Business Overview

4. INFORMATION ON OUR GROUP 4. INFORMATION ON OUR GROUP 4.1 GROUP OVERVIEW 4.1.1 Our History and Business We were incorporated in Malaysia under the Act on 27 JUly 2010 as a private limited company under the name of Pecca Malaysia Sdn Bhd. Subsequently, we changed our name to Pecca Group Sdn Bhd on 28 April 2014. We were converted into a public limited company and assumed our present name on 12 June 2014. Pecca is an investment holding company with three (3) subsidiaries, namely PLeather PAviation and EEmpire, the details of which are as follows:-
PLeather PAviation EEmpire Commenced operations in December 2000 and is principally involved in the styling, manufacturing, distribution and installation of leather upholstery for car seat covers, as well as the supply of leather cut pieces to the automotive leather upholstery industry. PLeather is also involved in other related business activities such as styling, manufacturing, distribution and installation of car door trim covers and covers for car accessories (such as steering wheels, gearshift knobs, handbrake levers, console box and operating manual book), provision of sewing services for fabric car seat covers, provision of wrapping and stitching services, and the supply of raw materials to the automotive upholstery industry. Commenced operations in December 2015 and principally involved in the manufacturing, repair, refurbishment, distribution and installation of aircraft leather seat covers and other leather related products, such as side wall panels, ceiling panels and leather trim for commercial aircrafts and private jets. PAviation has submitted its application to the DCA to obtain certification and related approval in accordance with the licensing requirements of the DCA and the FAA internationally for its venture into the aviation leather upholstery and parts refurbishment in the aviation industry. PAviation’s application for its venture into parts refurbishment has been approved by the DCA on 9 lVIarch 2016 whilst the approval for its venture into the aviation leather upholstery is pending and is expected to be obtained by end of 2016, the details of which are set out in Section 4.1.4(b)(i) of this Prospectus. Currently dormant. The intended principal activity is to operate retail outlets selling Smart Fit, Quick Fit and car accessory covers in Malaysia.
Our products and services currently cater for three (3) segments within the automotive upholstery industry, namely:­(i) OEM;
(ii) PDI; and

(iii) REM.
4. INFORMATION ON OUR GROUP (Cont’d) Our Group’s humble beginnings started with the incorporation of PLeather in 2000 by our founder and Group Managing Director, Datuk Teoh Hwa Cheng. With his exposure in the leather industry gained in managing his own trading and manufacturing of small leather goods and his intention to grow upstream in the leather business, Datuk Teoh Hwa Cheng set his vision to venture into the supply of leather car seat covers for the burgeoning automotive industry. He saw the potential in the supply of leather car seat covers for the automotive industry including ample room for growth for a new player in the said market as at that point of time, there was only a handful of qualified vendors serving the OEM and PDI segments. He invited his brother-in-law, Sam Chee Keng, who is experienced in the development of templates for leather car seat covers and was the Head of the R&D of a leather car seat cover company to join him as an Executive Director in PLeather. PLeather commenced business operations in the same year in 2000 at Lot 51, Jalan E1/2, Kawasan Perindustrian Ehsan Jaya, Taman Ehsan, Kepong, 52100 Kuala Lumpur producing leather car seat covers with a monthly production capacity of 300 sets of leather car seat covers. In the same year in 2000, Datuk Teoh Hwa Cheng also established MRZ Car Seat Sdn Bhd which was principally involved in the installation of car seats for the aftermarket sales. PLeather’s business was concentrated on aftermarket sales where we supplied our leather car seat covers to MRZ Car Seat Sdn Bhd catering for individual car owners that intend to refurbish their car seat covers and interior, and servicing showrooms of car distributors for customers that intend to upgrade the interior of their cars to leather. MRZ Car Seat Sdn Bhd has ceased its operations since February 2015 as disclosed in item (2) of Section 7.1.2 of this Prospectus. After being involved and establishing ourselves in the manufacturing and supply of leather car seat covers for the aftermarket sales segment for about four (4) years, we were awarded our first major contract in 2004 to supply leather car seat covers for the Proton Waja model in the OEM market segment. The contract was awarded by Johnson Controls Automotive Holding (M) Sdn Bhd, a Tier 1 car seat manufacturer for Proton. After establishing ourselves in the Malaysian market, we have gradually expanded our business operations to the overseas market. The following are the main overseas markets that our Group have exported our products to, which have individually contributed at least 5% of our Group’s total revenue in anyone of the financial year/ period during the past four (4) FYE 2012 to FYE 2015 and FPE 2015:­(a) Netherlands;
(b) Australia; and
(c) USA.

 

We export our products through our distribution partners in the abovementioned countries. Further, for the Australian market, we also have an online ordering system, where the customers can place their orders via our website. Further details on our mode of distribution to the export markets are disclosed in Section 4.5.4.1 (c) of this Prospectus. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d)
The OE Fit leather car seat covers for the OEM segment is the main revenue generator representing approximately 47.02%, 54.34%, 53.70%, 65.61% and 55.26% of our Group’s total revenue for the FYE 2012, FYE 2013, FYE 2014, FYE 2015 and FPE 2015 respectively as the OE Fit leather car seat covers contributed to our Group’s highest sales volume during the aforesaid financial years/ period as compared to the contribution by the other car seat covers manufactured by our Group. There is a higher demand for the OE Fit leather car seat covers for the OEM segment as the OE Fit leather car seat covers form part of the standard car accessories for selected variants of the car models launched by the car manufacturers to the market. The OE Fit leather car seat covers involve the installation of leather seat covers directly on bare coverless seats by the Tier 1 Car Seat Manufacturers. The supply of OE Fit leather car seat covers also encompass the POI segment whereby the installation process under the POI segment is relatively complex as the whole car seat need to be dismantled from the car, followed by the stripping off of the original fabric cover and subsequent installation of leather seat cover onto the bare car seat. The long installation hours and potential damage to the car interior have prevented the POI customers from considering leather upholstery as an accessory option. These obstacles encountered in the supply of leather upholstery to the POI market have prompted us to initiate the development of leather car seat covers which possesses the features of easy in-the-car installation and at the same time, command comparable good fitment to conventional OE leather car seat covers have led to our development of Smart Fit leather car seat covers. In 2009, we successfully introduced the Smart Fit product for leather car seat covers and door trim covers, and commenced commercialisation of the product in the Malaysian market. We managed to secure our first contract in Malaysia that same year, involving the manufacture and supply of Smart Fit car seat covers for the Viva model to Perodua Sales Sdn Bhd. Our Smart Fit product is an innovative method to attach a leather car seat cover firmly onto a car seat that is easy, convenient and would not affect the texture of the original cushion or fabric layer of a car seat. Subsequently, we introduced the innovative Smart Fit car door trim cover, which allows convenient and time-efficient assembly of the products onto a cars’ interior without destroying the texture of the doors’ original fabric. We believe that our Smart Fit product would offer quality leather upholstery in compliance with OEM quality and safety specifications for our customers in the POI market segment with shorter installation time. In 2010, we started to develop and apply our Smart Fit product to cater for various Japanese car models such as Toyota Noah, Toyota Yaris and Nissan Oualis. Subsequently, we successfully introduced our Smart Fit product for Nissan Serena car model and started commercial production for the POI market segment in Japan. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) Since the introduction of our Smart Fit product, we have been awarded the contracts for the manufacturing of Smart Fit car seat covers and door trims for the following models:­
1. T­~ 4.
5.

6. 7.
Perodua Sales Sdn Bhd yoyot;:.iysusho..Corpo.ra.Uon -..—-.–­·MltsLibishfMoto-r·(tv,-a·laysiaj”sdn·shCi·····——·—· -P”T”Outa·Serkat”An·ugerah·—-·····–··–·-···········-·· ·fa·ri·C·ii-o·rig·&·Sons·Motor·Co-S·a·ri·i3·hd—·–····-·–Nissan Motor (Thailand) Company Limited

 

·MiisLibisiiTMotor”(‘fha·iianCi5·ComiianyTfiiiiied-·-­Malaysia• Perodua Viva

• 2009 • Perodua Myvi
• 2011 • Perodua Alza
• 2011 ~-·–·Niss·aii·sereiia·······—···· ;;-···”201-1····–·–­

·japan······· ~””‘Mi’tsubisiii”r;;;irage””””” ~—–Nissa·ri·sereiia-···—-·–··· ~””‘Niss’a’ri’Sereiia–“””””” • Nissan Grand Livina
• Nissan Almera
• Nissan X·Gear
• Nissan X-Trail
• Nissan Navara
• Nissan X·Gear

~”‘-‘Mitsubisiii’Mirage’–‘–“” • Mitsubishi Atlrage ;;·—“201-2-·-·——-Maiaysia–­;;—-“201-3″———Tridonesia-­;—·”201·3”-·——-‘Maiaysia–­• 2013
• 2014
• 2014
• 2015
• 2016

Thailand• 2014

 

;····”201·4·———“fii-aiian·a··-­• 2014 There were no duration specified in the contracts for the manufacturing of Smart Fit car seat covers and door trims that were awarded to our Group under the POI program as tabulated in the above table, save for PT Outa Berkat Anugerah, which has a contract duration of one (1) year. The contracts awarded were specific for each car model and the supply would be for the life of the said car model, unless the contract was being terminated prematurely due to issues such as quality and the delivery of our products. As at the LPO, there were no contracts that have been awarded to our Group that were being terminated prematurely. Normally, the car manufacturers prefer to source the supply of their upholstery products from the same or single source for a particular model in order to facilitate the ease of tracking for replacements when there are warranty claims by the end users/ customers of the car. As our business grew, we decided to relocate as we had outgrown our then premise located at Lot 51, Jalan E1/2, Kawasan Perindustrian Ehsan Jaya, Taman Ehsan, Kepong, Kuala Lumpur. In 2010, we relocated our entire business operations to a new office cum manufacturing plant at No 1, Jalan Perindustrian, Oesa Aman 1A, Industri Oesa Aman, Kepong 52200 Kuala Lumpur. Our new premise enables all our departments to operate under one roof, which assists in improving our operational efficiency and effectiveness. As at the LPO, with a total factory area of 89,896 Sq Ft and 268 personnel in our Production Department, we boast a monthly production capacity of 10,000 sets of leather car seat covers. In August 2011, we introduced our Quick Fit product to the market. In the same year in 2011, we incorporated EEmpire with the intention of venturing upstream into the seat manufacturing business and to become a Tier 1 supplier of complete car seats to car manufacturers. The plan was abandoned when the car manufacturers has indicated that EEmpire needs to forge technical partnerships with renowned car seat manufacturers in order for EEmpire to be considered as a Tier 1 supplier of car seats. As such, EEmpire was dormant and does not hold any assets since its incorporation in 2011. EEmpire intends to operate retail outlets of selling Smart Fit, Quick Fit and car accessory covers in Malaysia based on our future plans as disclosed in Section 4.20.2 of this Prospectus. As a natural extension of our emphasis on producing quality products, we established a QMS in 2003 in accordance with international standards. 46 4. INFORMATION ON OUR GROUP (Cant’d) In 2004, we obtained the ISO 9001 :20001D1N EN ISO 9001 :2000/MS ISO 9001 :2000 certification for production and supply of leather car seat cover from TUV NORD. SUbsequently, in 2006, we upgraded our ISO 9001 :2000 certification to ISOITS 16949:2002 OMS certification for the manufacturing of leather and synthetic leather seat covers for automotive industry. We further upgraded the ISOITS 16949:2002 certification to ISOITS 16949:2009 OMS certification in 2010 upon satisfying additional requirements from the enhanced scope of the OMS amongst others, the conformity to product requirements instead of concentrating only on product quality, additional compliance to statutory instead of regulatory requirements under the old standard. In 2013, we obtained ISO 14001 :2004 for Environmental Management System and OHSAS 18001 :2007 for Occupational Health and Safety Management System certifications from Bureau Veritas. Our strong OMS enabled us to penetrate into the continental car market, which requires more stringent quality requirements. In 2012, we fulfilled the quality requirements during the process audit carried out by the Volkswagen Group at our premise. Since December 2012, we have been performing a process audit in accordance with the VDA 6.3 audit standard developed by the VDA. Subsequently, we were conferred as an approved supplier of leather car seat covers to the Volkswagen Group. In 2014, we were awarded the first project by the Volkswagen Group Malaysia Sdn Bhd, which involved the manufacture and supply of OE Fit leather car seat covers for VW361 model. As a result of our strong commitment to quality and customer satisfaction, our Pecca Group and our Group Managing Director, Datuk Teoh Hwa Cheng has received various awards such as:­(a)  Enterprise 50 Award Programme 2007 from SMIDEC and Deloitte in 2007;  (b)  Golden Bull Award for Malaysia’s 10 Outstanding SMEs from Nan Yang Siang Pau in 2008 and 2009;  (c)  6th Asia Pacific International Entrepreneur Excellence Award 2007 for Excellence Leadership in 2007; and  (d)  Special Edition World Award 2015 for Brand Excellence in Manufacturing Automotive Leather Interior from Asia Pacific Brands Foundation.
According to Frost & Sullivan, we are the largest automotive leather upholstery supplier for the OEM and PDI passenger vehicle segments in Malaysia in 2015. We command a market share of about 36.3% in 2011, 38.4% in 2012, 57.8% in 2013, 65.2% in 2014 and 67.7% in 2015 based on the number of installed leather upholstery passenger vehicle units for OEM and PDI market segments for each respective year, with the exclusion of REM market segment. Please refer to paragraph 3.13 of the Independent Market Research Report in Section 10 of this Prospectus for further details. To date, our clientele from OEM and PDI market segments include car brands such as Perodua, Proton, Mitsubishi, Toyota, Nissan, Hyundai, Suzuki, Subaru, Peugeot, Volkswagen and Isuzu, amongst others. We believe that our success in capturing both domestic and overseas markets has been built on our strong emphasis on leather quality, vigilant quality control and constant innovation. 4. INFORMATION ON OUR GROUP (Cont’d) 4.1.2 Share Capital and Changes in Share Capital As at the LPD, our Company’s authorised share capital is RM250,000,000 comprising 500,000,000 Shares of which 140,204,000 Shares have been issued and fully paid-up. The changes in our Company’s issued and fUlly paid-up share capital since incorporation were as follows:­No. of  Par  Date of  Shares  Value  Allotment  Allotted  (RM)  27.07.2010  2  1.00  16.11.2015  2  0.50  17.11.2015  2  0.50  01.12.2015  140,083,994  0.50  01.12.2015  120,000  0.50
.Consideration  Cash  Subdivision  Cash  Shares issued consideration for Acquisition of PLeather  as the  Shares issued consideration for Acquisition of PAviation  as the
Cumulative Issued and Fully Paid-Up Share Capital (RM) 2 2 3 70,042,000 70,102,000 Upon completion of the Public Issue, our Company’s issued and fully paid-up share capital will increase to RM94,000,000 comprising 188,000,000 Shares. None of Pecca’s shares as tabulated above were issued at a discount, on special terms or on instalment payment terms. As at the LPD, Pecca does not have any warrant, option or convertible securities in issue or any uncalled capital. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) 4.1.3 Corporate Structure Our Group’s corporate structure upon Listing is depicted in Section 1.1 of this Prospectus. The details of our subsidiaries and their respective business activities are as follows:­Corporation  Date/ Place of Incorporation  Effective Equity Interest (%)  Issued and Paid-up Share Capital (RM)  PLeather ________________ M __________ PAviation ————-_.————EEmpire  28.06.2000/ Malaysia —————–­————­02.07.2009/ Malaysia ——————————­08.08.2011/ Malaysia  100 ——————-­60 —————-.-.­100  9,200,002 —————————–­100,000 .—————————-­6,000,000
Principal Business Activities Styling, manufacturing, distribution and installation of leather car seat covers, supply of leather cut pieces to the automotive upholstery industry and other services related to the automotive upholstery industry Manufacturing, repair, refurbishment, distribution and installation of aircraft leather seat covers and other leather related products Dormant. The intended principal activity is to operate retail outlets selling Smart Fit, Quick Fit and car accessory covers in Malaysia
4.1.4 Our Subsidiaries (a) PLeather (i) Background and History PLeather was incorporated in Malaysia under the Act as a private company on 28 June 2000 under the name of Pecca Distribution Sdn Bhd. On 8 November 2000, it changed its name to Pecca Manufacturing Sdn Bhd. Subsequently, on 14 December 2001, it changed and assumed its present name. PLeather commenced operations in December 2000. (ii) Principal Activities and Productsl Services The principal activities of PLeather are styling, manufacturing, distribution and installation of leather car seat covers, supply of leather cut pieces to the automotive upholstery industry and other services related to the automotive upholstery industry. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) (iii) Share Capital As at the LPD, the authorised share capital of PLeather is RM10,000,000 comprising 10,000,000 ordinary shares of RM1.00 each of which 9,200,002 ordinary shares of RM1.00 have been issued and fully paid-up. The changes in PLeather’s issued and paid-up share capital since incorporation are as follows:­Date of Allotment 28.06.2000 24.02.2001 30.10.2001 22.10.2003 03.01.2005 20.01.2006 29.12.2006 No. of Ordinary Shares Allotted 2 99,998 200,000 2,000,000 2,300,000 1 4,600,001 Par Value (RM) 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Consideration … Subscriber’s shares Cash Cash Assignment of liabilities Bonus shares issued on the basis of one (1) new ordinary share for every one (1) existing ordinary share held Cash Bonus shares issued on the basis of one (1) new ordinary share for every one (1) existing ordinary share held Cumulative Issued and Paid-Up Share Capital (RM) 100,000 300,000 2,300,000 4,600,000 4,600,001 9,200,002 None of PLeather’s shares as tabulated above were issued at a discount, on special terms or instalment payment terms.  As at the LPD, PLeather does not have any warrant, option securities in issue or any uncalled capital.  or  convertible  (iv)  Shareholder  PLeather is our wholly-owned subsidiary.  (v)  Subsidiary or Associated Company
As at the LPD, PLeather does not have any subsidiary or associated company. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) (b) PAviation (i) Background and History PAviation was incorporated in Malaysia under the Act as a private company on 2 July 2009 under the name of Pecca Stylelab Sdn Bhd. On 29 September 2014, it changed and assumed its present name. On 12 March 2015, PAviation has submitted its application to the DCA to obtain DCA’s approval for the Certificate of Airworthiness for its venture into the aviation leather upholstery and parts refurbishment in the aviation industry. The approval of the DCA for PAviation’s venture into the parts refurbishment in the aviation industry has been obtained via a certificate of approval dated 9 March 2016. However, the approval of the DCA for PAviation’s venture into the aviation leather upholstery is delayed pending the submission of an internal audit report by PAviation to DCA demonstrating PAviation’s readiness and capability to undertake the leather upholstery business which include the provision of the detailed floor layout plan, list of machineries and PAviation’s manpower and skill set readiness for the manufacturing of the aviation leather upholstery activities. Based on the said additional requirements, PAviation is expected to obtain the DCA approval on leather upholstery business by end 2016. Thereafter, PAviation shall prepare the relevant documentation to obtain certification and related approvals from the FAA to be recognised as an international player in the industry. We expect to receive the relevant certification and approval from FAA by 2017. PAviation has commenced business on 23 December 2015 as it has secured an interior refurbishing project from ExecuJet Malaysia Sdn Bhd, a certified and licensed MRO operator, to refurbish the side wall, headliner panels and floor carpet and toilet seat replacements for a private jet. ExecuJet Malaysia Sdn Bhd was responsible for the certification of the project after completion. (ii) Principal Activities and Productsl Services The principal activities of PAviation are manufacturing, repair, refurbishment, distribution and installation of aircraft leather seat covers and other leather related products. (iii) Share Capital The authorised share capital of PAviation is RM100,000 comprising 100,000 ordinary shares of RM1.00 each of which 100,000 ordinary shares of RM1.00 have been issued and fully paid-up. The changes in PAviation’s issued and paid-up share capital since incorporation are as follows:­
None of PAviation’s shares as tabulated above were issued at a discount, on special terms or instalment payment terms. 51
4. INFORMATION ON OUR GROUP (Cont’d) As at the LPD, PAviation does not have any warrant, option or convertible securities in issue or any uncalled capital. (iv) Shareholders PAviation is a 60.0% owned subsidiary of our Company. The shareholders of PAviation are as follows:-
Pecca Wohlstand MRZ Datuk Teoh Hwa Cheng Datin Sam Yin Thing  60,000 60.00 40,000 40.00  (a) 60,000 60.00 (b) 60,000 60.00 (e) 60,000 60.00
Notes:­(a) Deemed interested by virtue of its shareholding in Pecca pursuant to Section 6A of the Act.
(b) Deemed interested by virtue of his substantial shareholding in Pecca and his shareholding in MRZ pursuant to Section 6A of the Act.
(c) Deemed interested by virtue of her shareholding in IVIRZ pursuant to Section 6A of the Act.

