6. BUSINESS OF OUR GROUP 6. BUSINESS OF OUR GROUP 6.1 History of our Group Our Executive Chairman and Group Managing Director, DAKN’s experience in the structural steel erection industry can be traced back to 1982 when he undertook his first project, the Dayabumi building in Kuala Lumpur, Malaysia. In 1983, DAKN worked on the erection of structural steel work for Perusahaan Otomobil Nasional’s car plant in Shah Alam, Malaysia. This was followed by various projects in Malaysia including the fabrication and erection of structural steel work for the Sultan Salahuddin Abdul Aziz Power Station Phase 2 in 1986. In 1988, DAKN ventured into Singapore after securing the contract for the fabrication and erection of structural steel work for the Singapore Indoor Stadium. This was followed by other projects in Singapore such as the Pulau Seraya Power Station Stage 2, the Hitachi Tower, the Caltex Tower and the 66-storey Republic Plaza. SEVM was subsequently incorporated in 1993 to undertake engineering, fabrication design and erection of mechanical and structural work. It was awarded the contract to erect the tower head and spire steel for the Kuala Lumpur Tower which stands at 421 metres. In 1994, our Group was awarded the contract to fabricate and erect the steel structure for Petronas Twin Tower 2, the tallest twin towers in the world. In 1995, we were also awarded the contract to erect the Sky Bridge connecting Petronas Twin Tower 1 and Tower 2. In 1996, our Group entered the Middle East market when EV Dubai was awarded the contract to erect the steel structure for the sail-silhouetted Burj AI Arab Hotel in Dubai, UAE. It was once the world’s tallest hotel at 321 metres. Since then, our Group has undertaken many key landmark projects in the Middle East especially in Dubai and Abu Dhabi in the UAE, Saudi Arabia and Doha in Qatar. In Dubai, EV Dubai was part of the construction team for various iconic buildings such as the Emirates Towers, the Gate Building, the Dragon Mart, Ski Dubai, Rose Rayhaan Rotana Tower, Dubai Mall, Index Tower and Dubai Festival City. Our Group also worked on other key landmark structures in the Middle East such as the Khalifa Stadium and the New Doha International Airport in Qatar, Capital Gate BUilding in Abu Dhabi and Kingdom Center in Riyadh, Saudi Arabia. In 2008, we were involved in the erection of the structural steel work (including the steel spire) for the Burj Khalifa, the world’s tallest building at 828 metres and more than 160 stories high. The total steel used for the construction of the Burj Khalifa was about 8,187MT. In 1997, our Group set-up a full-fledged engineering department to enhance our value proposition to our clients. In the same year, our Group was awarded its first major design and construction project for the Kuala Lumpur Sentral Station in Malaysia. At present, a majority of our designing and draughting services is carried out by EV India, our wholly-owned subsidiary in Chennai, India. We were incorporated in 2003 as Sendang Project Management Sdn Bhd and SUbsequently changed our name to Eversendai-Corporation Sdn Bhd. On 13 April 2010, we were converted into a public limited company and on 10 May 2010, we assumed our current name. In line with our Group’s expansion plan, we acquired our first steel fabrication factory in AI Qusais, Dubai in 2003. In 2004, we commenced the construction of a new fabrication plant at the Hamriyah Free Zone, Sharjah in the UAE followed by another steel fabrication factory at Doha, Qatar in 2006. In 2008, we commenced the construction of our fourth fabrication plant at the Rawang Integrated Industrial Park, Malaysia. As at the LPD, all our fabrication plants are operational with a combined fabrication capacity of about 119,000 MT per annum.
6. BUSINESS OF OUR GROUP (Conf’d) We also expanded our services to include fabrication and power plant installation works. Initially, we started as general contractors for power plants and over time have evolved to become a specialist in the erection of mechanical and structural works for coal-fired power plants. In 2001, our Group was involved in the erection of mechanical and structural steel work for the boiler plant, coal and ash plant, fuel gas desulphurisation plant and the coal stockyard for the 3x700MW Jana Manjung coal-fired power plant in Malaysia. After the success of this project, our Group was awarded the mechanical and structural erection works for the boiler plant for the 3x700MW Tanjung Bin coal-fired power plant, Malaysia in 2004 and 2x700MW Jimah coal-fired power plant, Malaysia in 2006. On 30 May 2010, we acquired a 49% equity interest in EVSC which is involved in civil construction. EVSC undertook its first project for the Emirates Park Towers, Dubai where it was involved in the reinforced concrete structure works. This was followed by Dubai Pearl and Opus Business Bay Project in DUbai, UAE. In 2009, our Group expanded its business operations into India and was involved in the 2x600MW North Chennai power plant project and the Chhatrapati Shivaji International Airport (Phase 1) -South West Pier in Mumbai, India. The contracts were awarded to SEVM and EV India respectively. Over the years, our Group has evolved from a structural steel erection specialist to a leading integrated structural steel turnkey contractor in the Middle East, India and South East Asia with a strong design and engineering division and fabrication facilities in Malaysia, UAE and Qatar. With this, we are able to provide total solutions with added value at every stage of the structural steel process, from design, fabrication through to the erection of steel structure. We have completed many landmark projects in countries such as Malaysia, Thailand, Philippines, Indonesia, Hong Kong, Oman, Saudi Arabia, Bahrain, Qatar and UAE whilst maintaining our high standards of safety, quality, timely completion of projects and total client satisfaction. Some of the key projects completed by our Group are set out in Section 6.2.2 of this Prospectus. As a testament to our Group’s achievements, we have been conferred many awards which include the following: Year awarded Awards Awarded by 2005 Intemational Achievement Award CIDB, Malaysia 2007 Best Steel Model Tekla Structures, Middle East 2008 Safety & Health Excellence Award for Best Occupational Safety and Health Management Malaysian Occupational Safety Health Professionals Association & 2008 Golden Construction Award Trade Leaders’ Club, Madrid, Spain 2008 Best Brand in Structural Steel Specialist Brand Laureate Small Enterprise’s Chapter Malaysia Medium Award, 2008 Gold Steel Award Tekla Structures, Middle East 2009 Occupational Safety and Health Excellence Award 2009 -Steel Erection and Fabrication Sector Malaysian Occupational Safety and Health Professionals Association 2009 Intemational Star for Leadership in Quality Award in the Gold category Business Initiative Directions, Franc e 2010 Export Excellence Award (Services) 2009 MITI, Malaysia 2010 Best Sub-Contractor for Good Housekeeping Sky Oryx Joint Venture, Qatar 2010 Environmental Contractor Sky Oryx Joint Venture, Qatar
6. BUSINESS OF OUR GROUP (Cont’d) 6.2 Business overview 6.2.1 Scope of services Our scope of services includes the following: • Structural steel design, design of connections, detailing, engineering and reengineering for value addition;
• Structural steel supply and fabrication including protective treatment;
• Structural steel erection including metal decking and sheeting;
• Structural steel erection, installation of mechanical equipment, piping, cladding and electrical works for power plants, petrochemical and industrial plants; and
• Civil construction including mechanical, electrical and plumbing services.