The profile of the shareholder of PAviation, Wohlstand is as follows:­(aa) Background and History Wohlstand was incorporated in Malaysia under the Act as a private company on 13 March 2014. The principal activity of Wohlstand is the provision of aircraft maintenance, repairs, overhaul, consultation and other related activities.
(bb) Share Capital As at the LPD, the authorised share capital of Wohlstand is RM400,000 comprising 400,000 ordinary shares of RM1.00 each of which 50,000 ordinary shares of RM1.00 have been issued and fully paid-up. As at the LPD, the Directors and shareholders of Wohlstand are as follows:­
4. INFORMATION ON OUR GROUP (Cont’d) (cc) Profiles of the Shareholders of Wohlstand The profiles of the shareholders of Wohlstand, Tsng Fuh Shen and Ooi Eng Huat are as follows:­(1) Tsng Fuh Shen, aged 43, a lVIalaysian, is the 50% equity shareholder of Wohlstand. He obtained his CAA UK Aircraft Engineer License in Avionics from Scotland Perth-AST Training College in 1994 and Master of Business Administration (General Management) from University of Hull, United Kingdom in 2003. He has more than 24 years of operational experience in the aviation industry and is a holder of Aircraft Maintenance Licence Holder under classes AMEL(EASA)-B2 Avionics and AMEL(DCA MAL)-Avionics. He has experience in aircraft maintenance management, engineering planning and defect control, quality assurance and compliance in the aviation which is applicable for both the IVIRO and FBO services. He also has experience in hanger operations for FBO services. He has assumed various roles as a Licensed Aircraft Maintenance Engineer, Maintenance Control Planning Engineer, Quality Assurance Engineer, Supply Chain Manager, Director of Quality and Safety System (Aircraft lVIanagement), Director of Operations and Chief Operating Officer­Ground Operation during his tenure in the aviation industry. His qualification and experience are instrumental to PAviation’s pursuit of venturing in the aviation industry as our Group relies on him to satisfy the requirement of having a qualified certified Engineer in the aviation industry in the application to obtain the certifications and approvals from the FAA and DCA. Pursuant to the JV Agreement and Contract for Service Agreement as defined and disclosed in Section 4.20.3 of this Prospectus, he is contracted to provide his services to PAviation for a period 24 months from 1 October 2014 to 30 September 2016 and upon the commencement of PAviation’s operations, he will be responsible for the business development aspects of PAviation. (2) The profile of Ooi Eng Huat who is our Executive Director cum Operation Manager of PAviation is as disclosed in Section 5.4.2 (g) of this Prospectus. There is no relationship between the Promoters of Pecca and the Directors and shareholders of Wohlstand. (v) Subsidiary or Associated Company As at the LPD, PAviation does not have any subsidiary or associated company. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) (c) EEmpire (i) Background and History EEmpire was incorporated in Malaysia on 8 August 2011 under the Act as a private company under its present name. (ii) Principal Activities and Productsl Services Since its incorporation and up to the LPO, EEmpire is dormant. The intended principal activity is to operate retail outlets selling Smart Fit, Quick Fit and car accessory covers in Malaysia. EEmpire does not hold any assets since its incorporation in 2011. Please refer to Section 4.1.1 of this Prospectus on the background history of EEmpire and Section 4.20.2 of this Prospectus on the intended principal activity of EEmpire on the opening of the retail outlets. (iii) Share Capital The authorised share capital of EEmpire is RIVI10,000,000 compnslng 10,000,000 ordinary shares of RM1.00 each of which 6,000,000 ordinary shares of RM1.00 have been issued and fully paid-up. The changes in EEmpire’s issued and paid-up share capital since incorporation are as follows:­
Cumulative Issued and Paid-Up Share Capital (RM) 08.08.2011 2 1.00 Cash 17.08.2011 5,999,998 1.00 Cash 6,000,000 None of EEmpire’s shares as tabulated above were issued at a discount, on special terms or instalment payment terms. As at the LPO, EEmpire does not have any warrant, option or convertible securities in issue or any uncalled capital. (iv) Shareholder EEmpire is our wholly-owned subsidiary.
(v) Subsidiary or Associated Company As at the LPO, EEmpire does not have any subsidiary or associated company.

THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) LISTING SCHEIVIE In conjunction with and as an integral part of our listing of and quotation for our entire enlarged issued and paid-up share capital on the Main Market of Bursa Securities, our Company undertook a Listing Scheme which involved the following which are inter­conditional among each other:­(a) Dividend Payment Prior to the Subdivision, Allotment and Acquisitions, PLeather had declared and paid the following dividends to its shareholders:­(i) First interim dividend amounted to approximately RM2.58 million which was declared on 2 December 2014 and paid on 10 December 2014; and
(ii) Second interim dividend amounted to approximately RM5.70 million which was declared on 28 May 2015 and paid on 19 June 2015.

The aforementioned dividends was declared and paid from PLeather’s PAT generated for the FYE 2015. (b) Subdivision Our Company undertook a subdivision of one (1) existing ordinary share of RM1.00 each in Pecca into two (2) new Shares. The Subdivision resulted in the ordinary shares of our Company to increase from two (2) ordinary shares of RM1.00 each to four (4) Shares. The issued and paid-up share capital of our Company remains as RM2.00. The Subdivision was completed on 16 November 2015. (c) Allotment Subsequent to the Subdivision, our Company allotted and issued a total of two (2) Shares. The details of the Allotment and the shareholdings of Pecca after the Allotment are as follows:-
The Allotment resulted in the ordinary shares of our Company to increase from four (4) Shares to six (6) Shares and the issued and paid-up share capital of Pecca to increase from RM2.00 to RM3.00. The Allotment was completed on 17 November 2015. 4. INFORMATION ON OUR GROUP (Cont’d) (d) Acquisitions (i) Acquisition of EEmpire Our Company had entered into a conditional sale and purchase agreement dated 24 December 2014 with PLeather to acquire 100.0% of the issued and paid-up share capital of EEmpire comprising 6,000,000 ordinary shares of RM1.00 each for a cash consideration of RM5,980,000. The purchase consideration of EEmpire was based on the audited NTA of EEmpire as at 30 June 2014 of RM5,980,165 and was satisfied via internally generated funds. The Acquisition of EEmpire was completed on ‘/ December 2015. (ii) Acquisition of PLeather Our Company had entered into a conditional sale and purchase agreement dated 24 December 2014 with the Vendors of PLeather to acquire the entire issued and paid-up share capital of PLeather comprising 9,200,002 ordinary shares of RM1.00 each for a purchase consideration of RM70,041 ,997, satisfied wholly by the issuance of 140,083,994 new Shares at an issue price of RMO.50 per share. The purchase consideration of PLeather was based on the adjusted audited NTA of PLeather as at 30 June 2014 after adjusting for the fair value (net of deferred taxation) of the properties of PLeather of RM9,933,682 as set out below:­RM Audited NTA of PLeather as at 30 June 2014 60,108,941 Fair value adjustment to the properties of PLeather (net of deferred taxation) #9,933,682 Adjusted audited NTA of PLeather as at 30 June 2014 70,042,623 Note:­# The fair value adjustment arising from the revaluation of the properties of PLeather is as set out below:­(A) Market Value’ RM  (B) NBVas at 30.06.2014 RM  (C = A -B) Gross Surplus RM  (D) Deferred Taxation RM  (E S = C -D) Net urplus RM  (F) Equity Interest %  (G = E x F) Amount of Surplus RM  36,320,000  23,075,090  13,244,910  3,311,228  9 ,933,682  100.00  9,933,682  Note:­
The revaluation of the properties is based on market value as appraised by the Independent Registered Valuers. Please refer to Sections 4.15.1 and 12 of this Prospectus for further details on valuation of the properties. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) The shareholdings of the Vendors of PLeather in our Company pursuant to the Acquisition of PLeather are as follows:­Shareholders  No. ()fOrdinary Shares of RM1.00 Each Held in PLeather  Equity Interest %  Purchase Consideration RM  No. of Pecca Shares Issued  MRZ Datuk Teoh Hwa Cheng Syed Mohammad Hafiz bin Syed Razlan  7,935,000 1,200,002 65,000  86.25 13.04 0.71  60,411,210 9,135,925 494,862  120,822,420 18,271,850 989,724  Total  9,200,002  100.00  70,041,997  140,083,994
The Acquisition of PLeather was completed on 1 December 2015. (iii) Acquisition of 60% PAviation Our Company had entered into a conditional sale and purchase agreement dated 24 December 2014 with the Vendors of PAviation to acquire 60.0% of the issued and paid-up share capital of PAviation comprising 60,000 ordinary shares of RM1.00 each for a purchase consideration of RM60,000 satisfied wholly by the issuance of 120,000 new Shares in Pecca at an issue price of RMO.50 per share. As at 30 June 2014, PAviation registered the audited net tangible liabilities of RM15,125. The purchase consideration was based on the cost of investment in PAviation by the Vendors of PAviation after taking into consideration the increase in the issued and paid-up share capital of PAviation on 13 November 2014 as set out below: Issued and Paid-up Share Capital of PAviation RM Issued and paid-up share capital as at 30 June 2014 100 Increase in issued and paid-up share capital on 13 November 2014 99,900 Total issued and paid-up share capital 100,000 Cost of investment by the Vendors of PAviation based on 60.0% equity interest 60,000 The shareholdings of the Vendors of PAviation in our Company pursuant to the Acquisition of 60.0% PAviation are as follows:-
Datuk Teoh Hwa Cheng Datin Sam Yin Thing Total  48,000 12,000 60,000  48.00 12.00 60.00  48,000 12,000 60,000  96,000 24,000 120,000
The Acquisition of PAviation was completed on 1 December 2015. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) The Acquisition of PLeather and Acquisition of 60.0% PAviation resulted in our issued and paid-up share capital being increased from six (6) Pecca Shares to 140,204,000 Pecca Shares. The new Pecca Shares issued pursuant to the Acquisition of PLeather and Acquisition of 60.0% PAviation ranked pari passu in all respect with our existing Pecca Shares, except that the new Pecca Shares will not be entitled to any dividends, rights, allotment or other distributions declared, made or paid prior to the date of allotment and issuance of the said Pecca Shares. (e) IPO Subsequently, we are undertaking an IPO, the details of which are set out in Section

 

2.3 of this Prospectus. (f) Listing of and Quotation for Our Shares Upon completion of the abovementioned IPO, we will seek the admission of our Shares into the Official List and the listing of and quotation for our entire enlarged issued and paid-up share capital on the Main Market of Bursa Securities. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) OVERVIEW OF OUR GROUP’S BUSINESS ACTIVITIES AND SERVICES Our Group’s business model is depicted in the diagram below, on which the revenue generation is based upon:­~ ClJ …….
~ ClJ is “0′ ‘f} ClJ~ 2′ Revenue Sources ~  \’  ~  Leather Cut Pieces  Car Seat Covers  Other Products and Services #

• POI Centres • Car Showroomsl Sales Agents Distribution Arms • Car Manufacturers’ • Car Accessory Shops Note:­# Other products and services include car door trim covers and covers for car accessories, sewing services for fabric car seat covers, wrapping and stitching services and supply of raw materials to the automotive upholstery industry. KEY ACHIEVEMENTS, AWARDS AND RECOGNITION The table below sets out our Group’s development and achievement milestones, including awards and recognition that we have been awarded over the years:­

2001 • PLeather set up an R&D Department.
• Obtained ISO 9001 :2000/DIN EN ISO 9001 :2000/MS ISO 9001 :2000 certification for production and supply of leather car seat cover from TUV NORD;
• Expanded our business operations to the REM segment in the USA; and
• Secured our first project in OEM market segment with Johnson Controls Automotive Holding (M) Sdn Bhd.

2004 4. INFORMATION ON OUR GROUP (Cont’d) Year  Key Achievements, Awards and Recognition  2006  •  ISO 9001 :2000 QMS certification was upgraded to ISOrTS 16949:2002 by TUV  NORD.

2007 • Received the Enterprise 50 Award Programme 2007 from SMIDEC and Deloitte; and
• Received the 6th Asia Pacific International Entrepreneur Excellence Award 2007 for Excellence Leadership.
• Received the 2nd position -Top 10 for Golden Bull Award 2008 of the 6th Malaysia’s 100 Outstanding SMEs.
• Received the 9th position -Top 10 for Golden Bull Award 2009;
• Expanded our business operations to the REM segment in the Netherlands;
• Commenced commercialisation of Smart Fit product to Malaysian market; and
• Secured first contract for Smart Fit in Malaysia for the supply of Smart Fit car seat covers for Viva model to Perodua Sales Sdn Bhd.
• Introduced Smart Fit product to the Japanese market.
• Awarded our first project for the Smart Fit product by Nissan Motor Company Limited for Serena model. We supplied our products through Toyota Tsusho Corporation, Japan; and
• Expanded our business operations to the REM segment in Australia.

2008 2009 2010 2012 2013 • Started to perform a process audit in accordance with the VDA 6.3 standards, which enabled us to become an approved supplier of leather car seat covers to Volkswagen Group;
• Obtained ISO 14001 :2004 certification for manufacturing of leather and synthetic leather seat cover and interior finishing for automotive industries; and
• Obtained OHSAS 18001 :2007 certification for manufacturing of leather and synthetic leather seat cover and interior finishing for automotive industries.