We also provide technical services such as the following: (i) Structural steel design, design of connections, detailing, engineering and re-engineering for value addition Technical service Description Structural design We provide complete design services ranging from conceptual stage design to connection design for various structures using appropriate software. We provide design services for complex profile structures and geometrical shapes using various types of sections such as circular hollow sections and open sections. Examples of circular hollow sections are pipes or tubes while open sections are I-beams, angles and channels. Detailing works We provide structural detailing works services which include preparation of detailed fabrication drawings using 3-D modelling software for all types of structures. These structures include complex geometrical shaped structures consisting of various rolled sections and plates. In addition, we carry out reinforcing bar detailing works. Unfolding drawings We provide services in unfolding drawings with 3-D curvatures for complex structures. Value engineering We optimise the designed structures received from our services clients or through the structural engineering consultants to provide value added engineering services, simplify construction methodology, reduce the tonnage (steel quantity) and overall project costs for our clients. Our Group is equipped with structural design and detailing software, with 3-D modelling capabilities for structural design, connection design, temporary erection engineering for high-rise buildings, industrial structures, stadiums, bridges, airports, shopping malls and infrastructure projects. The 3-D modelling of structures and connections are synchronised with our CNC machines located in our fabrication plants. 6. BUSINESS OF OUR GROUP (Cont’d) We are equipped with software such as Staadpro, Etabs, and Fastrak for structural design and custom made spread sheets for connections. We also use software such as X Steel Tekla Structures, Bocad, CADS RC and AutoCAD for structural steel and reinforcing bar detailing. We have engineers with experience in analysing the intricacies associated with complex requirements and providing safe and economic solutions to our clients. Our design team consists of about 50 experienced design engineers and 150 detailing personnel including experienced 3-D structural model creators and checkers with production capacity of 5,000MT of shop drawings per month. Our Group is experienced in providing structural design and detailing services to our clients which conforms to British, American. Canadian, Australian, European and Indian Standards, Universal Building Code, International Building Code and Japanese Industrial Standards. (ii) Structural steel supply and fabrication, including protective treatment We source our raw steel material directly from reputable international steel mills and at times we procure from local and overseas stockists. Our fabrication plants are strategically located and have a combined steel fabrication capacity of about 119,000MT per annum. For the FYE 2010. our fabrication plants and their respective capacities are as follows: Fabrication Plants Annual Fabrication Capacity (MT) Rawang. Malaysia (1) 24,000 AI Qusais Industrial, Dubai. UAE 18,000 Hamriyah Free Zone, Sharjah, UAE 53,000 Industrial Area, Doha, Qatar 24,000 Total (2) 119,000 Notes: (1) Rawang plant was completed in November 2009 and fabrication activities have commenced in May 2010.
(2) The annual fabrication capacity of our combined fabrication facilities is measured in MT based on the production floor area, number of machines, production workers and the number of production operators manning the machines as at the end of the financial year 31 December 2010 being operational for a single shift plus overtime per day.
The automated CNC manufacturing equipment such as the CNC band saw, CNC plasma and oxy/acetylene cutting machine in our fabrication plants are directly integrated and synchronised with our advanced 3-D modeling software in our design and detailing department. Data produced herein are downloaded to the CNC manufacturing machines, comprising of oxy-fuel and plasma plate cutters. plate drillers and pipe profile cutters which can automatically cut the steel plates according to the design/specifications from our 3-D modeling software. We have an automated production line for section cutting, drilling, punching and marking with multi-drill heads, ensuring that all components are fabricated accurately and are easily identifiable throughout the fabrication process. Fabrication works which are carried out by our Group, are in accordance with the internationally recognised ISO 9001 Quality Standards and follow the standards of quality, health, safety and environmental requirements. 51 6. BUSINESS OF OUR GROUP (Cont’d) Our Group produces high quality fabricated structural steel and has the accreditation and certification from ASME and the National Board of Boilers and Pressure Vessels Inspectors, USA. We have been certified with the following pressure code stamps: Pressure code Scope U Stamp and U2 Authorisation by ASME for the manufacture of Pressure Stamp Vessels under the ASME Code S Stamp Authorisation by ASME for the manufacture of Pressure Boilers R Stamp Authorisation by National Board of Boilers and Pressure Vessel Inspectors for metallic repairs and/or alterations and extended for field repairs and/or alterations NB Stamp Authorisation by The National Board of Boilers and Pressure Vessel Inspectors to apply the NB mark and register boilers, pressure vessels, or other pressure retaining items Our Group has in-house capabilities and facilities to carry out protective treatment for steel work as required by the contract specifications. (iii) Structural steel erection Our Group has a diverse range of structural steel erection capabilities which includes but is not limited to the following structures: •
Multi-storied buildings • Mall structures Stadiums Industrial structures Airport structures Power and petrochemical plants Bridges • Roof structures such as large span convention centres and exhibition centres Steel structures erection involves the following procedures: (a) Survey Pre-erection and post-erection surveys are carried out by our survey engineers with surveying equipments such as total stations and instruments. Periodical monitoring is carried out and any differential settlements and creeps are rectified from time to time. For heavy lifts erection, surveys are taken before and after de-props/slides. (b) Alignment, bolting and welding The structures are aligned as per the post-erection survey reports. The bolting works are carried out in accordance with applicable standards as per the project requirements. The site welding works are carried out by our qualified and certified welders. (c) Handing over After completion of the entire erection, welding and QA/QC activities, the structures are offered for inspection to client and consultants. Upon inspection, the structures are handed over to enable other parties to proceed with their works. 52 6. BUSINESS OF OUR GROUP (Cont’d) Our Group follows various steel erection methodologies as per site requirements and site constraints. Our engineering team studies the requirement and prepares the best suited methodology, which is effectively executed by our erection team. These various erection methodologies available are selected based on the availability of access, storage area, crane capacities, structure suitability, time and cost factors, road access permissions and transportation arrangements in accordance with the relevant laws. Erection methodologies can generally be grouped as direct conventional or innovative. Further details of the erection methodologies are as follows: (a) Direct conventional methods For direct conventional methods, the steel members are lifted and placed in its final position either manually or by using a crane. The members are then aligned and bolted/welded to adjacent members. For long structures, it will be broken into segments for erection. The segments are lifted into position and supported by temporary towers. These segments are then aligned and bolted/welded. After completion of the erection, the temporary towers will then be removed. (b) Innovative erection methods These erection methods use the Strand-Jacking System and Launching methods, examples of which are as follows: Innovative erection methods Description Used in projects Strand A heavy-lift method used in Sky Bridge at Jacking areas where use of a crane is Petronas Tower System not possible or where the (Malaysia) permanent structure has excessive length or weight Bu~ AI Emirates Arab, A construction process Towers, Ski whereby large steel members Dubai, Bu~ are lifted into position with Khalifa, transfer computer-controlled trusses at the synchronised hydraulic jacks Index Building, Since multiple hydraulic jacks can be moved in unison and with great precision, heavy structures can be assembled International Financial Centre Gate Building (Dubai) at ground level and then lifted Kingdom into position by incremental Center (Saudi sliding/lifting method Arabia) Launching Mainly used for erection of • Dubai Mall roof method bridges by incremental structures in the launching until the final Entertainment position is achieved Roof, Ice Rink, • Used in structures with extraordinary sizes where use of a crane is not possible ego mall roofs Galleria Aquarium Buildings (Dubai) and
6. BUSINESS OF OUR GROUP (Cont’d) (iv) Structural steel erection, installation of mechanical equipment, piping, cladding and electrical works for power plants, petrochemical and industrial plants (a) Power plants Our Group has the expertise in all areas of power plant construction works for coal-fired power plants. We have maintained our focus on coal-fired power plants as these plants are typically more complex and require higher expertise and substantial quantities of steelwork compared to gas-fired power plants. The engineering skills required for the design of temporary structures for such power plants are typically complex which we carry out in-house. Our Group’s scope of work for power plants includes, among others, the installation of equipment, erection of steel structures, painting, piping, electrical and cladding works. Some of the power plant projects completed by our Group are as follows: Year of execution Project Location Scope of work 2001 3x700MW Jana Perak, Structural steel erection, Manjung coal Malaysia installation of mechanical fired power equipment and piping plant works for boiler plant, fuel gas desulphurisation plant, coal and ash handling system and coal stockyard 2002 Tunku Jaafar Negeri Erection of structural steel Power Plant Sembilan, work Rehabilitation Malaysia Project 2004 3x700MW Johor, Structural steel erection, Tanjung Bin Malaysia installation of mechanical coal fired equipment and piping power plant works for boiler plant, pre-assembly and erection of coal bunkers 2006 2x700MW Negeri Structural steel erection, Jimah coal Sembilan, installation of mechanical fired power Malaysia equipment and piping plant works for boiler plant, electrostatic precipitator and fuel gas desulphurisation plant, pre-assembly and erection of coal bunkers We are currently undertaking the 2x600MW North Chennai power station project in India. Our scope of work includes engineering, fabrication and erection of structural steel work for the turbine building, coal bunker, mill bay structure, pipe rack and auxiliary buildings. 6. BUSINESS OF OUR GROUP (Cont’d) (b) Chemical plants Some of the chemical plant projects completed by our Group are as follows: Year of execution Project Location Scope of work 1998 Petronas Gurun, Erection of structural steel, Fertiliser Malaysia alignment and bolting works Complex 1998 Kertih Kertih, Erection of structural steel, Aromatics Malaysia equipment, tank and piping Project works (c) Industrial plants Year of execution Project Location Scope of work 1999 Silicon Wafer Kulim, Site-assembly, strand-jacking Fabrication Malaysia and erection of structural Facilities steel, alignment and bolting works 2000 Thermal Energy Saudi Engineering, supply material, Storage Tank, Arabia fabrication and erection of Kingdom storage tank Centre 2001 MNLG Tiga Bintulu, Erection of Structural Steel Malaysia for Pipe Racks, Platforms and Access Ways We are currently undertaking the Nakilat Ship Construction Facilities Phase 4 in Ras Laffan, Qatar which is designed to accommodate an electric overhead travelling crane with a capacity of 120MT which will be used to assemble ships inside the building. Our scope of work includes design, engineering, supply of material, fabrication, painting and erection of structural steel, roof, wall cladding works and installation of steel doors. (v) Civil construction including mechanical and electrical services EVSC and SEVM have previously undertaken and/or are currently undertaking the projects as follows: Year of execution Project Location Scope of work 2007 Emirates Park Tower Dubai, UAE Reinforced concrete (Package A and Package B} structural works 2009 Dubai Pearl Dubai, UAE Reinforced concrete structural works 2010 Opus Business Bay Project Dubai, UAE Reinforced concrete structural works 2010 PKT Logistics Warehouse Shah Alam, Piling, reinforced Malaysia concrete, structural steel, mechanical and electrical works 2010 Trump Tower Mumbai, Civil works, design, India fabrication and erection of structural steel
6. BUSINESS OF OUR GROUP (Cont’d) Year of execution Project Location Scope of work 2010 Convention Center Extension Doha, Qatar Civil works and Link Bridge to Qatar foundation works, Science and Technology connection design, Park -Education City and supply of material. Engineering, fabrication, site assembly and erection of structural steel work 6.2.2 Competitive strengths We have established ourselves as one of the leading integrated structural steel turnkey contractors in UAE and Qatar and a power plant installation contractor. We have the following competitive strengths: (i) Experienced senior management team Our Group is led by our Executive Chairman and Group Managing Director, DAKN who has 29 years of experience in the structural steelwork industry and power plant construction. Our executive directors and key management team have an average of 20 years experience in the structural steel design, fabrication and erection as well as construction works for power plants. Our key executive directors and senior management team are supported by a strong operational team that is able to consistently deliver projects on time with quality and safety to ensure total client satisfaction. Our management team’s expertise, commitment and up-to-date knowledge of the business have contributed to our steady growth over the years. (ii) Proven performance and track record We have established ourselves as one of the leading integrated structural steel turnkey contractor in the UAE and Qatar. In the UAE and Qatar, Frost & Sullivan has estimated that we have the largest market share of 26.5% based on annual fabrication capacity of structural steel in 2010. Over the last 3 financial years, we were involved in major projects in the UAE, Qatar, India and Malaysia which generated total revenues of about RM2.35 billion. We have worked on iconic structures such as the Petronas Twin Tower 2 and Kuala Lumpur International Airport in Malaysia, Burj AI Arab and Burj Khalifa in Dubai (UAE) and Capital Gate Building, Abu Dhabi (UAE), New Doha International Airport, Qatar and Kingdom Centre, Saudi Arabia. Please refer to the table below on the list of key projects completed by our Group. We have built a track record as an established power plant installation contractor with projects such as the Jana Manjung, Tanjung Bin and Jimah power plants in Malaysia and the ongoing North Chennai power station in India. We have proven capabilities in structural design, engineering, fabrication and erection which are recognised and valued by our clients, consultants and industry players. The award of the Capital Market Authority Tower contract in Saudi Arabia in 2010 (which is expected to be the tallest bUilding in Saudi Arabia upon completion), is testament to our proven performance and track record.