2014 • Awarded the first maiden project by the Volkswagen Group Malaysia Sdn Bhd upon being successfully qualified pursuant to the process audit in accordance with the VDA 6.3 standard for OE Fit car seat covers. 2015 • Received Special Edition World Award 2015 for Brand Excellence in ManUfacturing Automotive Leather Interior by Asia Pacific Brands Foundation.
THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) 4.5 OVERVIEW OF OUR GROUP’S PRODUCTS, SERVICES AND OPERATIONS 4.5.1 Business Activities Overview We are principally involved in the styling, manufacturing and distribution of leather car seat covers for OEM, PDI and REM market segments, as well as the installation of leather car seat covers for the PDI market segment. We also supply of leather cut pieces for the OEM market segment. The summary of our business activities is presented below:­(a) Principal Business Activities “/:’iI8+1<  :  ,} >C”  OEM  Market Segmenti’,>’: f,C POI ;,’iN;,ii} · ;·.·,B.J::MC>.l;ii~;i+  Car seat covers  • Styling • Manufacturing • Supplying  • Styling • Manufacturing • Distribution • Installation  • Styling • Manufacturing • Distribution  Product name  • OE Fit  • Smart Fit  • • •  OE Fit (I) Quick Fit Smart Fit (ii)  Customer (III)  • Toyota Boshoku UMW Sdn Bhd • Fuji Seats (Malaysia) Sdn Bhd • Lear Automotive (Malaysia) Sdn Bhd • Auto Parts Manufacturers Co Sdn Bhd • Mitsubishi Motors Malaysia Sdn Bhd  • Tan Chong & Sons Motor Company Sdn Bhd • Perodua Sales Sdn Bhd  • Cooperatie Leder Inbouw Nederland U.A • Shrin Corporation • Doyles Group  I Leath..cui pie”””  • Supplying  Not applicable  Not applicable  Customer (iii)  • Toyota Boshoku UMW Sdn Bhd  Not applicable  Not applicable
Notes:­(i) Supplied to end users through referrals from car sales agents for new car models and direct to showrooms for reconditioned models as detailed in Section 4.5.2.1 (d) of this Prospectus.
(ii) Presently, our Group does not supply our Smart Fit product to the REM market. We plan to supply our Smart Fit product to the REM market segment when we open our own retail outlets as detailed in Section 4.20.2 of this Prospectus.

(iii) The customers who individually contributed 5.0% or more to the total revenue of our Group for the past four (4) FYE 2012 to FYE 2015 and FPE 2015. 4. INFORMATION ON OUR GROUP (Cant’d) (b) Other Business Activities Product  Market Segment  OEM • Styling • Manufacturing • Distribution • Sewing • Wrapping • Stitching Not applicable  PDI • Styling • Manufacturing I • Distribution • Installation Not applicable Not applicable Not applicable  REM • Styling • Manufacturing • Distribution Not applicable Not applicable • Supplying  Car accessory covers:­» car door trim » steering wheel » gearshift knobs » handbrake lever » operating manual book » console box  Fabric car seat covers  Car accessory covers:­» car door trim » steering wheel » gearshift knobs » handbrake lever » console box  Raw materials
The customers for the other business activities of our Group, for the products as tabulated in the table above, individually contributed less than 5.0% of the total revenue of our Group for the past four (4) FYE 2012 to FYE 2015 and FPE 2015. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) 4.5.1.1 Principal Business Activities (a) Car Seat Covers Our car seat covers cater to three (3) segments within the automotive industry, as presented in the diagram below:­OEM Market Segment
(i) Leather Car Seat Covers for OEM Market Segment We are an OEM supplier of leather car seat covers. We are principally involved in the styling, manufacturing and supplying of customised leather car seat covers for Tier 1 car seat manufacturers and car manufacturers in Malaysia. This segment is the main revenue generator for our Group for the FYE 2012 to FYE 2015 and FPE 2015 as the OE Fit leather car seat covers contributed to our Group’s highest sales volume during the aforesaid financial years/ period as the OE Fit leather car seat covers are embedded as part of the standard car accessories for selected variants of the car models launched by the car manufacturers to the market. Car manufacturers determine the quality requirements and specifications for the car components, including leather upholstery of car seats. Hence, our products for OEM market segment are manufactured in accordance with the precise specifications as determined by our car manufacturer clients. We supply our products to Tier 1 car seat manufacturers, who then install the leather car seat covers onto manufactured car seats. The completely assembled car seats are subsequently supplied to a car manufacturer or assembler for installation onto the cars. 4. INFORMATION ON OUR GROUP (Cont’d) (ii) (iii) Leather Car Seat Covers for POI Market Segment We are principally involved in the styling, manufacturing, distribution and installation of leather car seat covers for POI centres in Malaysia and Thailand. Our sales of leather car seat covers for the local POI centres in Malaysia represented approximately RM14.74 million (23.72%), RM8.88 million (13.43%), RM10.57 million (10.62%), RM12.23 million (9.44%) and RM8.23 million (14.62%) of our Group’s total revenue for the FYE 2012, FYE 2013, FYE 2014, FYE 2015 and FPE 2015 respectively whilst our sales of leather car seat covers for the POI centres in Thailand represented approximately RMO.99 million (1.0%) and RMO.24 million (0.19%) of our Group’s total revenue for the FYE 2014 and FYE 2015 respectively. Please refer to Sections 8.4.2.1.2 and 8.4.2.1.4 of this Prospectus for further details. We penetrated the Thailand market during the FYE 2014 and serve the POI centres in Thailand directly from our Malaysian operations. Our clients in the POI market segment consider restyling of car interior and changing fabric car seat upholstery with leather in order to enhance the value of a car model and promote sales. Such restyling may be required at different stages of a car model lifecycle. At the launching stage of a car model, leather interior is used to emphasise exclusivity of the batch being introduced to the market. At the mature and/or declining stage of a product life cycle, restyling of car interior is used for stock clearance prior to the introduction of a new car model and for special/limited edition car models. Our innovative Smart Fit product enables the change of fabric car upholstery to leather without the necessity to dismantle the car seats, stripping off original fabric seat cover or apply any physical alternation of the original fabric installed onto the car seats, as the installation of Smart Fit can be conducted within the car. Car Seat Covers for REM Market Segment We are involved in the styling, manufacturing and distribution of car seat covers for end users in REM market segment in Malaysia as well as overseas markets. We also offer installation services for the REM market segment in Malaysia. We offer two (2) different types of leather car seat covers, namely conventional OE leather car seat covers and Quick Fit car seat covers for the REM market segment. In Malaysia, we supply and install OE leather car seat covers to car showrooms/ sales agents for the REM market segment. OE leather car seat covers requires dismantling of a car seat from the car and subsequent reinstallation onto the car after the assembly of the leather car seat cover. For export sales, we sell our products via our distribution partners and the installation will be conducted by our distribution partners. Our Quick Fit car seat covers target mass market and can be easily installed by end users. Quick Fit car seat covers are available to the end users via retailers and car accessory shops. 4. INFORMATION ON OUR GROUP (Cont’d) (b) Leather Cut Pieces Supply for OEM Market Segment We are involved in the supply of leather cut pieces instead of complete car seat covers to our clients in OEM market segment, when required. We produce leather cut pieces according to the templates provided by the client. The client (or a third party sewing service provider) will then sew the supplied leather cut pieces together to produce car seat covers. Depending on the client requirements, the production process of leather cut pieces may involve the following:­• We purchase leather cut pieces from suppliers and perform sub-processes, such as laminating and/or trimming, and supply the leather cut pieces to the client; or
• We purchase leather hides from suppliers and perform sub-processes, including cutting, laminating and/or trimming, and supply the leather cut pieces to the client.

Our business in the supply of leather cut pieces is an ancillary supporting business provided to our existing clientele as our core business is concentrated in the manufacturing and supply of leather car seat covers. The production process for this business activity involve part of our normal operating cycle as it involves the selection and supply of leather, cutting and trimming process without involving any sewing process resulting in low value added and margin contribution to our Group. The supply of leather cut pieces is to support our existing customers who have constraints in the procurement of leather in terms of the requirement to fulfil minimum order quantity, consistency in quality of leather from reliable supplier based on competitive pricing due to low volume in demand for specific car model. The lack of know-how in the selection of leather in order to maximise the utilisation of the leather during the cutting process coupled with the constraints in the leather cutting capacity of our existing customers further contributed to the growth of this business segment for our Group. Further, the supply of leather cut pieces to our existing customers is only for the car models or variants that our Group does not supply the leather car seat covers. It is a normal practice in the industry for car manufacturers to appoint a vendor for the supply of leather car seat covers for a specific car model or variant instead of multiple vendors for the same car model or variant. This is to ease the process of tracing and identifying the source of the supply of leather car seat covers when there are claims or complaints pertaining to qualities of leather car seat covers based on after-sales warranties. Our supply of leather cut pieces is to our existing customers who are either car manufacturers or the Tier 1 car seat manufacturers. In addition to manufacturing the car seats, all the Tier 1 car seat manufacturers operate their own sewing line for the supply of fabric car seat covers which command higher demand as compared to the leather car seat covers. The manufacturing process of fabric car seat covers is less complicated as the main material comprises of fabric instead of leather hide which is subject to defects and dependent on the skill set in the process of selecting the leather hides. The high volume in demand for fabric car seat covers enables the Tier 1 car seat manufacturers to achieve economies of scale as well as to price the supply of fabric car seats competitively with the provision of a complete package to the car manufacturers with the supply of complete car seats which is inclusive of fabric car seat covers. 4. INFORMATION ON OUR GROUP (Cont’d) The demand for leather car seat covers are lower as compared to fabric car seat covers as leather car seat covers are more expensive being a premium product. Oue to the complexity in the manufacturing of leather car covers and lower volume, most Tier 1 car seat manufacturers will outsource the supply of leather car seat covers to third parties. Further, most car manufacturers will dictate the appointment of the vendor(s) for the supply of the leather car seat covers due to the stringent quality and safety requirements associated with the supply of this product which caters for the premium car models or variants. As such, save for selected car models of Toyota and Mitsubishi for which we supply the leather cut pieces, most car manufacturers or Tier 1 car seat manufacturers in Malaysia do not operate their own leather car seat covers division as they will not be able to achieve economies of scale in supplying the leather car seat covers for their internal consumption only without supplying to external customers. Our supply of leather cut pieces to our existing customers who are either car manufacturers or the Tier 1 car seat manufacturers is to support these customers when they are facing constraints and/or lack of expertise in certain areas as explained above. As such, our customers for the supply of leather cut pieces will not be the competitors to our Group for the supply of leather car seat covers. 4.5.1.2 Other Business Activities Our other business activities include the styling, manufacturing, distribution and installation of car door trim covers and covers for car accessories, the provision of wrapping and stitching services, the provision of sewing services for fabric car seat covers and the supply of raw materials related to the automotive upholstery industry. (a) Car Door Trim Covers for OEM, POI and REM Market Segments We are involved in the styling, manufacturing, distribution of car door trim covers for OEM, POI and REM market segments. We also provide installation services for the clients in POI market segment. We offer our innovative Smart Fit car door trim covers to our clients in POI market segment. Smart Fit car door trim cover can be closely fitted onto a car interior without dismantling the car door trim from a car or resulting in any alternation to the original fabric installed on it. (b) Other Car Accessory Covers for OEM, POI and REM Market Segments
We are involved in the styling, manufacturing, distribution and installation of leather upholstery for car accessories, such as steering wheels, gearshift knobs, handbrake levers, operating manual books and console boxes for OEM, POI and REM market segments. We also provide installation services for the clients in PDI market segment.
(c) Sewing Services for Fabric Car Seat Covers for OEM Market Segment

We are involved in the provision of sewing services to the Tier 1 car seat manufacturers. The client supplies cut pieces, such as fabric and accessory parts, and we are responsible for sewing the cut pieces onto a car seat cover and providing the final product to the client for installation. This activity is regarded as a support service provided to our Tier 1 car seat manufacturer customers to alleviate their capacity constraint in the event of sudden demand surge of selective models. 4. INFORMATION ON OUR GROUP (Cont’dj (d) Wrapping and Stitching Services We are involved in the provision of supportive services to our clients, such as wrapping and stitching services for door trims, steering wheels, gear knobs, brake levers and console boxes. We produce leather and/or PVC cut pieces and wrap them around these car accessories. We also provide the services of stitching for steering wheel, gearshift knob and handbrake lever covers which are performed with double or single needle stitch according to client’s requirements. (e) Supply of Raw Materials We are involved in the supply of raw materials, such as leather hides, PVC, foam and plastic parts for car seat covers. We supply raw materials to our clients in REM export market segment. The raw materials are usually required in order to support sewing of replacement parts due to wear and tear, and warranty claims. 4.5.2 Principal Products and Services Our product portfolio mainly comprises of leather upholstery for car seats and accessory covers for the OEM, POI and REM market segments. We also provide sewing services of fabric car seat covers and accessory covers for our clients in the OEM market segment. 4.5.2.1 Car Seat Covers We offer OE Fit leather car seat cover for OEM market segment, Smart Fit leather car seat cover for POI market segment as well as OE leather car seat cover and Quick Fit car seat cover for REM market segment. (a) OE Fit Leather Car Seat Cover
THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) Under the OE Fit product line, our car manufacturer clients provide the specification, such as the design, seat profile and combination of materials configuration (leather, PVC and carpet). Depending on the car model, car seats are designed in many varying forms, shapes and sizes. We have the expertise to manufacture leather car seat covers in various sizes and specifications to meet the client’s requirements and specifications. We supply our products to Tier 1 car seat manufacturers, who then install the leather car seat covers onto manufactured car seats. The completely assembled car seats are subsequently supplied to a car manufacturer or assembler for installation onto the cars. (b) Smart Fit Leather Car Seat Cover
Smart Fit is a patented leather car seat cover product, which presents an innovative method for attaching a leather car seat cover closely onto a car seat. Smart Fit has been developed specifically for the POI market segment. Smart Fit leather car seat cover can be directly installed on car seat that is already equipped with original fabric seat cover, while providing comparable physical appearance (fitment) and comfort (firmness) to OE fitted leather car seats. Smart Fit is a simple and convenient method for attaching a leather car seat cover. It allows interchangeability of various designs for leather car seat covers to accommodate different lifestyles and preferences of the end users. Our Smart Fit product is developed based on model specific concept in order to achieve good fitment. Our Smart Fit product is differentiated from those in the market based on the method adopted to install the leather car seat cover. Most of the leather seat covers in the market are manufactured to fit most of the standard sized car seats and are loosely fitted as the leather car seat covers are not produced based on model specific as opposed to our Smart Fit product. Further, for the model specific leather car seat covers produced by the other manufacturers, the mechanism used for the installation of the leather car seat covers is based on the usage of rope to tighten for the purpose of fitment whereas the installation of our Smart Fit product is based on the Pull Belt System and Velcro Installation. 4. INFORMATION ON OUR GROUP (Cont’d) Conventionally, installation of leather car seat cover onto a car seat, which is originally equipped with fabric car seat cover, required dismantling of the seat and stripping the fabric car seat cover. Smart Fit car seat covers are installed within a car without dismantling seats, thus requiring less manpower and time for installation. In addition, the original fabric is kept pristine. Our Smart Fit product also reduces the risk of damaging fragile parts of car interior during installation of the leather car seat covers. Thus, Smart Fit enhances the value of cars which can sUbsequently be marketed as a premium variant. Our Smart Fit product is also in compliance with OEM quality and safety specifications. Smart Fit can be customised with various styling and material combination options available. Smart Fit consists of two (2) components, which are the cover for seat back and cover for seat cushion. The design and specialised sewing technique coupled with Pull Belt System and Velcro Installation of Smart Fit car seat cover enables it to pass airbag deployment tests. The airbag deployment tests conducted by our Group for the Smart Fit products over the years are as set out below:­Year  Car Model  Certifying Body for Compliance with Airbag Deployment  Country  2009  Toyota Corolla (passenger seat)  MGA Research Corporation  USA  2010  Toyota Corolla (driver seat)  MGA Research Corporation  USA  2011  Nissan Serena (driver seat)  Johnson Controls Inc., Japan  Japan  2012  Honda CRY (driver seat)  Autoliv Hirotako Sdn Bhd  Malaysia
The airbag deployment test for Smart Fit car seat cover is only conducted for car models with car seats that were equipped with airbags. The patents for Smart Fit have already been granted in Taiwan, Indonesia, Australia, Malaysia and Thailand (granted as utility model for ten (10) years) as detailed in Section4.14.2(b)(i) of this Prospectus. (c) Quick Fit Car Seat Cover
4. INFORMATION ON OUR GROUP (Cont’d) Quick Fit is a patented car seat cover product, which presents an interchangeable car seat cover. Quick Fit car seat cover can be easily and quickly fitted onto a car seat. Quick Fit car seat cover does not destroy original fabric of the car seat. Quick Fit car seat covers can be installed without the need to dismantle seats and/or door panels, thus requires less manpower and time for installation. Our Quick Fit product also reduces the risk of damaging fragile parts of car interior during installation of the leather car seat covers. Our Quick Fit product is also developed based on model specific concept in order to achieve good fitment similar to our Smart Fit product as detailed in Section 4.5.2.1 (b) of this Prospectus. Quick Fit car seat covers can be of various designs. It can be customised to accommodate different lifestyles and preferences for the end users and to provide a close fit for comfort and appearance. Quick Fit car seat covers consists of a single component for seat back and seat cushion and is installed on car seats with fabric seat cover. Quick Fit car seat covers of standard specifications are fully made of PVC material and thus, meeting the demands of mass market due to relatively lower costs compared to leather car seat covers. Quick Fit car seat covers are available to the end users via car accessories and retail shops. The patent for Quick Fit has been registered in Malaysia as detailed in Section 4.14.2(b)(i) of this Prospectus. (d) OE Leather Car Seat Covers for REM Market Segment Our OE leather car seat covers for REM market segment are supplied to end users through referrals from car sales agents for new car models. For reconditioned car models, we supply OE leather car seat covers directly to the car show rooms. Our products are installed on car seats that require replacement for leather car seat covers. In order to replace the original cover with leather car seat cover, the seats are dismantled from the car and the original cover is stripped. After the leather car seat cover is installed, the seats are reinstalled into the car. All the installations for OE leather car seat covers under REM market segment are conducted directly by us. We supply OE leather car seat covers to both Malaysian and overseas markets. 4.5.2.2 Leather Cut Pieces We cut leather according to the templates provided by the clients and perform sub­processes, such as laminating and trimming, if required. Then, we supply leather cut pieces to the clients, who are either the car manufacturers or the Tier 1 car seat manufacturers. 4.5.2.3 Other Products and Services The following products and services provides additional revenue stream for our Group. (a) Door Trim Covers and Other Car Accessory Covers for OEM, POI and REM Market Segments We manufacture car door trim covers and leather upholstery for car accessories, such as steering wheel, gear knob, handbrake lever, operating manual book and console box. 4. INFORMATION ON OUR GROUP (Cont’d) Smart Fit Car Door Trim Cover
Our patented Smart Fit product for PDI market segment is an innovative method for the production and subsequent installation of an interchangeable car interior lining, such as car door trim covers. Conventionally, the installation of car door trim covers requires dismantling of the car door trim from a car. Upon the installation of leather and/or PVC cover onto the car door trim, it can be reconfigured back into the car. This process is time-consuming and requires the employment of highly skilled labour. Our Smart Fit product is an innovative method for car door trim cover installation, which can be closely fitted onto a car interior without dismantling a car door trim from a car or resulting in any alternation to the original fabric installed on it. Our Smart Fit product for car door trim covers allows easy, convenient and time-efficient assembly of it onto a car interior. It is interchangeable and thus allows various designs of car door trims covers to be assembled onto a car interior. The patent for Smart Fit door trim cover has been granted in Malaysia as detailed in Section 4.14.2(a)(i) of this Prospectus. (b) Sewing Services for Fabric Car Seat Covers
We provide sewing services for fabric car seat covers as supportive services for Tier 1 car seat manufacturers. Upon completion, the final product is delivered to the client for installation.
(c) Wrapping and Stitching Services
We provide wrapping services for car door trims and covers for car accessories, such as steering wheel, gearshift knob, handbrake lever and console box as well as stitching services for covers for car accessories, such as steering wheel, gearshift knob and handbrake lever. We provide wrapping and stitching services as supportive services to our clients.
(d) Supply of Raw Material