6. BUSINESS OF OUR GROUP (Conf’dj Some of the key projects completed by our Group are as follows: Year Executed Project Location Scope of work Malaysia 1994 1994 1995 1995 UAE 1996 1998 2003 2003 2003 2004 Kuala Lumpur Tower Kuala Lumpur Petronas Twin Tower 2 Kuala Lumpur Petronas Twin Tower 2 Kuala Sky Bridge Lumpur Kuala Lumpur Kuala Intemational Airport, Lumpur Main Terminal Building and Contact Pier Bu~ AI Arab Dubai Emirates Towers Dubai Marina Crown Dubai Dragon Mart Dubai Ski Dubai Dubai DIFC Gate Building Dubai
Erection of structural steel, alignment, bolting and installation of secondary steel Fabrication and erection of structural steel, inclusive of embedded plates Site assembly and erection, alignment and bolting of the bridge connection Tower 1 and Tower 2 Erection of structural steel, alignment, bolting and welding works Erection methodology, site assembly, erection of structural steel, alignment, bolting and welding works Site assembly, erection of structural steel, alignment, bolting and site welding works Structural design, supply material, fabrication and erection of structural steel including concrete core wall design and construction Connection design, engineering, supply material, fabrication and erection of structural steel works Erection of Ski Dome structure, structural design, supply material, fabrication and erection of temporary structural steel works Connection design, engineering, supply material, fabrication, erection of structural steel works
6. BUSINESS OF OUR GROUP (Cant’d) Year Executed Project Location Scope of work 2005
2006 2007 2007 2008
Qatar 2005 2006 2006 2009 Dubai Mall Index Building Bu~ Khalifa (Spire) Capital Gate Building Bu~ Khalifa (Annexe Building) Qatar Science and Technology Park Tornado Tower New Doha International Airport (Phase 1) -Main Terminal Building New Doha International Airport -AGL Substation Steel Roofs Dubai Dubai Dubai
Abu Dhabi Dubai Doha Doha Doha Doha Connection design, engineering and detailing, supply of material, fabrication and erection of structural steel works
Connection design, engineering, supply material, fabrication, site assembly and erection of structural steel works Connection design, engineering, supply material, fabrication, site assembly and erection of structural steel work CCinnection design, engineering, supply material, fabrication, site assembly and erection of structural steel work Connection design, engineering, supply material, fabrication, site assembly, erection of structural steel work and metal decking Connection design, engineering, supply material, fabrication, site assembly and erection of structural steel work Connection design, supply material, engineering, fabrication, site assembly and erection of structural steel work Connection design, engineering, supply material, fabrication, site assembly and erection of structural steel work Connection design, engineering and detailing, supply of material, fabrication and erection of structural steel works
6. BUSINESS OF OUR GROUP (Cont’d) Year Executed Project Location Scope of work 2010 Convention Center Doha Civil works Extension and Link foundation works, Bridge to Qatar Science connection design, and Technology Park and supply of Education City material. Engineering, fabrication, site assembly and erection of structural steel work Other Middle East countries 2000 Kingdom Centre Saudi Arabia Structural redesign, engineering, supply material, fabrication, erection of structural steel, metal decking and fire proofing works 2002 AI Moayyed Tower Bahrain Erection of structural steel work 2005 Salalah Amphitheatre Oman Site assembly and erection of cantilever stadium roof structure Others 1993 Chartered Square Thailand Civil work Formwork and concreting of core wall, erection of structural steel, alignment, bolting, deck installation and stud bolt welding 1994 Empire Tower Indonesia Erection of structural steel, alignment, bolting, welding, deck installation and stud bolt welding 1998 Hong Kong Airport – Hong Kong Site assembly, Extension C304 Project erection of structural steel, alignment and bolting works 1998 Mabalacat & Bambam Philippines Erection of steel arch bridges bridge for Bambam and plate girder for Mabalacat bridge
Some of the on-going key projects undertaken by our Group are as follows: Year awarded Project Location Scope of work 2006-New Doha International Doha, Qatar Connection design, Airport (Phase 1) -engineering and Passenger Terminal detailing, supply of Complex -Contract material, fabrication, CP18 site assembly and erection of structural steel works
6. BUSINESS OF OUR GROUP (Cont’d) Year awarded Project Location Scope of work 2008 2008 2008 2008 2008 2009 2009 2010 Dubai Tower Doha, Qatar New Doha International Airport (Phase 2) -Erection of Structural Steel work for Concourse C Doha, Qatar Nakilat Ship Construction Facility -Port of Ras Laffan, Qatar Doha, Qatar Central Market Redevelopment Abu Dhabi, UAE The Gate Towers District Abu Dhabi, UAE South West Pier of Chhatrapati Shivaji International Airport Mumbai, India 2×600 MW North Chennai power station Chennai, India Cleveland Clinic Abu Dhabi, UAE
Connection design, engineering and detailing, supply of material, fabrication, site assembly and erection of structural steel works Site assembly and erection of structural steel work for Concourse C including temporary engineering works Complete design and engineering including detailing, supply of material, fabrication, site assembly and erection of structural steel, roof and wall claddling works design and built job Connection design, engineering and detailing, supply of material, fabrication, site assembly and erection of structural steel works Connection design, engineering and detailing, supply of material, fabrication, site assembly and erection of structural steel works for roof hat connecting Tower 3, 5 and 5, and Link Bridge 1 Connection design, engineering, material supply, fabrication,
erection and fire proofing works Engineering, fabrication and
erection of structural steel work for turbine building, coal bunker, mill bay structure, pipe rack and auxiliary buildings Connection design, engineering and detailing, supply of material, fabrication, site assembly, erection of structural steel works and fire proofing works
6. BUSINESS OF OUR GROUP (Cont’dj Year awarded Project Location Scope of work 2010 2010 2010 2010 2010 2010 2010 2010 Vas Island Development, Phase 1 Algeria Oman Fertilizer Project Capital Market Authority Tower New Doha International Airport (Phase 3) CP51 Doha Convention Center and Tower King Abdullah Petroleum Studies & Research Centre Trump Tower Marathon Futurex
Abu Dhabi, UAE Algeria Saudi Arabia Doha, Qatar Doha, Qatar Saudi Arabia Mumbai, India Mumbai, India Design, supply, delivery, installation of 17 structural steel canopy structures inclusive of steel subframe roof of circular hollow section Procurement, fabrication and supply of fabricated structural steel Connection design, engineering and detailing, supply of material, fabrication, site assembly and erection of structural steel works Structural steelwork inclUding engineering (Connection design and detailing), procurement, fabrication, supply, primer painting, delivery to site and installation and metal decking Structural steelwork including engineering (Connection design and detailing with temporary engineering), procurement, fabrication, supply, painting, galvanization, delivery to site and installation, intumescent fire proofing and metal decking Structural steelwork including engineering (Connection design and detailing), procurement, fabrication, supply, primer painting, delivery to site and installation, intumescent fire proofing and metal decking Civil works, design, fabrication and erection of structural steel Fabrication, supply and erection of structural steel
6. BUSINESS OF OUR GROUP (Cont’d) Year awarded Project Location Scope of work 2010 BWE Energy India Gujarat, Engineering and India detailing, supply of material, fabrication, painting and loading of boiler steel structures and accessories 2010 BTG Erection Package Maharashtra, Complete erection for 2X300MW EMCO India including assistance in Thermal Power testing and commissioning of boiler, turbine, generator works (Mechanical electrical and, control and instrumentation works) 2010 2x660MW Coal Fired Andhra Complete erection Thermal Power Plant Pradesh, including assistance in India testing and commissioning of boiler, turbine, generator works (Mechanical electrical and, control and instrumentation works) 2010 Bank Ke~asama Rakyat Kuala Supply, detailing, Malaysia Office Tower Lumpur, fabrication, painting Malaysia and erection of structural steel
2011 Development of new Sepang, Design, supply and Kuala Lumpur Malaysia installation of International Airport 2 structural steel works 2011 Sabah Oil & Gas Sabah, Supply, fabrication and Terminal Malaysia painting of structural steel works Given our proven track record for a period of nearly 2 decades, we are firmly positioned as one of the leaders in the integrated structural steel turnkey industry in the UAE and Qatar. The various recognitions, awards and accolades received by our Group and our participation in various landmark projects, bears testimony to our performance and track record.
(iii) Commendable safety track record Our Group adheres strictly to safety requirements and over the years, we have developed a commendable safety track record as shown below: Year Safety recognition Project Clients 1998 Certificate of Safety Telekom Tower, Daewoo Corporation and Health Malaysia Peremba Construction Sdn Bhd Joint Venture 1999 6,000,000 man-Petronas Fertilizer Project Management hours of work Kedah Project, Consultants Consortium without lost time Malaysia of OGP Technical injury Services and ElL Asia Pacific Sdn Bhd 62
6. BUSINESS OF OUR GROUP (Cont’d) Year Safety recognition Project Clients 2006 5,000,000 man-3x700MW Tanjung Sumitomo Corporation. hours without lost Bin coal fired Zelan Berhad, Sumitime injury power plant, Power Malaysia Sdn Malaysia Bhd, Tos Energy Malaysia Sdn Bhd, Ishi Power Sdn Bhd 2008 12,000,000 man-2x700MW Jimah Department of hours without lost coal fired power Occupational Health time injury plant, Malaysia and Safety 2009 4,000,000 man-New Doha Sky Oryx Joint Venture hours without lost International formed by Taisei time injury Airport, Qatar Corporation & Tepe Akfen Vie Investment Construction and Operation Co. 2010 1,000,000 man-National Convention Qatar Petroleum and hours without lost Centre -Extension Qatar Foundation time injury project, Qatar 2010 Certificate of Bu~ Khalifa project, Bureau Veritas, Appreciation for the UAE Samsung-Besix-Arabtec Safety JV and Hyder Management Consulting System and achieving 30 Million man-hours without lost time accident 2010 5,300,000 man-Emirates Park Brookfield Multiplex LLC hours without any Towers Hotel major incidents project, UAE 2010 5,000,000 man-Cleveland Clinic, SixCo-Samsung JV hours without any UAE lost time injury 2010 20,000,000 safe Nakilat Ship Repair Qatar Gas Transport man-hours Yard, Qatar Company Ltd and Qatar Petroleum 2011 6,000,000 manNew Doha Sky Oryx Joint Venture hours worked International formed by Taisei without a lost time Airport, Qatar Corporation & Tepe accident Akfen Vie Investment Construction and Operation Co. In addition, our Group has been conferred awards in recognition of our safety track record by the Malaysian Occupational Safety and Health Professionals Association. Further details of such awards are set out in Section 6.1 of this Prospectus. (iv) Integrated business model Our business model is integrated from the structural design, engineering, fabrication to erection which are all performed in-house as a total solutions provider. Therefore, reliance on out-sourcing or sub-contracting works is minimal. We have design teams based in India, Dubai and Sharjah, UAE and Qatar and our fabrication facilities have a combined fabrication capacity of about 119,OOOMT per year. Having such integrated capabilities allows us to control the quality and schedule from the structural design to construction.
6. BUSINESS OF OUR GROUP (Cont’d) Our expertise in value engineering has enabled us to generate savings in raw material usage, time and ensuring constructability of complex landmark structures. Our fabrication process uses software which is synchronised with our CNC plant and equipment. The precision of the fabrication process allows us to reduce wastage and ensure quality products are fabricated according to design specifications. Our planning process utilises software which ensures that our products are fabricated and delivered according to schedule. With our substantial experience as a structural steel specialist and a power plant installation contractor, we are able to identify issues at the outset in relation to installation/erection methodology. As such, we are able to provide solutions to our client and consultant during the conceptual design stage. These factors are crucial to ensure the success of the project by avoiding cost overruns and schedule delays. (v) Quality work Our Group does not compromise on quality and places strong emphasis on delivering high quality work for all our projects. As a testimony of our commitment and achievement, our fabrication facilities have garnered ISO 9001 certifications as set out in Section 6.2.8 of this Prospectus. We have conscientiously enforced tight quality controls throughout structural design, engineering, fabrication, protective treatment and erection. Our Group has well-trained and experienced QA/QC team to inspect and ensure that all works are carried out in accordance to the specification. These measures have enhanced our Group’s image and enabled us to build a strong reputation which allows us to secure repeat business from our clients. (vi) Excellent client relationship Our Group has long standing relationship with major international clients with a long history of successful collaboration on many landmark projects. We are routinely invited by many international clients to participate in the bidding of their projects. Some of the examples of our long standing collaboration are as follow: Clients Year Projects Location Samsung 1994 Petronas Twin Tower 2 Malaysia Corporation 2005 Bu~ Khalifa -Link Beams Dubai, UAE 2007 Burj Khalifa -Spire Dubai, UAE 2008 Burj Khalifa -Annex Building Dubai, UAE 2010 Cleveland Clinic Abu Dhabi, UAE Brookfield 1997 Kuala Lumpur International Airport -Malaysia Multiplex Pan Pacific Link Bridge L.L.C.