We supply raw materials for car seat covers and for the production of accessory covers as a supportive service to our clients for the REM export market. 4.5.3 Principal Markets for Products and Services Our products and services are marketed both in the Malaysian and overseas markets. In Malaysia, our products are catered to the OEM, PDI and REM market segments, whereas our export-designated sales are from our products for the PDI and REM segments. The majority of our export sales are denominated in USD, EUR, SGD and AUD. 4. INFORMATION ON OUR GROUP (Cont’d) Our revenue breakdown for Malaysia and overseas markets for the past four (4) FYE 2012 to FYE 2015 and FPE 2015 are as follows:­
Revenue  FYE 2012 FYE 2013 FYE 2014  FYE 2015  FPE 2015  (RM’OOO) % (RM’OOO) % (RM’OOO) %  (RM’OOO) %  (RM’OOO) %  Malaysia  46,835 75.39 53,805 81.40 81,498 81.87  117,024 90.34  49,916 88.71
Overseas -Netherlands -Australia -Singapore -USA  15,292 24.61 12,295 18.60 18,048 18.13 10.29 4,523 6.84 5,146 5.17  12,512 9.66 3.12 3.29 0.74  6,351 11.29 2,177 3.87 3;27 1.90
Total Our principal business activities include the styling, manufacturing, distribution and installation of car seat covers and the supply of leather cut pieces. We are also involved in other business activities related to the automotive upholstery industry. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cant’d) Our revenue breakdowns by business activity for the past four (4) FYE 2012 to FYE 2015 and FPE 2015 are as follows:­Revenue Source Revenue FYE 2012 I FYE 2013 FYE 2014 I FYE 2015 FPE 2015 (RM’OOO) %I(RM’OOO) % (RM’OOO)I %I(RM’OOO) % (RM’OOO) % Principal Business Activities Car seat covers by market segment:­ -OEM (OE Fit)  29,212 47.02  35,919 54.34  53,456 53.70  84,991 65.61  31,095 55.26  -REM (OE Fit)  13,701 22.05  13,274 20.08  18,003 18.09  15,029 11.60  7,879 14.00  -PDI (Smart Fit)  14,735 23.72  8,879 13.43  10,572 10.62  12,230 9.44  8,226 14.62  -REM (Quick Fit)  252 0.41  21 0.03  11 0.01  1 #  — eather supply  cut  pieces  — 1,399 2.12  9,833 9.88  12,735 9.83  6,871 12.21  ~ub-totaJ  57,900 93.20  59,492 90.00  91,875 92.30  124,986 96.48  54,071 96.09  Other Business ActivitiDoor trim covers  es  1,900 3.06  2,486 3.76  1,699 1.70  2,176 1.68  663 1.18  Sewing services for fabric car seat covers (car pieces)  633 1.02  2,002 3.03  1,463 1.47  929 0.72  291 0.52  Manufacturing of leather and PVC car accessories covers and miscellaneous seat covers, the provision of wrapping and stitching services, and supply of raw material  1,694 2.72  2,120 3.21  4,509 4.53  1,445 1.12  1,242 2.21  Sub-total  4,227 6.80  6,608 10.00  7,671 7.70  4,550 3.52  2,196 3.91  Grand Total  62,127 100.00  66,100 100.00  99,546 100.00  129,536 100.00  56,267 100.00
Note:­# Negligible.
4.5.4 Modes of Marketing, Distribution and Sales 4.5.4.1 Marketing Strategies As at the LPD, we have fourteen (14) personnel in our Sales and Marketing Department, who are responsible for serving our existing clients as well as developing new customer base and to expand the export markets. Our Group’s principal marketing strategy is to provide high quality products at competitive prices. Our website, http://www.peccaleather.com. has been set up to promote our Group and our products to the clients to facilitate them to search for the information about our Group and our products. I Company No: 909531-0 4. INFORMATION ON OUR GROUP (Cont’d) Our Group’s marketing and distribution activities for each market segment are as follows:­(a) OEM Market and POI Market Segments We secure projects in OEM and POI market segments through participation in tender bidding processes whereby we will be invited to submit RFQ and RFP for the bidding. Our Sales and Marketing team will work closely with the client to discuss on the client’s requirements and specifications. For the POI segment, our scope of service extends to the installation services at the client’s site. (b) REM Market Segment Our Sales and Marketing team collects information on market requirements, market developments and competitors’ products, and deals directly with the sales representatives to identify the targeted end users’ requirements and expectations. Currently, our Sales and Marketing team promotes our OE leather car seat covers to car showrooms and car sales personnel or dealers. (c) Export Market Apart from targeting local market, our Sales and Marketing team constantly seeks business opportunities overseas by liaising with the potential clients in POI and REM market segments. Our personnel also attend meetings with our overseas clients in order to obtain feedbacks and explore further business opportunities. We also gain business opportunities for export market through a stable of distribution network. Our selection of distribution partners for our overseas market is based on thorough evaluation process in order to establish mutual growth. The evaluation of our distributors is based on their capabilities to expand the distribution channels of our products, establishment of their respective local operations with competent staff to support the installation of our products and their financial capabilities. This is achieved by conducting field visits to understand their business operations where enquiries are made regarding their products for the respective car models and their existing customer base. The supply of car seat covers for REM market segment is undertaken by the distributor through the channel of car showrooms and/or POI centres. Thus, the distributors have to adhere to stringent quality requirements and professional conduct in order to be qualified as a supplier to the POI centres. As at the LPO, we have thirteen (13) distribution partners, out of which eight (8) are in Australia. We also have one (1) distribution partner each in the Netherlands, the UK, USA, New Zealand and Singapore. Our distribution partner in Netherlands is Cooperatie Leder Inbouw Nederland U.A., which we have 5% equity interest as disclosed in note (a)(iii) in Section 7.1.2 of this Prospectus. For the Australian market, we also have an online ordering system, where the customers can place their orders via our website. 4.5.4.2 Distribution Channels Our sales for OEM and POI market segments in Malaysia are generated through our OEM and POI Sales and Marketing team. Within the REM market segment, sales of our OE leather car seat covers can be generated through our REM Sales and Marketing team or through our intermediaries, i.e. car showrooms and car sales personnel or dealers. 4. INFORMATION ON OUR GROUP (Cont’d) Our overseas markets in Thailand and Indonesia which are concentrated in the POI market segment are supported by our sales and marketing team whereas our overseas markets in Australia, Japan, New Zealand, Netherlands, USA, Singapore, UK and Mauritius which are concentrated in the REM market segment are primarily marketed by our distribution partners and agents in the respective countries. PROCESS FLOW Our principal business activities include manufacturing of car seat covers for OEM, POI and REM market segments and the supply of leather cut pieces. The overall process flow of project implementation is depicted in the following diagram:­OEM and POI

 

I Suppliers I 4.6.1 OEM and POI (a) RFQ and RFP RFQ and RFP are the processes, where potential clients in OEM or POI market segment invite us into a bidding process to bid for a project. We will evaluate the parameters and specifications of the project and conduct profitability studies. 4. INFORMATION ON OUR GROUP (Cont’d) (b) Tender Bidding Process Upon obtaining confirmation to participate in a bidding process, we will submit our quotations or business proposals to potential clients based on specifications and requirements of the project. If we are awarded the project, the client will provide a letter of intent or confirmation letter or via email to request for us to proceed with the development of car seat covers. (c) Prototype Development If the project is awarded to us, we will proceed to develop a prototype. Our R&D Department will create samples of car seat covers (prototype) based on clients’ specifications. The prototype will be sent to the client for testing and installation. Upon confirmation of prototype by the client, we will prepare the necessary documentation for the client to sign off. (d) Pre-Production Stage During the pre-production stage, our R&D Department will conduct briefings for our Production and QA/QC Departments. Trial runs and final quality checks will be conducted before mass production. The client will issue a PO or 80 prior to mass production. 4.6.2 REM (a) Client or Market Requirements For OE leather car seat covers, a client in REM market segment usually requests for quotations, when required. We will conduct a profitability study and submit a quotation to the client for confirmation and approval. For Quick Fit car seat covers, we will conduct market surveys and a feasibility study in order to identify market requirements and car models that we can potentially target. (b) Template Development The client will send us the complete set of original fabric stripped from car seats for template development. Our R&D Department will conduct checking and verification of the set of original fabric provided by the client, based on which a first template is created and sent to the client for fitment confirmation. If the fitment is confirmed, the client will sign off the necessary documentation and we will create a pattern code for the model. These pattern codes will be used for any subsequent orders. 4.6.3 Job Order For OEM, mass production is based on one (1) month firm and three (3) months’ production forecasts that are provided by the car manufacturers on a monthly basis. Once we receive PO and/or a production forecast from the client, our Sales and Marketing Department will issue a SO and inform our Planning Department. Our Planning Department will then issue a JO and verify with our Sales and Marketing Department. The approved JO will be sent to our Production Department for commencement of mass production. For OEM customers, on average, we maintain three (3) days buffer stock as the delivery for OEM clients is based on daily orders or JIT approach.
4. INFORMATION ON OUR GROUP (Cont’d) 4.6.4 Production Process Our production process is depicted in the following diagram:­(a) Incoming Raw Materials and Quality Control -I (b) Storage and Material Issuance I Leather PVC, Carpet, Lux Velvet ~ Leather Selection
I II (d) Cutting of Raw Materials I I Sent to QC tor re-inspection It’ I ~ IPQC RejectL I Rework! Replace I Accept I ..I (Ii) Leather Cut (i) Car Seat Covers Pieces Sub-processes:­• Lamination
• Perforation
• Skiving
• Embroidery
• Embossing Punching

• Trimming
• Airbaa Parts

 

Sewing Accept Packing 4. INFORMATION ON OUR GROUP (Cont’d) (a) Incoming Raw Materials and Quality Control We purchase raw materials, such as leather, PVC, plastic parts, foam and carpet from our approved suppliers. ONOC Department will conduct stringent internal laboratory tests for incoming raw materials. Properties of leather hides, such as elongation break strength, flexing endurance, tear and tensile strength, dry and wet abrasion resistance, colour matching and taber abrasion test will be conducted to ensure the leather hides meet the client’s specifications. We perform quality inspection in accordance with AOL 1.5 for all incoming raw materials to ensure the quality of raw materials. Our adoption of AOL 1.5 reflects our quality tolerance of not more than 1.5% defects in a batch of raw materials received. We will reject the whole batch of material received should the sampling result of the defective items is more than 1.5% of the said batch. Raw materials with defects will be returned to the supplier for replacement. (b) Storage and Material Issuance After inspection, raw materials will be delivered to the warehouse and transferred to designated areas according to specified location numbers and colour coding. Based on the JO issued by our Planning Department, the specified quantity of raw materials will be delivered from the warehouse to the production plant. Accessories, such as zippers, hooks or plastic parts, will also be prepared based on the specifications and in accordance to the JO. Full pre-production quality inspection is conducted for leather, before it is sent to the Production Department. (c) Leather Selection After full pre-production quality inspection, leather will be sent for selection, where leather colour and surface appearance are checked and verified against the job pick list. During the defect checking, the parts of leather hides with defects, such as insect bites, line marks and scratches will be identified and marked with stickers. (d) Cutting of Raw Materials During the cutting process, raw materials will be cut according to templates by automated leather cutting machine or roller die cutting machine. The automated leather cutting machine scans the leather hides, identifies defects and automatically adjusts the digitised template in order to avoid the parts of leather hides with defects and at the same time optimising the use of leather. Other raw materials such as PVC, fabrics and carpets which are used in producing our products are also cut using the automated PVC cutting machine which is capable of cutting multi layers of material at once as compared to the leather cutting machine which cut one layer at a time due to the requirement to scan the defect parts. The roller die cutting machine requires manual nesting. A well-trained and skilful operator will be assigned to undertake the manual nesting. (e) IPQC After the cutting process, the raw materials are grouped according to their respective parts of the car seat covers and IPOC is conducted. We carry out quality inspection at various stages of production processes in order to ensure the quality of raw materials as well as the final products. Each stage of our manufacturing process is monitored by personnel from our ONOC Department. If defects are identified, the materials will be reworked, if possible, or replaced with new materials. 4. INFORMATION ON OUR GROUP (Cont’d) (i) Car Seat Covers Depending on the client requirements and specifications, the following sub­process may be performed for the manufacturing of car seat covers:­• Lamination
Lamination is the process of affixing a layer of foam to leather, PVC or lux velvet cut pieces. Foam is selected based on required thickness and cut according to templates. Leather, PVC or lux velvet cut pieces will be trimmed and/or laminated together with foam by lamination machine.
• Perforation
During the perforation process, a series of holes will be produced on the leather, PVC or lux velvet cut pieces by perforation machine, if required.
• Skiving
During the skiving process, the edges of the leather and PVC cut pieces are pared to reduce the thickness, if required.
• Embroidery
Embroidery is the process of decorating materials with needle by embroidery machine. If required, leather or PVC cut pieces can be embroidered with a car logo or other graphic marks based on the client’s requirements.
• Embossing
According to the templates, leather or PVC cut pieces will be embossed by an emboss machine, if required.
• Punching If required, the materials will be sent for punching process.