1998 Emirates Towers Dubai, UAE 2001 U.P Tower Dubai, UAE 2002 Grosvenor Hotel & Apartments Dubai, UAE 2002 DIFC Dubai, UAE 2004 DIFC Gate Building 5 to 6 Dubai, UAE 2006 The Index Building Dubai, UAE 6. BUSINESS OF OUR GROUP (Cont’d) (vii) Clients Year Projects Location Brookfield 2007 Motor City Dubai, UAE Multiplex L.L.C. 2008 Emirates Park Tower Hotel Dubai, UAE (Cont’d) 2009 Opus Business Bay Project Dubai, UAE Arabian 2005 Rose Rayhaan Rotana Tower Dubai, UAE Construction Co. 2007 AI Shams Sky Tower Abu Dhabi, UAE 2007 Princess Tower Dubai, UAE 2008 Khalifa Central Market and Tower Abu Dhabi, UAE 2009 Pentominium Tower Dubai, UAE 2009 The Gate District Towers Abu Dhabi, UAE 2010 Central Market Redevelopment Abu Dhabi, UAE AI Habtoor 1996 Burj AI Arab Hotel Dubai, UAE Engineering Enterprises CoLLC 2002 2007 Sheikh Zayed Cricket Stadium Capital Gate Building Abu Dhabi, UAE Abu Dhabi, UAE 2007 Dubai Tower Qatar 2009 Dubai Pearl -Phase 1 Dubai, UAE Taisei 2002 Tuanku Jaafar Power Station -Port Malaysia Corporation Dickson 2006 New Doha International Airport Qatar 2008 New Doha International Airport Qatar Concourse C Six Construct 2002 Emirates Palace Hotel Abu Dhabi, UAE Ltd 2002 Jebel Ali “K” Station Phase II Dubai, UAE 2003 Khalifa Stadium Qatar 2006· Tornado Tower Qatar 2010 Cleveland Clinic * Abu Dhabi, UAE 2010 Doha Convention Center and Qatar Tower” 2010 New Doha International Airport Qatar (Phase 3) -CP51″ IHI 2004 3x700MW Tanjung Bin Power Plant Malaysia Corporationl Ishi Power 2006 2x700MW Jimah Power Plant Malaysia Sdn Bhd Qatar 2005 Qatar Science and Technology Qatar Petroleum Park 2008 Nakilat Ship Construction Facility- Qatar Port of Ras Lattan 2009 Convention Centre Extension and Qatar link bridge to QSTP -Education City Notes:
Six Construct Ltd is part of the Samsung Consortium for this project. Six Construct Ltd is part of the MlOMAC Consortium for these projects. ” Recognised brand name We have established a reputable brand name with an impressive track record and positioned ourselves as one of the leading and reliable integrated structural steel turnkey contractor in the field of structural steelwork in the UAE and Qatar and a specialist in the construction of coal-fired power plants. 6. BUSINESS OF OUR GROUP (Cont’d) (viii) (ix) Our brand name “EVERSENDAI” is synonymous with safety, quality, timely completion and total client satisfaction. In the industry, our brand name is associated with various landmark projects such as the sail-silhouetted Burj AI Arab Hotel, UAE, Burj Khalifa the world’s tallest building, Rose Rayhaan Rotana Tower, the world’s tallest hotel tower suites, UAE and the Petronas Twin Tower 2 in Malaysia, thus underlining our ability to satisfactorily meet our clients’ demanding standards. Solutions provider for complex structures We provide innovative and creative solutions to construct complex structures such as Burj AI Arab, Kingdom Centre, Ski Dubai, Dubai Mall, Capital Gate and Burj Khalifa, among others. For example, the Burj AI Arab, a unique architectural with complex engineering, comprised mainly an in-situ hybrid V-shaped concrete structure with exposed structural steel blended into it. The diagonal trusses weighed a total of 9,200MT which forms the exposed steel structure was lifted by our experienced erection team into position using our innovative erection methodologies to counter the challenging wind conditions which caused the diagonal trusses to sway while being lifted into position and thereafter secured into the main concrete structure of the building. All this was achieved by our team within a day. The Kingdom Centre is currently the tallest building in Riyadh, Saudi Arabia. It comprises a central concrete tower which rises to a height of 180 metres, followed by a unique steel structure weighing 4,500MT called the Sculpture which rises to a final total height of 311 metres. Our experienced erection team was given the challenging task of constructing the 72 metres span, 250MT sky bridge which connects the top of the two towers of the Sculpture. Another example of our competitive edge as a solutions provider for complex structure was demonstrated during our involvement in the lifting of the steel structure for the Ski Dubai, a 85 metres high snow dome which is one of the world’s longest artificial ski slopes spanning 400 metres. The steel structure was first assembled at ground level and then lifted to a height of 62 metres simultaneously using 16 large jacks. It was the biggest 3,000MT single lift within the shortest time of 10 hours in the Middle East which was documented on the Discovery Channel. We also executed the structural steelwork for the Burj Khalifa in Dubai, currently the world’s tallest building at 828 metres. Structural steel was installed at certain levels in the building and the last 280 metres were constructed entirely from steel and we are the first structural steel com pany in the world to work above a height of about 595 metres. The execution of structural steelwork for such a complex structure requires precise design, fabrication and construction processes. In addition, performing erection work at such a height under strong wind and high temperature conditions is difficult and as such, demands a high level of precision from our erection team while maintaining quality and safety. Skilled permanent employees
As at the LPD, our Group directly employs a combined workforce of more than 6,000 permanent personnel. Given our continuous project workload and leading position in the industry, our Group employs a pool of permanent staff who are well-versed with our work culture, procedures and operating standards. 66
6. BUSINESS OF OUR GROUP (Cont’d) (x) Recognition through awards We have been recognised by various agencies for outstanding performance and achievements. These awards recognises our Group’s achievements internationally, our continuous commitment to safety and quality, and our contribution to the construction industry and the Malaysian economy. A summarised list of our Group’s notable awards is set out in Section 6.1 of this Prospectus. 6.2.3 Technology We use various softwares for our design, detailing, fabrication and erection processes which complement the skills and expertise of our staff. This enables us to complete our projects effectively and efficiently. As at the LPD, the software used in our processes are as follows: Function Software Structural Design Structural design and custom made spread sheets for STAAD Pro connections ETABS Fastrak AutoCAD X Steel Tekla Structures Structural steel and reinforcing bar detailing X Steel Tekla Structures Bocad CADS RC AutoCAD Fabrication Cutting of plates ProNest 7 Marking, drilling and cutting of plates Shop Data Systems Trimming Bocad Drilling of sections PROFILE 111 Production planning and monitoring of progress StruMIS Erection Project planning and scheduling including allocation of manpower Primavera P-6 and Microsoft Project Production planning and monitoring of progress StruMIS
6.2.4 Fabrication facilities We have fabrication plants at Rawang in Malaysia, Dubai and Sharjah in the UAE and Doha in Qatar. The major types of machinery and equipment available at our fabrication plants as at the LPD are as follows: Machinery and No. of equipment Description/purpose units Welding Consist of stud welding machines used to weld studs 1,249 machine without additional material such as welding electrodes Also has welding machines (mostly 500 Amps) used to combine two components together using welding electrodes 6. BUSINESS OF OUR GROUP (Cant’e/) Machinery and equipment Description/purpose No. of units Grinding machine Consist of portable grinding machine required for the grinding works on any rough surfaces in-order to make it smooth and/or to make the surface defect free from all minor surface cracks 1,239