• Trimming
Leather or PVC cut pieces are sewed and trimmed with foam by trimming machine.
• Airbag Parts Sewing

For car seats equipped with airbag, the relevant cut pieces of the airbag parts are sewed with airbag thread using an airbag sewing machine. Airbag tag logo is produced and attached together with car seat cover for identification purposes. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) • Sewing Prior to every working shift, we will perform one (1) trial manufacturing cycle on the first piece of production to ensure the correctness of machine set-up and product measurement. The first fully complete car seat cover has to be checked and approved by the QAJAC Department before the full scale sewing process is initiated. During the sewing process, the prepared parts of car seat cover are joined together to make a complete car seat cover. Car seat cover designed for a car seat with installed airbag is also sewed with airbag sewing machine. (ii) Leather Cut Pieces Supply Depending on the client requirements and specifications, the following sub­process may be performed for leather cut pieces:­• Lamination
Lamination is the process of affixing a layer of foam to leather, PVC or lux velvet cut pieces. Foam is selected based on required thickness and cut according to templates. Leather, PVC or lux velvet cut pieces will be trimmed and/or laminated together with foam by lamination machine.
• Trimming

Leather or PVC cut pieces are sewed and trimmed with foam by trimming machine. (f) Outgoing Quality Control Our QAJQC Department conducts final inspection on all finished products to ensure that the client’s specifications are met. Finished products that do not meet the client’s specifications will go through the rework process and re-route for repeated final inspection. Finished products that meet specification requirements are sent for packing and then to the warehouse. The products which cannot be reworked will be discarded. 4.6.5 Packing, Storage and Delivery The finished products approved by the QAJQC Department are packed according to the packaging requirements specified by the client and stored in our warehouse before delivery. Our Logistic Department is responsible for timely delivery of our products. We may also provide support on installation of seat covers in accordance with clients’ requirements. 4.6.6 Client Feedback Our quality objective is to achieve the customers’ satisfaction level of at least 80%. Therefore, client’s feedback is always evaluated and incorporated in order to enable us to attain better customer satisfaction. 4. INFORMATION ON OUR GROUP (Cont’d) 4.7 QUALITY ASSURANCE AND CONTROL PROCEDURES Our Group is committed to consistently maintain high quality of our products and services in accordance with our quality policy. Our dedication in ensuring customers’ satisfaction impels us to continually progress and improve. Stringent checks are conducted during all stages of our production process from leather selection to packing and delivery to the client. Our quality control planning encompasses identifying quality requirements, quality procedures and acceptance criteria for our products. 4.7.1 Compliance with International Standards Significant emphasis is placed on adoption of quality standards and controls within our business operations in accordance with international standards in order for us to deliver products according to our clients’ specifications and requirements. We are an ISOITS 16949:2009 certified manufacturer. ISOITS 16949:2009 defined as the OMS requirements for the design, development, production, installation and service of automotive-related products. We implement our quality standards through the provision of high quality products, commitment towards customers’ satisfaction and assurance of continuous improvements. The certifying body, TUV NORD, conducts annual compulsory surveillance audits to ensure that we continuously meet quality standard requirements. Strict quality control ensures that we produce only the best quality products in terms of meeting product specification and good fitment requirement of our clients, as well as minimise the potential warranty claim due to quality issues from the customers. Stringent checks are conducted during all stages of leather selection, production, packing and delivery. We also conduct an annual process audit in accordance with the VDA 6.3 standard to evaluate, analyse and enhance controls in the manufacturing processes. The qualification and compliance to VDA 6.3 standard is a pre-requisite qualifying condition for us to be an approved vendor for the Volkswagen Group. The scope of the process audit covers the entire product life cycle processes in the automotive industry. Presently, we have two (2) certified VDA 6.3 process auditors. We also obtained ISO 14001 :2004 and OHSAS 18001:2007 certifications in 2013. ISO 14001 :2004 requires an organisation to set up an effective environmental management system and to measure and improve its impact on the environment. OHSAS 18001 :2007 requires the organisation to commit to prevent occupational ill health and injury at the work place. The certifying bodies, TUV NORD and Bureau Veritas, conduct compulsory surveillance audits annually to ensure that we continuously meet the quality standards requirements. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) The details of our Group’s certifications are as follows:­Company  Standard  Activity  Issuing Party  Validity period  PLeather  ISOfTS 16949:2009  Manufacturing of leather and synthetic leather seat cover and interior finishing  TUV I\JORD  10.06.2015 to 09.06.2018 20.05.2013 to 19.05.2016 20.05.2013 to 19.05.2016  PLeather  ISO 14001 :2004  Manufacturing of leather and synthetic leather seat cover and interior finishing for automotive industries  Bureau Veritas  PLeather  OHSAS 18001 :2007  Manufacturing of leather and synthetic leather seat cover and interior finishing for automotive industries  Bureau Veritas
4.7.2 Quality of Incoming Raw Materials We purchase raw materials from our approved suppliers, who are subject to constant evaluation. We use only high quality leather mainly from reputable tanneries, which adopt environmentally-friendly tanning methods and conduct stringent quality inspection. Upon the delivery of the materials, our QNQC Department will also conduct internal laboratory test in accordance with AQL 1.5 for incoming raw materials to ensure that only high quality materials are used in production. We have developed test procedures to ensure that the colour, flexing endurance, tensile strengths, colour fastness and abrasion resistance of our leather car seat covers, meet the requirements and specifications of our clients. Raw materials that are accepted by the QNQC Department are marked with green stickers. Raw materials with defects will be marked with red stickers and returned to the supplier for a replacement. 4.7.3 IPQC We perform QNQC procedures at various stages of the production process. Every order is followed up closely from pre-production to post-delivery to achieve zero communication error and product defect. IPQC and monitoring are performed in order to ensure the conformance of materials and parts to the customer’s requirements. We have implemented a SPC method to monitor and control quality during the manufacturing process on a real time basis. As a quality control measure, our clients may also conduct scheduled product and process audits at our manufacturing plant in order to independently verify our strict adherence to the approved manufacturing process and ensure that the quality of materials used conform to the client’s specifications. 4.7.4 Outgoing Quality Control Our QNQC Department conducts final inspection of all finished products to ensure that the client’s specifications are met. The final inspection is performed in order to ensure the quality of finished products prior to delivery to our client. 4. INFORMATION ON OUR GROUP (Cont’d) 4.8 R&D POLICIES We place strong emphasis on R&D activities to ensure quality of our products and continuous product development and enhancement. R&D activities are undertaken under the leadership of Sam Chee Keng, our Executive Director and Liew Yoon Fatt, our Chief Operating Officer. 4.8.1 Prototype Development Our business focuses on leather car seat covers for different clients in the respective market segments. The product specifications are provided to us based on car model and car seat design. Based on the product specifications, our R&D Department develops prototypes prior to commencement of mass production of new car seat cover models in OEM and PDI market segments. R&D on prototype development is essential for the manufacturing of our new product models. Prototypes of new product models are created using hard cardboard. Once the prototype is confirmed, we will create a digitised pattern code for the model. The pattern coded prototypes will be used for the production of any sUbsequent orders. Mass production of a specific product model commences only after receipt of customer confirmation on the final prototype. Our R&D Department also develops templates for car seat covers in REM market segment. The templates are usually based on the original design of the fabric car seat covers. 4.8.2 R&D Expenditure The amount spent on R&D activities as a percentage of revenue for the past four (4) FYE 2012 to FYE 2015 and FPE 2015 is as follows:­
4.9 TECHNOLOGIES We utilise sewing, pressing, embossing and perforation machines as well as fully­automated cutting press for our production. Over the years, we have a selection of equipment consisting of models and brands which are reliable and efficient. A portion of our production machinery utilises CNC technology that enables the computerised programming of machinery settings for varying product models. CNC machines have built-in computers which facilitate precision and accuracy in production, and minimises manual input and the possibility of errors and defects. 4.10 RAW MATERIALS The key raw materials used for manufacturing of our products include leather hides, PVC, plastic parts, foam and carpet. The majority of our imported raw material purchases are denominated in USD. 4. INFORMATION ON OUR GROUP (Cont’d) The key raw materials and the respective sources of supplies for the past four (4) FYE 2012 to FYE 2015 and FPE 2015 are as foliows:­
Note:­# Including leather hides and pre-cut leather pieces.
4. INFORMATION ON OUR GROUP (Cont’d) 4.11 MAJOR SUPPLIERS The major suppliers who individually contributed 10.0% or more to our Group’s total purchases for the past four (4) FYE 2012 to FYE 2015 and FPE 2015 are as follows:­
2 ——–._———–­2 6 9 9 Note:­# Percentage of total purchases of the Group for the respective financial years! period. Toyota Tsusho (Malaysia) Sdn Bhd was our major supplier for the FPE 2015 and accounted for approximately 41.26% of our Group’s total purchases. Toyota Tsusho (Malaysia) Sdn Bhd is a trading company responsible for the purchase of leather for selected models of cars manufactured by Toyota, namely Camry and Hilux from Toyota’s nominated suppliers. Zendaleather SA was our major supplier for the leather hides for the FYE 2015 and FPE 2015 and accounted for approximately 33.04% and 28.73% of our Group’s total purchases respectively replacing Conceria Pasubio Spa who was our major supplier for leather hides, which accounted for approximately 65.07%, 63.66% and 58.59% of our Group’s total purchases for the past three (3) FYE 2012, FYE 2013 and FYE 2014 respectively. Please refer to note (2) in Section 2.7(a) of this Prospectus for further details. Although we are highly dependent on imports of leather and leather hides, we have not encountered any major shortages of supplies. In order to mitigate the reliance on a single supplier, we have established vendor development programmes and a list of our approved suppliers. 4. INFORMATION ON OUR GROUP (Cant’d) The purchases of our major raw materials, such as leather, PVC and plastic parts may differ in accordance with our clients’ requirements and specifications. Hence, we have to develop different specifications with our suppliers for selected contracts. Our Group has established vendor development programmes in order to ensure that our suppliers meet our specifications and standards in supplying the raw materials to our Group. For the main raw material such as leather and PVC, our vendor development programmes involve the joint studies and development of the leather specifications, which meet the requirements of our customers in terms of grain, glossiness and endurance level. All the raw materials developed will need to be lab tested to ensure compliance with the specifications set. In view of the above, we are able to procure the supply of high quality leather hides at reasonable prices from other vendors, if such need arises. Please refer to Section 3.2.5 of this Prospectus addressing the risk associated with our dependency on our suppliers for the supply of the raw materials and components. 4.12 MAJOR CUSTOMERS The major customers who individually contributed 10.0% or more to the revenue of our Group for the past four (4) FYE 2012 to FYE 2015 and FPE 2015 are as follows:­
4. INFORMATION ON OUR GROUP (Cant’d)
# (“!o) 5.52 11.43 21.32 67.30 JRM’OOO) # (%) 7,477 11.31 4,065 6.15 6,513 9.85 44,910 67.94 8,972 191 104,777 6.93 0.15 80.89 1,398 2.48 6 107 0.19 6 43,951 78.11 Over the past 15 years, we have built a strong market presence both locally and overseas. The majority of our revenue was generated from our local customers. None of our customer continuously contributed more than 10.0% to our revenue for the past four (4) FYE 2012 to FYE 2015 and FPE 2015. Our Group has been enjoying cordial relationships with our major customers due to our capabilities to deliver high quality products and services. Therefore, our Group is not overly reliant on any single customer. Please refer to Section 3.1.6 of this Prospectus addressing the risk associated with our dependency on our major customers from the OEM (OE Fit) market segment who are Tier 1 car seat manufacturers in Malaysia. 4.13 SEASONALITY We do not experience any material seasonality or cyclical factors other than the general economic environment as our business operations are mainly project driven. 4.14 BRAND NAMES, TRADEMARKS, PATENTS, LICENCE AGREEMENTS AND OTHER INTELLECTUAL PROPERTY RIGHTS As at the LPD, save for the following trademarks and patents which we are currently using in our day-to-day business, our Group does not presently hold or own any other brand names, trademarks, patents, licence agreements or other intellectual property rights. 4. INFORMATION ON OUR GROUP (Cont’d) 4.14.1 Trademarks Our Group has not registered any trademarks with the Registrar of Trademarks, Intellectual Property Corporation of Malaysia. All the trademarks set forth below are currently registered in the name of either I\/IRZ or Seatcoverpro, the companies in which our Group Managing Director, Datuk Teoh Hwa Cheng and Executive Director, Datin Sam Yin Thing are the Directors and substantial shareholders. On 24 December 2014, MRZ and Seatcoverpro have entered into Deeds of Assignment with PLeather respectively assigning and transferring all rights, titles and interests in respect of all the registered trademarks set forth below to PLeather. Please refer to Section 13.5 (b) and (c) of this Prospectus on the details of the Deeds of Assignment (“Trademarks Deeds of Assignment”). (a) Registered Trademarks of MRZ and Seatcoverpro The following trademarks have been registered by MRZ and Seatcoverpro, and assigned and transferred to PLeather pursuant to the abovementioned Trademarks Deeds of Assignment:­

* 1. MRZ Not applicable c p. 2.  tit l’ /\., ,  MRZ  Not applicable  3.  01!riR  MRZ  OE Fit seat cover  4.  v:GI·tW.Ire .l\1 .0’1.  Seatcoverpro  Quick Fit seat cover
Malaysia  2011014755  Malaysia  2011014756  car  Malaysia  2012000244  car  Malaysia  2011014754
12 (aJ 16.08.2011 16.08.2021 18 (b) 16.08.2011 16.08.2021 12 (aJ 06.01.2012 06.01.2022 12 (aJ 16.08.2011 16.08.2021 5.  CJ..F OUI4kFIt: H,t  Seatcoverpro  Quick Fit car seat cover  Malaysia  2011014757  12 (aJ  16.08.2011  16.08.2021  6.  or­Owlc:l::FIt:: “U}  Seatcoverpro  Quick Fit car seat cover  Malaysia  2011014759  18(b)  16.08.2011  16.08.2021  7.  OF  Seatcoverpro  Quick Fit car seat cover  Singapore  T1114848C  12 (aJ  21.10.2011  21.10.2021
4. INFORMATION ON OUR GROUP (Cont’d)
Registered  ColintrY0f  Re.gi~~~~tipn ….   EffectiVe  Expiry  No.  Trademark  Proprietor  Product  Registration  Number  ClasS  Date  Date  8.  elF  Seatcoverpro  Quick Fit car seat cover  Malaysia  2011018885  12 (a)  25.10.2011  25.10.2021  9.  Seatcoverpro  Quick Fit car  Thailand  848176  12 (a)  28.05.2012  27.05.2022  OF  seat cover  OUIC:kF!t:  10.  elF  Seatcoverpro  Quick Fit car seat cover  Japan  2012-041926 5538569  12 (a)  22.11.2012  22.11.2022  11.  Seatcoverpro  Smart Fit car  Japan  2012-099529  12 (a)  31.05.2013  31.05.2023  seat cover  5586052  t’:itn”~f~T””’;’f’  12.  Seatcoverpro  Quick Fit car  China  10991728  18(Ol  21.09.2013  20.09.2023  OF  seat cover  Owlc:I::F!S
Notes:­(a) Class 12 refers to international trademark classification for vehicles.
(b) Class 18 refers to trademark classification for goods made from leather and imitations of leather such as PVC.

(b) Trademarks of Seatcoverpro Pending Registration Seatcoverpro has submitted the application to register the trademarks as set out below which are still pending as at the LPO. The said trademarks have been assigned and transferred to PLeather pursuant to the abovementioned Trademarks Deeds of Assignment:­

12 (a)Smart Fit Malaysia 2012000245 04.01.2012 Responded to car seat 1. Seatcoverpro opposition against cover filing on 14 ~iTr”·l~~P.'” October 2014 (b) 12 (alSeatcoverpro Quick Fit Indonesia D002012023165 16.052012 Awaiting the car seat IDMOO0441318 issuance of the 2. Q.F cover certificate from the OWIC:kF!!:; trademark office 12 (alSeatcoverpro Smart Fit China 11724325 09.11.2012 Awaiting car seat development on 5t=:· cover notice of 3. Assignment from the trademark office ml-fH”‘~”f””.”t’ 12 (alSeatcoverpro Smart Fit Thailand 922320 25.12.2012 Awaiting car seat development on cover notice of 4. Assignment from the trademark office Itlirnffll\l”l”-””i”!” 4. INFORMATION ON OUR GROUP (Cont’d) No.  Trademark  Regl~tered Proprietor  . Product  Country of Registration  Application Number  Class  Application Date  Status  5.  Seatcoverpro  Smart Fit car seat cover  Indonesia  D002013056598  12 (a)  27.11.2013  Awaiting development on notice of Assignment from the trademark office
Notes:­(a) Class 12 refers to international trademark classification for vehicles.
(b) On 25 January 2013, RamRais & Partners had on behalf of Daimler AG (“Opponent”) filed a notice of opposition with the Registrar of Trade Marks Malaysia against the “SF SmartFit” trademark. In the notice of opposition, the Opponent claimed that the “SF SmartFit” trademark filed by Seatcoverpro is confusingly similar to “Smart” trademark filed! registered by the Opponent in Malaysia under classes 7,9,12,16,36,37,39,41, 42 and 43. Seatcoverpro has on the same day received the said notice.

Seatcoverpro responded to the opposition via a counter-statement on 19 June 2013 followed by a written submission filed with the Registrar of Trade Marks Malaysia on 14 October 2014. Subsequently, Seatcoverpro has sent emails and reminders to the Registrar of Trade Marks Malaysia on 4th June 2015 and 28 February 2016 respectively to follow-up on the matter. As at the LPD, Seatcoverpro is still waiting for a decision from the Registrar of Trade Marks Malaysia. Please refer to Section 3.1.9 of this Prospectus for details of the risks in the event that our registration for the trademarks as tabulated in the abovementioned table are not successful. 4.14.2 Patents (a) Patents of PLeather (i) Registered Patents of PLeather The following patent has been registered by PLeather:­
1.  A  method  for  PLeather  Smart  Fit  Malaysia  PI2011001296  23.03.2011  23.03.2031  First  annuity  fee  of  producing  an  door  trim  RM816.20  due  on  29  interchangeable  cover  November 2016  vehicle interior lining  vehicle seat cover
THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) (ii) Patents of PLeather Pending Registration Our Group has applied for the following patents that are still pending registration as at the LPD. Annuity  Country of  Application  Application  Fee Paid  No.  Patent  Proprietor  Product  Registration  Number  Date  Per Annum  1.  A method for producing an interchangeable vehicle interior lining  PLeather  Smart Fit door trim cover  Taiwan  101110006  22.03.2012  Not applicable (i)  2.  A method for producing an interchangeable vehicle interior lining  PLeather  Smart Fit door trim cover  Indonesia  W00201304353  23.09.2013  Not applicable ti)  3.  A method for producing an interchangeable vehicle interior lining  Pleather  Smart Fit door trim cover  USA  14/006,762  23.09.2013  Not applicable (i)  4.  A method for producing an interchangeable vehicle interior lining  PLeather  Smart Fit door trim cover  Thailand  1301005306  23.09.2013  Not applicable 0)  5.  A method for producing an interchangeable vehicle interior lining  PLeather  Smart Fit door trim cover  Japan  2014-501024  23.09.2013  Not applicable ti)
Status Substantive Examination Request was filed on 13 February 2015. Awaiting response from Taiwan patent office Substantive Examination Request was filed on 15 August 2014. Awaiting response from Indonesia patent office Received Office Actions for the patent application. Responded and filed the Office Actions received accordingly (ii) Unexamined Patent Application pUblished on 12 October 2015. Substantive Examination Request due on 12 October 2020 Filed the Response to Office Action on 29 January 2016. Awaiting response from Japan Patent Office Notes:­(i) Payable upon registration of patent.
(ii) An Office Action is a document written by an examiner in a patent or trademark examination procedure in the USA, where the document is mailed to an applicant for a patent or trademark. On 19 August 2014 (1″\ 13 January 2015 (2nd), 16 April 2015 (3’d) and 5 August 2015 (4th), PLeather received Office Actions filed by the Examiner of the United States Patent and Trademark Office (“USPTO”) raising their objections that PLeather’s invention lacks in novelty and inventiveness by referring to certain previously filed applications. PLeather has responded to the aforementioned Office Actions on 20 November 2014 (1 st), 9 April 2015 (2nd), 24 July 2015 (3’d) and 17 November 2015 (4th) respectively. In addition, Restriction Requirement notice was issued by USPTO on 4 December 2014 in which PLeather has responded to the said Restriction Requirement on 31 December 2014. Subsequently, an Advisory Action was issued by USPTO on 24 November 2015 and in response, PLeather has requested for continued examination on 5 January 2016. A fifth (5th) Office Action was issued on 28 January 2016 in response to PLeather’s arguments to the fourth (4th) Office Action. The deadline to respond to the fifth (5th) Office Action is 28 April 2016 and PLeather is in the midst of preparing its response to the fifth (5th) Office Action.

4. INFORMATION ON OUR GROUP (Cont’d) In the event the registration in respect of the above patent at the USPTO is not successful, the Pecca Group may still manufacture or sell the products which are dependent on the use of such patent, unless there is an identical or similar patent successfully filed by a third party. Please refer to Section 3.1.9 of this Prospectus for details of the risks in the event that our registration for the patents as tabulated in the abovementioned table are not successful. (b) Patents of Seatcoverprol PLeather As set forth below, there are patents which are currently registered in the name of Seatcoverpro, the company in which our Group lVIanaging Director, Datuk Teoh Hwa Cheng and Executive Director, Datin Sam Yin Thing are the Directors and substantial shareholders. On 24 December 2014, Seatcoverpro has entered into a Deed of Assignment with PLeather assigning and transferring all rights, titles and interests in respect of all the patents registered under its name as set forth below to PLeather. Please refer Section 13.5 (d) of this Prospectus on the details of the Deed of Assignment (“Patents Deed of Assignment”). (i) Registered Patents of Seatcoverprol PLeather The following patents have been registered by Seatcoverpro and assigned and transferred to PLeather pursuant to the abovementioned Patents Deed of Assignment:­
1.
2.
3.
4.

Vehicle seat cover Vehicle seat cover Vehicle seat cover A c1ose­fitting vehicle seat cover PLeather # PLeather # PLeather # PLeather # Smart  Fit Malaysia  MY-151916-A  18.03.2009  18.03.2029  Next  annuity  car  seat  fee  of  RM360  cover  due on  30 July  2016  Smart  Fit Australia  2009342413  26.05.2009  26.05.2029  Next  annuity  car  seat  fee of AUD300  cover  due on 26 May  2016  Smart  Fit  Indonesia  IDPOOO036350  26.05.2009  26.05.2029  Next  annuity  car  seat  fee  of  cover  Indonesian  Rupiah  4,000,000  due  on  16  July  2016  Quick  Fit Malaysia  PI2011700167  17.11.2011  16.11.2031  Next  annuity  car  seat  (MY-153485­ fee  of  RM360  cover  A)  due  on  12  February 2017
4. INFORMATION ON OUR GROUP (Cont’d) Certificate of  Annuity Fee  Country of  GranU Patent  Effective  Expiry  Paid Per  No.  Patent  Proprietor  Product  Registration  Number  Date  Date  Annum First annuity fee of Thai Baht 1,500 due on 28 March 2018, i.e. after the expiry of the six (6) years period from the first registration date of patent  5.  Vehicle seat cover  PLeather #  Smart Fit car seat cover  Thailand  8462  29.03.2012  28.03.2018  6.  Vehicle seat cover  PLeather #  Smart Fit car seat cover  Taiwan  M446731  11.02.2013  26.03.2022  Next annuity fee of New Taiwan Dollar 5,000 due on 9 February 2017
Note:­# The patent has been assigned and transferred to PLeather pursuant to the Patents Deed of Assignment. (ii) Patents of Seatcoverprol PLeather Pending Registration Seatcoverpro and PLeather have submitted the application to register the patents as set out below which are still pending as at the LPD:­No. 1.  Vehicle seat cover  ;’. PLeather (.)  ,”” ;fJi, ,,’ i; j.;I;ii§~ ;;;5;.” Smart Fit India car seat cover  0t.if-f,,,  fiff’; j> fa; ‘.;; 68281 DELNPI 2011  “it H~p~re 09.07.2011  Annuity Fee Paid Per Annum Not applicable Oi)  ;;; Hi Status Hi; Substantive Examination Request was filed on 12 March 2013. Awaiting response from Indian patent office  2.  Vehicle seat cover  PLeather (i)  Smart Fit car seat cover  China  200980158097.6  15.09.2011  Not applicable (ii)  Received first and second notices of rejection filed by the Examiner of the State Intellectual Property Office of China (“CSIPO”) on 25 April 2014 and 14 May 2015 respectively raising its objections that the invention lacks in novelty and inventiveness by referring to certain previously filed applications. Appeals and re-examination requests have been filed pursuant to the first and second notices of rejection on 23 June 2014 and 29 August 2015 respectively. The decision by CISPO rejecting the application was upheld on 5 January 2016. PLeather is considering legal proceeding before 5 April 2016 (iii)
4. INFORMATION ON OUR GROUP (Cont’d) No. 3. 4. 5.  Patent Vehicle seat cover Vehicle seat cover Vehicle seat cover  Applicant PLeather (i) PLeather (i) PLeather (i)  Product Smart Fit car seat cover Smart Fit car seat cover Smart Fit car seat cover  Country of Registration USA Philippines Canada  Application Number 13/256/970 1-2011-501859 2756008  Application Date 16.09.2011 16.09.2011 19.09.2011  AnmlifyFee Paid Per Annum Not applicable (ii) Philippines Peso 5,420 Canadian Dollar 240  Status Received a first and second Office Actions for the patent application. Filed for continued examination pursuant to the first and second Office Actions on 16 September 2014 and 13 September 2015 respectively. Received third Office Action on 28 December 2015 and replied on 5 February 2016. Awaiting response from USPTO Next annuity fee of due on 23 September 2016 Filed the Response to Office Action on 13 January 2016. Awaiting response from the Canadian patent office.  Next annuity May 2016  due  on  26  6. 7. 8. 9. 10, 11. 12.  Vehicle seat cover Vehicle seat cover Vehicle seat cover Vehicle seat cover Vehicle seat cover A close-fitting vehicle seat cover A c1ose­fitting vehicle seat cover  PLeather (i) PLeather (i) PLeather (i) PLeather (i) PLeather (i) PLeather (i) PLeather (i)  Smart Fit car seat cover Smart Fit car seat cover Smart Fit car seat cover Smart Fit car seat cover Smart Fit car seat cover Quick Fit car seat cover Quick Fit car seat cover  Brazil Vietnam Europe Japan Korea China Indonesia  PI 0924429-8 1-2011-02509 9841963.3 2012-500732 10-2011-7024488 201280056731.7 P 00201402917  19.09.2011 20.09.2011 20.09.2011 20.09.2011 18.10.2011 19.05.2014 19.05.2014  Brazilian Real 435 Not applicable (ii) EUR1,100 Not applicable (ii) Not applicable (ii) Not applicable (ii) Not applicable (ii)  Next annuity due on 26 August 2016 Responded and filed to the First Office Action dated 27 April 2015 on 27 August 2015. Awaiting response from Vietnam patent office Next annuity fee due on 31 May 2016 Application granted. Awaiting for the issuance of certificate from the Japan patent office Responded and filed to the First Office Action on 16 June 2015. Responded to the Second Office Action on 31 January 2016 Responded and filed the Office Action on 3 December 2015. Awaiting response from CSIPO Substantive Examination Request was filed on 29 October 2015. Awaiting response from Indonesia Patent Office
4. INFORMATION ON OUR GROUP (Cont’d) Annuity Fee  Country of  Application  Applicati0l’l  Paid Per  No.  Patent  Applicant  Product  Registration  Number  Date  Annum  13.  A close-fitting vehicle seat  PLeather (i)  Quick Fit car seat cover  Philippines  1-2014-501120  19.05.2014  Philippine Peso 4,500  cover  14.  A c1ose­fitting vehicle  PLeather (i)  Quick Fit car seat cover  Vietnam  1-2014-01631  19.05.2014  Not applicable (ii)  seat  cover  15.  A close­fitling vehicle  PLeather (i)  Quick Fit car seat cover  Thailand  1401002722  19.05.2014  Not applicable (ii)  seat  cover
Status Substantive Examination Request filed on 5 November 2014. Awaiting response from Philippines patent office. First annuity fee due on 23 May 2017 Substantive Examination Request was filed on 24 February 2015. Awaiting response from Vietnam patent office Application was filed on 19 May 2014. Awaiting the Unexamined Patent Application to be published Notes:­(i) The patent has been assigned and transferred to PLeather pursuant to the Patents Deed of Assignment.
(ii) Payable upon registration of patent.

(iii) In the event the registration in respect of the above patent at the CSIPO is not successful, the Pecca Group may still manufacture or sell the products which are dependent on the use of such patent, unless there is an identical or similar patent successfully filed by a third party. Please refer to Section 3.1.9 of this Prospectus for details of the risks in the event that our registration for the patents as tabulated in the abovementioned table are not successful. 4.14.3 Licence Agreement As at the LPO, our Group has not entered into any licence agreement. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK I Company No: 909531-D I 4. INFORMATION ON OUR GROUP (Cont’d) 4.15  OUR GROUP’S PROPERTY, PLANT AND EQUIPMENT  4.15.1  Property and Plant  (a)  As at the LPD, our Group owns the following land and buildings:­

Market Value/ Date of Audited Revaluation NBV as at Valuation/ Surplus as 30.11.2015 Method of Valuation at 30.06.2014 (RM) (RM)(RM) 13,070,025 Aman 1A building with a 36,000,000/22,929,975121,868,4201. IPLeather No.1, Jalan Perindustrian Desa 1 unit of 4-storey office 14 years/ Charged tOl5 January 2011 United Overseas (for 4-storey office and Industri Desa Aman mezzanine floor
28.08.2014/ Kepong annexed to a 4-storey Leasehold 99 years expiring IBank 4-storey factory)/ on 4 August 2107/ 52200 Kuala Lumpur flatted factory building
Comparison and a 6-storey hostel 21 June 2011 and Cost(for 6-storey hostel) 72,506 Sq Ft (land area)/ Approach 2034, Locality of Desa Aman, guardhouse/ H.S. (M) 24691, Lot PT No. building together with a 21,700 Sq Ft (Built-up area Bandar Sungai Buloh, District of
for 4-storey office building)/ Gombak, State of Selangor Head office and Darul Ehsan production factory of our189,896 Sq Ft (Built-up area
Group for 4-storey factory building)/ 174,885 Block B, Damansara Sutera lapartment! # 320,000/145,115 140,8082. IPLeather 7 years/ B-5-1, 5th Floor 1 unit of 3-bedroom Charged to 113 October 2006 Hong Leong (for the Master Lot No. Apartment
28.08.2014/ Persiaran KIP Utama Staff accommodation Bank Berhad 2854)Freehold/ (formerly known Kipark Damansara
Comparison 52200 Kuala Lumpur as EON BankNot applicable (land area)/ and Income 850 Sq Ft Berhad) Approach Strata Title No. Geran Caveat lodged in 58055/M2/6/178, Parcel No.
(Built-up area) favour of Hong 178, Storey No.6, Building No.
Leong Bank M2, Parent Lot No. 2854, Town
Berhad (formerly of Kepong, District of Gombak,
known as EON State of Selangor Darul Ehsan
Bank Berhad) Sub-Total 36,320,000 I 13,244,91023,075,090122,009,228 36,320,000 I 13,244,91023,075,090122,009,228Total 96 4. INFORMATION ON OUR GROUP (Cont’d) Note:­# Based on the updated valuation conducted on 28 January 2016 on the same method of valuation, the market value of the property was RM350,000. Please refer to Section 12 of this Prospectus for the Valuation Certificates prepared by the Independent Registered Valuers in relation to the valuation of the properties. The revaluation surplus of approximately RM13.24 million as at 30 June 2014 arising from the revaluation of our properties as tabulated in Section 4.15.1 (a) of this Prospectus was not incorporated to the financial statements of PLeather. The revaluation exercise was undertaken pursuant to the Listing and the said revaluation surplus as at 30 June 2014 has been incorporated into the Listing Scheme pursuant to the Acquisition of PLeather as detailed in Section 4.2 (d) (ii) of this Prospectus. As at 30 November 2015, the revaluation surplus arising from the revaluation of our properties as tabulated in Section 4.15.1 (a) of this Prospectus was approximately RM14.31 million. The land and buildings as disclosed in item (1) in Section 4.15.1 (a) of this Prospectus are used for the business operations of our Group. Our principal place of business, production facilities, marketing and distribution as well as hostel building are located at No.1, Jalan Perindustrian Desa Aman 1A, Industri Desa Aman, Kepong, 52200 Kuala Lumpur. The Directors of our Company confirm that the properties as disclosed herein above:­(i) have not breached any of the land use conditions/ permissible land use;
(ii) subject to item (iii) below, comply with relevant statutory requirements, land rules or building regulations; and

(iii) all the buildings for our production and business facilities have been issued with CF. (b) As at the LPD, our Group has also rented the following properties:­
The Directors of our Company confirm that the rented properties as disclosed above are not in breach of any land use conditions and/or are in compliance with relevant statutory requirements, land rules or building regulations. 97 4. INFORMATION ON OUR GROUP (Cont’d) 4.15.2 Material Plant and Equipment As at 30 November 2015, our Group’s material plant and equipment are as follows:­No.  Machinery  Description  No. of Units  Purchase Price (RM)  Audited NBV as at 30.11.2015 (RMl  1. 2. 3.  Cutting machine Airbag sewing machine Logo embroidery machine Total  Leather/ PVC/ Foam cutting Sewing of airbag thread for car seat cover for a car seat with installed airbag For embroidery sewing  9 3 3  7,155,700 680,000 278,000  5,232,086 474,233 173,967  8,113,700  5,880,286
As at 30 November 2015, the total purchase price and NBV of our Group’s material plant and machinery are approximately RM8.11 million and RM5.88 million respectively. Further information on the production facilities of our Group are as set out in item (1) in Section 4.15.1 (a) of this Prospectus. 4.15.3 Production Capacities and Output Our Group’s estimated annual capacity, actual output and utilisation rate for the manufacture of leather car seat covers for the past four (4) FYE 2012 to FYE 2015 and FPE 2015 were as follows:­
FYE 2012  90,000  53,058  58.95%  FYE 2013  90,000  57,713  64.13%  FYE 2014  120,000  80,648  67.21%  FYE 2015  120,000  99,627  83.02%  FPE 2015  50,000  43,643  87.29%
We are currently capable of producing up to 10,000 car seat covers monthly. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) 4.15.4 Material Capital Expenditures and Divestures Save as disclosed below, we did not incur any other material capital expenditure for the past four (4) FYE 2012 to FYE 2015 and FPE 2015 and up to the LPD:­Description  Transaction Vallie (at Cost) (RM’OOO)  FYE 2012  FYE 2013  FYE 2014  FYE 2015  FPE 2015  Up to LPD  Investments Bui/ding & renovation Plant and machineries Divestments Building & renovation Plant and machineries  1,090 2,702 238 – 659 1,746 -200  57 5,138 -602  -2,047 -556  19 210 -5  122 1,174 -5
The capital expenditures listed above were financed through our internally-generated funds and/or bank borrowings. The detailed breakdown of the capital expenditures and divestitures tabulated in the above table for the past four (4) FYE 2012 to FYE 2015 as well as FPE 2015 and up to the LPD are as follows:­(a) FYE 2012 Our capital expenditure for building and renovation for a total of approximately RM1.09 million for the FYE 2012 was mainly for the progress payment and renovation of our factory cum office bUilding at No.1, Jalan Perindustrian Desa Aman 1A, Industri Desa Aman, Kepong, 52200 Kuala Lumpur (“Desa Aman Factory”) of at approximately RMO.17 million and RMO.62 million respectively, and the purchase of residential apartments for a total purchase consideration of approximately RMO.30 million. Our acquisition of plant and machineries for the total costs of approximately RM2.70 million for FYE 2012 comprises the following:­….. ..>~F”,,,,,r ! Various types of sewing machine Enhancement of cutting machines Perforation machine Die-cut machine Various types of machinery and equipment Total Units  RM’OOO  54 2 2 2 – 1,540 378 305 156 323 2,702
Our divestment of building and renovation for the total proceeds of approximately RM0.24 million for the FYE 2012 was for the sale of a residential apartment. 4. INFORMATION ON OUR GROUP (Cont’d) (b) FYE2013 Our capital expenditure for building and renovation for a total of approximately RMO.66 million for the FYE 2013 was mainly for the renovation and installation of fire protection systems for our Oesa Aman Factory. Our acquisition of plant and machineries for the total costs of approximately RM 1.75 million for the FYE 2013 comprises the following:­Description of Plant and Machineries  Units  RM’OOO  Various types of sewing machine Cutting machines Various machinery and equipment  10 2 – 246 1,258 242  Total  1,746
We disposed off two (2) units of cutting machines for the total proceeds of approximately RMO.20 million for the FYE 2013. (c) FYE 2014 Our capital expenditure for building and renovation for a total of approximately RMO.06 million for the FYE 2014 was mainly for the renovation of our Oesa Aman Factory. Our acquisition of plant and machineries for the total costs of approximately RM5.14 million for FYE 2014 comprises the following:­Descriptioh.ofMachineriEls’ .  Units ·J  RM’.O.OO.  Various types of sewing machine Cutting machines Die-cut machine Others  68 2 1  1,771 2,436 675 256  Total  5,138