Drilling machine Cutting machine • Consist of radial drilling machines and portable magnetic drilling machines Consist of gas cutting machine, portable beam cutting machine, portable pipe cutting machine and concrete cutting machine 147 145 Material handling equipment Used to shift material during the fabrication process Consist of fork lifts, electric overhead travelling crane and gantry crane 89 Rolling, bending, rotating and camber machines Plate rolling machine used to curve/straighten steel plates Section bending machine used to bend “I”-section, channels and pipes Beam rotating machine used to rotate structures when required to complete the welding process in flat/horizontal positions instead of overhead welding process Cambering machines used to incorporate pre-cambering on rolled sections without introducing any heat. Camber is used in long spans to counter erection deflection due to load 10
Air compressor • Used to produce compressed air required for the operations of various tools and equipment Consist of electric and diesel air compressor. Compressors are used to produce compressed air which is required for various tools and equipment to operate CNC machines • Used to saw/cut, drill, cope and cut plates, sections, angles, channels, tubes and hallow sections Consist of CNC band saw, CNC plasma and oxy/acetylene cutting machine. CNC drilling and 6 axis robotic arm with plasma and oxy/acetylene coping machine, gantry operated submerged arc welding machine
Iron worker 100MT capacity hydraulic iron worker machine is designed to punch holes on steel plates and shearing works Surface Used to blast clean steelwork prior to paint systems 20 preparation application machines I equipment Consist of chambers blasting machines and manual blasting
Straightening Consist of straightening machines with the capacity of machine 400MT of steel sections Pressing • Consist of hydraulic pressure machines and press brake machine machine that press and bend metal
6. BUSINESS OF OUR GROUP (Cant’d) Our fabrication capacity for the FYE 2010 and as at 31 March 2011 is as follows: Actual Actual (3)% of quarterly fabrication (4)% of quarterly Annual fabrication utilisation Quarterly output as at utilisation as fabrication output for the for the fabrication 31 March at 31 March Fabrication plants capacity FYE 2010 FYE 2010 capacity 2011 2011 (MT) (MT) (MT) (MT) Rawang, Malaysia (1) 24,000 1,377 6% 6,000 1,295 22% AI Quasis Industrial, 18,000 9,204 51% 4,500 2,775 62% Dubai, UAE Hamriyah Free Zone, 53,000 31,639 60% 13,250 9,802 74% Sha~ah, UAE Industrial Area, 24,000 5,588 23% 6,000 3,550 59% Doha, Qatar Total (2)119,000 47,808 40% 29,750 17,422 59%
Notes: (1) Rawang plant was completed in November 2009 and fabrication activities have commenced in May 2010.
(2) The annual fabrication capacity of our combined fabrication facilities is measured in MT based on the production floor area, number of machines, production workers and the number of production operators manning the machines as at the end of the financial year 31 December 2010 being operational for a single shift plus overtime per day.
(3) Percentage of utilisation for the FYE 2010 represents actual fabrication output over annual fabrication capacity.
(4) Percentage of utilisation as at 31 March 2011 represents actual quarterly fabrication output as at 31 March 2011 over quarterly fabrication capacity.
Our total annual fabrication capacity allows us to bid and accept large structural steel orders. Clients with large structural steel work projects or orders will typically assess the capacity availability of various fabricators in their selection process. It would typically be preferable for clients to allocate the job to a single fabricator as opposed to a few fabricators as this would incur additional resources and costs in terms of project management resources to oversee all of the fabricators. We are able to allocate an additional 20% of our fabrication capacity for any large orders to cater for any unforeseen increase in demand due to changes in the order and or acceleration requirements. We plan to utilise about RM50 million of the net proceeds from the Issue Shares to either establish a new fabrication facility or acquire an existing fabrication facility in India with an initial fabrication capacity of 36,000MT per annum. Subsequently, we intend to further increase the capacity of our plant to about 50,000MT per annum in line with the future growth of our India operations. We intend to allocate an additional RM33 million of the net proceeds from the Issue Shares for this purpose. We intend to utilise another RM27 million from our IPO proceeds to purchase new plant and machineries such as gantry cranes, mobile cranes, CNC cutting and drilling machines and welding machines for our Middle East operations. All these plant and machineries will be utilised for our fabrication and erection processes. We intend to utilise part of our IPO proceeds to enhance the production capabilities of our existing fabrication facility in Rawang, Malaysia by extending our existing facility and purchase of additional plant and machineries such as blasting machines, CNC cutting and drilling machines. The expected cost for the extension of the existing facilities and purchase of additional plant and machineries is about RM16 million and will be funded via our proceeds from the Issue Shares. 6. BUSINESS OF OUR GROUP (Cont’d) 6.2.5 Raw materials The main raw materials used by our Group is steel sections and plates which forms about 90% of the total raw material used in our steel fabrication plants. Others include consumables such as gases, electrodes, grinding wheels and blasting and paint materials. Generally, the costs of steel constitute about 25% to 35% of the value of the contract. Since our inception, we have not experienced any major shortage of raw materials that has adversely affected our manufacturing schedule and our client delivery timeline. The raw materials used for the fabrication plants in the Middle East are purchased via our principal suppliers which are Corus Middle East ltd, Hanwa Co. ltd. and Steel N People ltd. The fabrication plant in Rawang Integrated Industrial Park, Malaysia sources its raw material from local stockist such as Hiap Teck Steel Manufacturing Sdn Bhd, Ann Yak Siong Hardware Sdn Bhd and Alpine Pipe Manufacturing Sdn Bhd. We manage our raw steel price exposure by closely monitoring raw steel prices and obtaining quotes from reputable international mills/trading houses prior to submitting a bid. Immediately upon the award of the contract, orders are placed for about 95% of the required raw steel materials by locking in the quotes obtained earlier from these suppliers. This helps protect us against any steel price fluctuation from the time of bid submission to award of the contract. The information for material ordering is derived from the bill of quantities, material ordering drawings and other relevant information. A discussion on the impact of fluctuations on the prices of our raw materials and intermediate parts and foreign exchange rates and the resulting impact on our operations has been set out in Sections 5.1 (v) and 5.1 (vi) of this Prospectus respectively. [The rest of this page is intentionally left blank]