We disposed off two (2) units of cutting machines and eight (8) units of sewing machines for the total proceeds of approximately RMO.60 million for the FYE 2014. (d) FYE 2015 Our acquisition of plant and machineries for the total costs of approximately RM2.05 million for the FYE 2015 comprises the following:­Description of Machineries  l. nits  I  Various types of sewing machines and related accessories Cutting machine Die-cut machine Various machinery and equipment  9 1 1  303 380 1,174 190  Total  2,047
We disposed off nineteen (19) units of sewing machines and one (1) unit of cutting machine for the total proceeds of approximately RMO.56 million for the FYE 2015. 100 4. INFORMATION ON OUR GROUP (Cont’d) (e) FPE 2015 Our capital expenditure for building and renovation for a total of approximately R1\I10.02 million for the FPE 2015 was mainly for the renovation of our Desa Aman factory. Our acquisition of plant and machineries for the total costs of approximately RMO.21 million for the FPE 2015 comprises the following:­Description of Machineries  Units  RM’OOO  Various types of sewing machines and related accessories Enhancement of cutting machines Various machinery and equipment  8 2 – 88 44 78  Total  210
We disposed off one (1) unit sewing machine for the total proceeds of approximately RMO.01 million for the FPE 2015. (f) As at the LPD Our capital expenditure for building and renovation for a total of approximately RMO.12 million up to the LPD was mainly for the renovation of our Desa Aman factory. Our acquisition of plant and machineries for the total costs of approximately RM 1.17 million up to the LPD comprises the following:­Description of Machineries … nii.,.{n}  ·;Ul1if$)!  RM’OOO  Cutting machine Various types of sewing machines and related accessories Enhancement of cutting machines Various machinery and equipment  1 8 2 – 890 88 44 152  Total  1,174
We disposed off one (1) unit of sewing machine for the total proceeds of approximately RMO.01 million up to the LPD. 4.15.5 Material Plans to Construct, Expand or Improve Facilities As at the LPD, save as disclosed in Sections 2.7 and 4.20 of this Prospectus, we have no immediate plans to construct, expand or improve any of our existing facilities. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cant’d) 4.16 APPROVALS, MAJOR LICENCES AND PERMITS The following are the approvals, major licences and permits issued to companies in our Group in order for us to carry out our operations:­
1.  Manufacturing Licence  MITI  17.02.2011  (a)  MITI shall be informed of the sale of shares in PLeather.  Complied  (b) PLeather shall train Malaysians on technology transfer and expertise to all levels of position.  In compliance  (c)  PLeather shall administer project that was approved subject to the above conditions and in accordance with other laws and regulations in Malaysia.  In compliance
2~–­-saiesYa-x———–­-Roy-cii”rviilays-fan———­OrOr._20ej1″+—–1-None——————————————–­Not applicable Customs Department 3~–­”E3Llslness-ifi,fon:-­-Cocai-CoLlricli-or——-­02″:02-.I6-ii3+-3C””CO’-.0C””C6C-C.2″””‘0-‘1″::””6-I–None——————————————-­Not applicable luminous Selayang Advertising Board Licence ;C-­INa-re-lious-e———­”Locai-coLlriCii-or——-­02″:02-‘_2l)”ii3+-3C””CO’-.0″””‘6C-C.2″””‘0–‘1″::””6-I–None——————————————-­Not applicable storage licence & Selayang Non-luminous Advertising Board Licence 5~–­-Goocfs-and”———­-Roy-cii”Maiciys-ian———­20:08″‘_2014 -ylie–re~jistere(fpers-o-n–s-liaij”notifY Services Tax Customs Department the senior officer of customs on, inter-alia, the following:­(a) change of name; Noted. To be complied when applicable (b) change of director,
In compliance shareholder, key officer, representative or authorised person; or
(c) status of the business.

Noted. To be complied when applicable 6~–­Ce-ri”fflca-te-oy——­-DCA————————–­06~03._201i3 08.03.2017 -fii-e—va-lld”ity—or-Tliis–approvcirTs Noted~—-­Approval conditional upon the holder making payment to the DCA of the relevant To be statutory fee prior to the complied when anniversary date of issue of this applicable approval 4. INFORMATION ON OUR GROUP (Cont’d) 4.17 DEPENDENCY ON TRADEMARKSI CONTRACTSI ARRANGEMENTSI L1CENCESI PATENTS Save for trademarks and patents as disclosed in Section 4.14 of this Prospectus, our Group are not dependent on any other trademarks/ contracts/ arrangements/ licences/ patents. 4.18 INTERRUPTIONS IN BUSINESS OPERATIONS Our Group did not experience any interruption in our Group’s business which had a significant effect on our operations during the past twelve (12) months prior to the date of this Prospectus. 4.19 OUR COMPETITIVE ADVANTAGES AND KEY STRENGTHS Our competitive advantages and key strengths are important in sustaining our business as well as providing us with future business growth. (a) Our Established Track Record and Market Reputation We commenced operations in 2000. Over the years, we have gained a reputation as a reliable manufacturer of quality products and achieved growth in customer base. According to Frost & Sullivan, we are the largest automotive leather upholstery supplier for the OEM and POI passenger vehicle segments in Malaysia in 2015. We command a market share of about 36.3% in 2011, 38.4% in 2012,57.8% in 2013, 65.2% in 2014 and 67.7% in 2015 based on the number of installed-Ieather­upholstery passenger vehicle units for OEM and POI market segments for each respective year, with the exclusion of REM market segment. The quality of our products and our track record enable us to retain our existing clientele as well as continuously expanding our customer base and geographical presence. Currently, we have thirteen (13) authorised distributors for the overseas markets. In addition, “Pecca Leather” is a registered trademark. We actively strive to establish our brand name in the market to be associated with the best leather, vigilant quality control and constant innovation. We registered our brand name for “Pecca Leather” logo in 2005. We have also registered our trademarks for OE Fit products, Smart Fit products and Quick Fit products. The registration of our trademarks enables us to increase our brand presence and recognition as a provider of high quality products. (b) Our Business Operations Adopt High Quality Standards and Controls in the Automotive Industry We adopt high quality standards and controls within our business operations in order to deliver high quality products that fulfil our clients’ requirements. Our QMS is in accordance with ISOITS 16949:2009, ISO 14001 :2004 and OHSAS 18001 :2007 international standard for the automotive industry. The certifications are the standard requirements in the automotive industry and enable us to participate in tenders both locally and overseas. To further enhance the quality standards of our business operations, we have conducted a process audit in accordance with the VOA 6.3 audit standard, which covers auditing procedures for the entire product life cycle process in the automotive industry. Our fulfilment of the VOA 6.3 audit standard enables us to penetrate the European market and become an approved supplier for the Volkswagen Group. 4. INFORMATION ON OUR GROUP (Cont’d) Our management team is committed to stringent quality control in the manufacturing processes and are able to closely monitor and ensure that all operations are carried out in accordance to our Group’s quality control objectives, so as to ensure effective and efficient production thus optimising productivity as well as product quality. (c) Our Smart Fit Product with Ease of Installation for Car Seat Covers and Car Door Trim Covers We believe that one of the critical factors that differentiate us from our competitors is the recognition of our products, which is associated with quality and our Smart Fit product with registered patents in Malaysia, Indonesia, Thailand, Taiwan and Australia. We have commercialised our Smart Fit product which is patented for car seat cover and car door trim cover for the PDI market segment which we could capitalise for the REM market segment. One of the options for PDI centres and/or car distributors to remodel a car or enhance the value proposition in order to increase sales is to substitute original standard fabric of car seats and door trim with leather. The conventional way for car seat cover or door trim replacement requires dismantlement of a car seat or a door and stripping of original fabric before new cover can be installed. However, dismantlement and subsequent reinstallation of a car seat or car door trim may result in invalidation of relevant warranties by a car manufacturer. Our innovative Smart Fit product allows installation of leather car seat cover on the original fabric and does not affect the texture of the original cushion or fabric layer of a car seat. The installation is done inside the car without the necessity to dismantle a car seat. Our Smart Fit product for car door trim covers allows assembly of it onto a car’s interior without destroying the texture and physical properties of the original fabric. Our Smart Fit product also reduces the risk of damaging plastic parts of the car interior during installation of leather car seat covers and car door trim covers. In addition, installation of our Smart Fit product requires less manpower, time and equipment compare with the conventional method of leather car seat cover installation. Hence, this effective method of Smart Fit installation leads to cost savings and consequentially reduces the total cost of leather upholstery for cars. For car seats that are originally equipped with airbags, the Smart Fit cover has been certified to fulfil numerous airbag deployment test carried out by independent testing bodies. Smart Fit car seat cover and door trim cover can be customised with various combinations of materials and styles resulting in vast options available to suit the different tastes and preferences of our customers. Our Smart Fit product offers quality leather upholstery in compliance with OEM quality and safety specifications for our customers in PDI market segment with shorter installation time. Our proprietary Smart Fit product creates potential barrier to entry for our competitors in PDI market segment as the PDI centres of renowned car manufacturers will avoid the appointment of other leather car seat covers manufacturers who might infringe on the patent rights of our Group resulting in the potential disruptions to their supply of leather car seat covers due to the legal proceeding brought against the infringer. 4. INFORMATION ON OUR GROUP (Cont’d) In addition, we have lodged patent registrations in other countries. Although these patents are currently being examined in the respective patent offices and the grant for patent registrations is still in progress, our Smart Fit product is under protection in those countries, as once the patent has gone through the examination process successfully, they will be protected from the priority date which is the first application filing date. As such, an invention will be under protection although the patent is pending registration. Once a patent is being registered, the registration is deemed effective since the filing date. Further, for the registration of our patent in selected countries, our Group is currently paying annuity fees being the maintenance fees from the first anniversary of the filing date as a consideration for the examination process whilst in certain countries like Malaysia, Singapore, USA, China and Japan, annuities are paid after a patent is granted. The details of the annuity fees paid by our Group in the respective countries are as disclosed in Section 4.14.2 of this Prospectus. (d) Our Key Management’s Experience and Expertise in the Leather Industry Our Group is managed by a team of long serving management and key personnel, who are qualified and experience, and headed by our Group Managing Director, Datuk Teoh Hwa Cheng who has more than 25 years of experience in the leather industry. By pervading on Datuk Teoh Hwa Cheng’s knowledge, skill set and methods from the small leather goods industry to the production of our leather car seat covers, he managed to infuse the detailed quality of producing small leather goods into the leather upholstery and car seat covers for the automotive industry. This includes, amongst others, the methods in the selection and checking of incoming materials, as well as the cutting and stitching methods. Leather is a very unique material whereby it is originated from animal raw skin and thus, every hide will have different characteristics in terms of size, defect areas due to insect bites, injuries from fights, existence of humps in certain species of cattle and loose skin due to the age of the cattle. Hence, in our selection process, a leather hide will be categorised into few grades based on the position and defect of the hides which will then be sewed to different parts of the seat covers to ensure an overall good and smooth appearance of the leather car seat covers produced. The selection of material requires extensive technical experience in ensuring acceptable quality standards to the customers and at the same time maximising the cutting yield for cost efficiency. Further, our experience and knowledge in the development of PVC material is critical in order to match the material characteristic with leather to produce semi-leather car seat covers encompassing colour matching, acceptable glossiness and emboss variance. This is critical to ensure all car seat covers produced with the combination of leather and PVC will be visually homogeneous. Our management and key personnel are experienced in prodUcing and supplying leather related products and are personally involved in the manUfacturing and marketing operations of our Group. (e) Our In-house Design and Styling Capabilities The preparation of styling and design proposals for leather car seat covers as well as the whole car interior and exterior to create matching propositions to meet our clients’ requirements is undertaken by our own Stylelab Department. For the car interior design, apart from the design of leather car seat cover, we are also able to propose a packaged styling and design for other items, such as floor mats, steering wheels and gear shift knobs. For car exterior design, we are able to propose styling design for grill, bumper and body kit as well as car body decals to match the car interior design. Our Stylelab comprises a team of experienced designers with extensive exposure in interior styling for the automotive industry. 105 4. INFORMATION ON OUR GROUP (Cont’d) Our Stylelab provides solutions to the clients in line with their styling preferences and targeted market segments. Based on the client’s requirements and specifications, our team will develop several styling design proposals that are attractive, reliable and cost effective. The proposals may include different combination of materials, stitches and logo embroidery. We provide 3-D drawings of the styling designs to the clients for their selection. Accordingly, we are able to deliver a customised and complete styling design services to our clients. 4.20 FUTURE PLANS, STRATEGIES AND PROSPECTS Our future plans are focused in the following key areas:­4.20.1 Operating Capacity Expansion As at the LPO, we are capable of producing 120,000 sets of car seat covers annually as detailed in Section 4.15.3 of this Prospectus. We are planning to purchase new machineries with the Public Issue proceeds as detailed in Section 2.7(c) of this Prospectus to increase our operating capacity by an additional 50,000 sets of car seat covers to 170,000 sets of car seat covers annually to support our business activities and also, to cater for the anticipated increase in our sales volume from new contracts to be secured by our Group. As at the LPO, we have utilised approximately 87% of our production capacity for the production of car seat covers for the existing car models as well as new models such as Perodua Axia, Proton Iriz, Perodua Myvi 0460, Proton Exora MC2 and Toyota Hilux. Our Group practice is to ensure that there is a buffer production capacity of approximately 15% at all times. This is drawn from our years of experience in the industry to ensure that we can cater for any ad-hoc orders from our customers which typically have a short delivery lead times as Tier 1 customers/ manufacturers could not afford any downtime in their production from not being able to obtain the supplies from us. The additional production capacity buffer is also important to ensure that preventive maintenance can be carried out on our production equipment and/or to cater for unscheduled downtime due to the breakdown of equipment. In line with the expansion of our production capacity and purchase of new machineries, we plan to build an additional storey on our existing factory bUilding with the Public Issue proceeds as disclosed in Section 2.7(d) of this Prospectus to increase our production area. The additional storey is expected to complete by the first quarter of 2017 resulting in an increase of our annual production capacity by 50,000 sets of car seat covers when the new machineries are installed. We have obtained the approval of the Municipal Council of Selayang vide its letter dated 14 January 2015 and 16 October 2015 for the revision to the approved layout plan and the approval of building plan respectively for the construction of an additional storey measuring 1,837 square metres or 19,773 Sq Ft, to our existing 4-storey flatted factory building. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) 4.20.2 Opening of Retail Outlets We plan to sell our products directly to end users and penetrating into the REM retail industry by opening fifty (50) retail outlets across Malaysia to focus on selling our Smart Fit and Quick Fit products, and car accessory covers. This will create branding awareness and preserve our patented product as the retail outlets will be able to showcase the various types of designs and provide live and fitness demonstration to our potential customers to showcase the features of the products in order to boost customers’ confidence on our products. Our retail outlets will also supply the OE Fit car seat covers in the event that there is such demand especially for car models that our Smart Fit and Quick Fit car seat covers are not readily available. We plan to carry out our REM retail business under EEmpire as we believe that our Smart Fit and Quick Fit products will be attractive to end users due to its affordability as an option of leather upholstery for cars. In addition, the opening of fifty (50) retail stores across Malaysia will create an additional revenue stream to our Group. Our plan to open and operate fifty (50) retail outlets enables us to serve and cover wide geographical locations focusing on the mass replacement market particularly new and reconditioned car owners. The proposed locations of the retail outlets as set out below are chosen based on their proximity to car showrooms and/or dealerships as the introduction and promotion of optional accessories such as leather car seat covers and tinting film will be done via car showroom sales personnel. This allows the leather car seat covers to be installed prior to the delivery/ handover of new cars. As such, being near to car showrooms and/or dealerships will facilitate the on-site installation of leather car seat covers which minimises travelling distance and the consequential logging of mileage including the risk of accidents or potential damages to the new cars prior to its registration and delivery/ handover to the customers. Our decision to introduce our Smart Fit and Quick Fit products to the REM retail market is based on the feedback from car showroom sales personnel and car dealers that there are demand for easy to install aftermarket leather car seat covers that do not damage the original seats or void manufacturer’s warranties. Currently, only leather car seat covers that require dismantling of existing car seat covers or leather/ PVC car seat covers meant for standard sized car seat that does not provide good fitment are available in the market. Both automotive tinting and car seat covers are car accessories that cater to customers in REM market segment. As such, the principles of operating the retail outlets for the sale of such products are similar as both cater to customers that want to enhance the interior of their cars for aesthetic and/or comfort reasons. Our plan to open and manage the retail stores is drawn from the exposure gained by our Promoters through working together with the management team of Tint Auto (M) Sdn Bhd, KT Universal Venture Sdn Bhd and previously from MRZ Car Seat Sdn Bhd prior to it ceasing its operations on 1 February 2015 which are/ were involved in the automotive aftermarket business segment. Tint Auto (M) Sdn Bhd presently operates a retail outlet for the sales and installation of window tinting film for automotive and architecture applications. KT Universal Venture Sdn Bhd is involved in the appointment of authorised retail outlets for L1umar tinting film and is presently managing a total of 48 L1umar concept stores nationwide whereas MRZ Car Seat Sdn Bhd was previously involved in the sales and installation of leather car seat covers in the REM market segment. 4. INFORMATION ON OUR GROUP (Cont’d) Our Promoter will be able to apply their exposure in operating retail outlets for window tinting film business to car seat covers business primarily in the areas of, amongst others, selection of locations for the retail outlets; formulation of multi-tier product pricing structure to accommodate sales commission for car showroom sales personnel and pricing structure for walk in customer to effectively induce sales; the roll-out of branding, advertisement and promotion strategies; and execution of product panel-ship arrangement by engaging the established business partners of tinting business comprising of car dealers. The Malaysian Automotive Association projected the total industry volume of 650,000 units for passenger and commercial vehicles in 2016. Further, as of 2014 and 2015, Frost & Sullivan estimates that 74.8% and 64.6% respectively of the locally assembled passenger vehicles units are equipped with fabric car seat programme, while only the remaining 25.2% and 35.4% respectively are equipped with leather programme in OEM and PDI market segments. This creates favourable opportunities to offer leather car seat and accessories covers to the customers in after-sales premium car segment, who are seeking to upgrade and enhance the appearance of their car interiors. There are also a significant room for growth in REM mass market, where the premium appearance, durability and yet affordable price of Quick Fit car seat covers is expected to gain traction. In addition, we are planning to work with financial institutions to offer instalment payment schemes to our customers to enable them to purchase our products easily. The opening of the retail outlets will involve the scouting of stores or shop lots available for rent with floor area in the range of 1,000 to 1,500 Sq Ft in the proposed identified geographical locations by property agents, renovation of the stores or shop lots in accordance to the standardised concepts, display of the various car seat covers and to stock up the requisite inventory to meet the anticipated demand and sales of the specific outlets. The renovations of the standardised concepts and layout of the retail outlets will be carried out by the selected identified contractor(s) to ensure uniformity of our retail outlets. As such, we anticipate that we will be able to meet our objective of opening the fifty (50) retail outlets within a period of 24 months from the date of our Listing. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) The proposed geographical location of our fifty (50) retail outlets are as follows:­West Mala sia Central Re ion
Northern Re ion East Mala sia No. Proposed Location No. Pro ·osed LocationNo. Proposed Location Penang sarawak1. Damansara (SS2) 27. Prai 44. Kuching (outlet 1)2. Kota Damansara 45. Kuching (outlet 2)3. Kajang 28. Georgetown
29. Juru

46. Miri4. Glenmarie 30. Bayan Lepas 47. Bintulu5. Old Klang Road
6. Uptown Damansara

sabah7. Bukit Tinggi Klang
Perak 48. Kota Kinabalu (outlet 1)8. Shah Alam 31. Setiawan
32. Ipoh (outlet 1)

49. Kota Kinabalu (outlet 2)9. Seri Kembangan
10. Bangsar

33. Ipoh (outlet 2) 50. Tawaul Sandakan 11. Klang
Kedah12. Sunway
34. Sungai Petani 13. Bukit Jalil
35. Langkawi14. Mahkota Cheras
36. Alar Setar 15. Alam Avenue
16. Setapak
17. Batu Caves
18. Setia Alam

19. Sungai Buloh Johor
20. Rawang 37. Batu Pahat
21. Cheras 38. Johor Bahru (Taman Malek)
22. Pandan Indah 39. Johor Bahru (perling)
23. Puchong 40. Kluang
24. KL City (Jalan Ipoh)
25. KL City (Jalan Imbi) Negeri SembiIan
26. KL City (Jalan Chan Sow Lin) 41. Seremban
Melaka 42. Melaka Town
THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) 4.20.3 Operations of PAviation We are planning to leverage on our technical expertise and understanding of leather upholstery to further expand our business activities. We intend to venture into the aviation leather upholstery and parts refurbishment industry through our subsidiary, PAviation. PAviation’s principal business activities involve the manufacturing, repair, refurbishment, distribution and installation of aircraft leather seat covers and other leather related products, such as side wall panels, ceiling panels and leather trim for commercial aircrafts and private jets. In accordance with the licensing requirements of the DCA and the FAA internationally, PAviation had on 12 March 2015 submitted its Part 145 Repair Station application to the DCA to obtain the DCA’s approval for the Certificate of Airworthiness for its venture into the aviation leather upholstery and parts refurbishment in the aviation industry which encompasses the provision of repair and restoration of non-structural cabin interior parts and materials, and repair and refurbishment of leather and vinyl cabin seat trims, seat covers and carpets. It is a practice in the aviation industry for the refurbishment business to include a wide scope of responsibilities whereby the appointed operator are required to undertake a total refurbishment program for the aircraft which includes upholstery refurbishment and other parts replacement. The approval of the DCA for PAviation’s venture into the parts refurbishment in the aviation industry has been obtained via a certificate of approval dated 9 March 2016 whilst the approval for its venture into the aviation leather upholstery is delayed pending the submission of an internal audit report by PAviation to DCA demonstrating PAviation’s readiness and capability to undertake the leather upholstery business and is expected to be obtained by end of 2016 as detailed in Section 4.1.4(b)(i) of this Prospectus. Thereafter, PAviation shall prepare the relevant documentation to obtain certification and related approvals from the FAA to be recognised as an international player in the industry. PAviation is expected to receive the relevant certification and approval from FAA by 2017. PAviation has commenced business on 23 December 2015 as it has secured an interior refurbishing project from ExecuJet Malaysia Sdn Bhd, a certified and licensed MRO operator, to refurbish the side wall, headliner panels and floor carpet, and toilet seat replacements for a private jet. ExecuJet Malaysia Sdn Bhd was responsible for the certification of the project after completion. PAviation is our 60% owned subsidiary and remaining 40% equity interest is held by Wohlstand. Wohlstand is relying on our Group’s core expertise in the manufacturing of leather car seat covers for automotive industry for the venture into the aviation upholstery industry for the REM market segment. At the same time, our Group are leveraging on the experience, expertise and qualification of the shareholders of Wohlstand in our foray into the manufacturing, repair, refurbishment, distribution and installation of aircraft leather seat covers as we do not have any prior experience in the manufacturing of leather seat covers for the aviation industry. Reliance is placed on the shareholders of Wohlstand to satisfy the requirement of having a qualified certified Engineer in the aviation industry in our applications to obtain the relevant certifications and approvals, and to manage the part refurbishment business in the aviation industry. Further, we intend to leverage on the existing contacts and trained human resources of Wohlstand in the aviation industry to ease our penetration into the aircraft leather seat covers for the aviation industry. In addition to our experience and expertise in the manufacturing of leather car seat covers as mentioned above, Wohlstand is dependent on our Group to provide the funding and operational support to obtain the relevant certification and approvals, and for the commencement and to subsequently manage the manufacturing operations of PAviation. 4. INFORMATION ON OUR GROUP (Cont’d) Wohlstand is presently involved in the provision of cleaning services for the interior of aircrafts in the aviation industry which it secured from the IVIRO operators appointed by the relevant commercial airlines, as well as, private jet liner companies. The shareholders of Wohlstand, namely Ooi Eng Huat and Tsng Fuh Shen have the experience and expertise in the aviation industry. Ooi Eng Huat, presently the Executive Director cum Operation Manager of PAviation, gained the relevant experience in the maintenance of aircraft passenger seats and operation of workshop for provision of aviation related support services during his past employments in the companies involved in the aviation related industry. Tsng Fuh Shen’s experience in aircraft maintenance management, engineering planning and defect control, quality assurance and compliance in the aviation which are applicable for both the MRO and FBO services as well as his experience in hanger operations for FBO services has also equipped him the necessary knowledge and expertise to provide the technical, quality assurance and training services for the setting up of PAviation pursuant to the Contract for Service Agreement as disclosed below. Please refer to Sections 5.4.2(g) and 4.1.4(b)(iv)(cc) of this Prospectus for the profiles of Ooi Eng Huat and Tsng Fuh Shen respectively. Datuk Teoh Hwa Cheng and Datin Sam Yin Thing, the then shareholders of PAviation (i.e. prior to the Acquisition of 60% PAviation and the Vendors of PAviation) and Wohlstand have entered into a Joint Venture Agreement on 23 September 2014 as disclosed in Section 13.5(a) of this Prospectus (uJV Agreement”). The parties to the JV Agreement have agreed that their relationship as shareholders in PAviation shall be governed by the JV Agreement. The JV Agreement sets out the scope and extent of co-operation, obligations and dealings of the parties vis-a-vis each other and the company as well as provisions relating to, inter alia, the objects of the company, roles and responsibilities of the parties, composition of directors and management, and general meeting of shareholders. SUbsequently, in conjunction with the Listing, the Vendors of PAviation and Pecca have entered into a conditional share sale agreement on 24 December 2014 as disclosed in Sections 4.2(d)(iii) and 13.5(g) of this Prospectus (UPAviation SPA”). The completion of the PAviation SPA was conditional upon, inter alia, Pecca executing the Ratification & Accession Agreement as defined and disclosed in Section 13.5(a) of this Prospectus whereby Pecca accepts, agrees and undertakes to be bound by the terms and conditions of the JV Agreement as the Vendors of PAviation would have been bound. Further, pursuant to the abovementioned JV Agreement, Tsng Fuh Shen and PAviation have entered into a Contract for Service Agreement dated 1 October 2014 whereby he is contracted to provide his technical, quality assurance and training services for the setting up of PAviation for a period 24 months from 1 October 2014 to 30 September 2016 for a monthly fixed contractual fee (UContract Service Agreement”). Upon the commencement of PAviation’s operations, he will be responsible for the business development aspects of PAviation. As such, the commitment of Wohlstand and its shareholders in the operations of PAviation is ensured. We intend to utilise RI\II1.0 million from the Public Issue proceeds for the commencement of the PAviation business as set out in Section 2.7(g) of this Prospectus which will be an advance from Pecca to PAviation. The aforementioned RM1.0 million advance to PAviation represents approximately 0.66% of the proforma consolidate NTA of Pecca upon Listing of RM150.66 million (UPAviation’s AdvanceU). The PAviation’s Advance is less than 5% proforma consolidate NTA of Pecca upon Listing. As such, the PAviation’s Advance is not considered as the provision of financial assistance in accordance with the Listing Requirements. Our venture into the aviation leather upholstery industry will create additional revenue stream and facilitate the growth of our Group as a whole. 4. INFORMATION ON OUR GROUP (Cont’d)
4.20.4 Establishment of Market Presence in Thailand Currently, we are serving the PDI market segment in Thailand directly from our Malaysian operations without a local presence in Thailand. Our sales personnel will travel to meet our existing and potential customers in Thailand whereas our products are delivered to our customers via land transportation. We plan to establish our local market presence and expand our customer base in Thailand by incorporating a private limited company in Thailand under the proposed name of Pecca Leather (Thailand) Pte Ltd, where 49% equity will be owned by Pecca, the maximum permissible equity shareholding allowed in accordance with the Regulation of Commercial Registration Department issued by the Director-General of the Department of Business Development of Thailand. However, we will assume the management control of the company based on our proposed equity shareholding via the issuance of the preference shares whereby our preference shares will be entitled to five (5) votes per share as compared to one (1) vote per ordinary share. We are currently in the midst of identifying our 51 % equity shareholder(s) for Pecca Leather (Thailand) Pte Ltd who preferably have the requisite exposure in the supply of automotive accessories in Thailand. We intend to set up our operations in the Muang Samutprakarn district of Bangkok, Thailand with sales, R&D and installation personnel, as well as a customer service centre to provide localised customer support as Thailand is an important hub in the South East Asian automotive market. Muang Samutprakarn has been chosen due to its proximity to the PDI centres for automotive manufacturers. In our pursuit to expand our presence beyond the Malaysian automotive industry and after in-depth consideration of operational and strategic factors inclUding investment requirements, monthly operating expenses and amount of sales required to sustain the operations, availability of human resources, our products competitiveness in the country, as well as the feasibility of operational support from our Malaysia office, Thailand is our nominated preferred regional location. The operations of the automotive upholstery industry require extensive manpower skill set and craftsmanship, which are typically acquired through many years of practical training to ensure optimal quality and good fitment of the assembled leather car seat covers. It is a common practice globally for the automotive assembly industry to adopt the JIT production method. Under such practice, all Tier 1 and Tier 2 suppliers are required to implement effective operating procedures that facilitate timely and efficient supplies, and responses to support the operations of the automotive assemblers. This is also the standard practice adopted in our Malaysian operations, whereby our technical teams are regularly stationed at the Tier 1 car seat manufacturers’ sites to ensure provision of timely and effective operational support, particularly for the installation of leather car seat covers. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) Due to geographical proximity, Thailand is regarded as the most ideal location for our expansion beyond Malaysia as it reduces our operational cost for the transfer of skilled or technical manpower and allow for timely product delivery and operational support. Furthermore, Thailand is ranked the twelfth (1 i h) largest automotive hub globally and the largest automotive producing country in ASEAN with a production of more than 1.92 million units in 2015 according to The International Organization of Motor Vehicle Manufacturers. This is equivalent to approximately three (3) times the scale of Malaysia’s automotive production of 0.61 million units in the same period. Some of our major customers who are foreign car manufacturers such as Mitsubishi, Toyota and Nissan have established regional assembly facilities in Thailand. Strengthening our presence in Thailand will allow us to foster closer business relationships with our customers to enhance and to create new business opportunities. Presently, Mitsubishi and Nissan Thailand are our customers for the supply of Smart Fit car seat covers. Furthermore, under the ASEAN Economic Community initiative, the removal of tariff barriers and harmonisation of technical standards within the participating ASEAN nations have facilitated greater incentives and operational advantages for other ASEAN automotive parts suppliers’ entry into Thailand. The introduction of tax benefits by the Thai Government, namely Value Added Tax waiver, has further encouraged the automotive industry in Thailand to source from Thailand’s local suppliers. In addition, having a presence in the Thai automotive industry will enable us to leverage on the local pool of skilled labour in the industry. Our Group views Thailand as an ideal strategic market for our regional expansion and our expansion to Thailand will be approached in a prudent manner. At the initial stage, our target customers will be the POI centres of the car manufacturers focusing on the marketing and sales of Smart Fit leather car seat covers. We will recruit local sales employees to explore business opportunities with local POI customers, while our Malaysian personnel will provide the necessary training and knowledge transfer to the local technical operations team. We plan to recruit six (6) headcounts to commence our operations in Thailand consisting of one (1) Sales Manager, one (1) Sales Executive, two (2) R&D Executives for templates and patterns making, one (1) Installer and one (1) Quality Assurance personnel. We also plan to install two (2) sewing machines and one (1) perforation machine at the said Thailand sales office cum support centre. Our Smart Fit leather car seat covers will be displayed in our showroom and our R&D team will be responsible to support the development of the patterns and templates upon receipt of orders from customers. We may further explore the feasibility and viability of establishing a local manufacturing plant in Thailand to support the Tier 1 car seat manufacturers in the OEM segment depending on the reception and performance of Thailand entity. We intend to utilise RM1.50 million of the Public Issue proceeds for the expansion of our market presence in Thailand as detailed in Section 2.7(f) of this Prospectus which will be recorded as an advance from Pecca. The aforementioned RM1.50 million advance represents approximately 1.0% of the proforma consolidate NTA of Pecca upon Listing of RM150.66 million which is less than 5% proforma consolidate NTA of Pecca upon Listing to be considered as the provision of financial assistance in accordance with the Listing Requirements. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK

 

Comments are closed