6. BUSINESS OF OUR GROUP (Cont’dj 6.2:6 Process flow (i) The following diagram illustrates the general process flow for structural steel design, detailing and re-engineering services upon award of contract: ~
Comprehensive Design and Preparation of Engineering Drawings I
Award of Contract Receipt of ApprOVed Construction Drawings/infonnation from Client
Structural Design Re-engineeringNalue Engineering
, Detailed shop drawings Verification and Client Approval
Connection Design I
1 .’0Project Manager Approving Authority 71 1
Fabrication Shop 6. BUSINESS OF OUR GROUP (Cont’d) (a)
-Receipt of approved for construction drawings/information from client Upon receiving the order or award for a successful project tender, our clients will provide the Approved for Construction (UAFC”) drawings to us. Receipt of AFC drawings will enable us to commence planning and preparation for works which may include, among others, comprehensive design, re-engineering/value engineering, connection design and material procurement. Structural design The design services provided by our Group can be generally categorised into comprehensive design, re-engineering/value engineering services and connection design. (i) Comprehensive design
Clients without a prepared structural design would require comprehensive design services which involve design engineers developing the concepts, finalising the concepts with the client and carrying out member sizing and preparing the engineering drawings.
(ii) Re-engineering/value engineering
We perform re-engineering/value engineering services to achieve an overall reduction in the project cost for our clients by reducing the steel tonnage usage (if possible) and shortening of the project schedule through more efficient construction methodologies. (iii) Connection Design Where our clients have already completed the structural design, our scope would be to carry out development of the connection design based on the forces provided. Related wire frame models are developed by using design softwares such as STAAD Pro, ETABS, X Steel, Tekla Structures and Auto CAD. Verification and client approval Once our structural designs are completed, they are reviewed and verified by our in-house engineering/design managers for accuracy and adequacy of the design prior to submission to our clients/consultants for their verification and approval. Detailed shop drawings Upon approval of the design, our modellers will develop detailed 3-D models for the members using X Steel Tekla Structures modelling software and apply connections to finalise the model. Our model checkers will then review and verify the completeness of the models and ensure compatibility with the CNC machines before releasing the shop drawings to the client/consultants for their verification and approval.
6. BUSINESS OF OUR GROUP (Cont’d) (e) Document controller
Our document controller controls all incoming and outgoing documents/drawings, and also ensures all detailed shop drawings are properly documented in accordance with the ISO requirements. Our document controllers issues the approved detailed shop drawings to the fabrication shop, project manager and to the approving authority or as stipulated in the contracts. rrhe rest of this page is intentionally left blank]
6. . BUSINESS OF OUR GROUP (Cont’d) (ii) The following diagram illustrates the general process flow for structural steel supply and fabrication, including protective treatment at our steel fabrication facility: Planning for Preparation/Fabrication and Allocation of Steel to the Shop
Receipt of Approved Detailed Shop Drawings by the Planning Department Receipt of Raw Steel Material at the Storage Yard I I
QC Non-Destructive Testing QC Protective Treatment QC
Legend: QC -Quality Control
6. BUSINESS OF OUR GROUP (Cont’d) (a)
Receipt of approved detailed shop drawings and raw steel material Our document controller in the fabrication shop receives the approved detailed shop drawings and makes it available to the relevant departments. The raw steel material received from suppliers are inspected and stacked in the stockyard. Planning for preparationlfabrication
The planning department of the fabrication shop allocates raw steel material to the shop for preparation and fabrication, taking into consideration the project and fabrication shop schedules. The planning department also determines the optimal utilisation of the CNC machines. Marking, cutting and drilling
The raw steel is fed into the factory and then to the CNC machine using cranes and conveyer system. Then, the CNC machines analyses the dimension of the raw steel members against the drawing data information for compatibility. The CNC machines are linked to the computer aided design/3-D model system for downloading of cutting and drilling data. Thereafter, the CNC machines will precisely proceed with the marking, cutting and drilling of the raw steel members. The CNC machines have significant advantages over manual cutting and drilling methods in terms of productivity and accuracy. Fit-up, welding and assembly
The cut and drilled members are then taken to the allocated bay using Electric Overhead Travelling cranes. The fitters will then mark on the members and tack weld the fittings to form the assembly. The various parts are then welded and/or bolted together to form the final component. Fully automatic welding machines are used for built-up sections with long run welds. Qualified welders equipped with semiautomatic welding machines will handle other welding activities. All joints are then inspected to determine compliance with shop drawings and project specifications. Non-destructive testing
Non-destructive testing is carried out based on the requirements of the applicable international codes and project specific quality plan. The testing shall be a combination of visual, ultrasonic, Magnetic Particle Inspection, Dye Penetrant, radiography and others. Protective treatment
The fabricated steel assembly is blast cleaned to project specifications. Blasting is carried out in the auto-blast machine using steel shots. Manual blasting is carried out in enclosed chambers using steel grit. Thereafter, a protective primer coat is applied followed by intermediate coat(s) and final coat. The painted components undergo an electronic dry film thickness check for compliance with project specifications at every coat. 75
6. BUSINESS OF OUR GROUP (Cont’d) Where the project specifications indicate the requirement for galvanisation, the fabricated steelwork components are sent to a third party galvanisation company. (g) Quality control and final inspection
Thorough reviews and inspections of the materials and products are performed at each stage of the entire fabrication process. In the event that the material or product does not conform to project specific quality plan, the material are reworked on or if necessary, disposed. Final inspection is carried out after the protective treatment process. Our Group imposes strict guidelines on its products to ensure that all products supplied to our clients are of an acceptable quality that meets the project specific quality plan. (h) Packing and delivery
After final inspection, the finished products are packed appropriately as per the project specific quality plan requirements and delivered to the respective designation. To avoid storing of finished products at our Group’s premises, the production schedules are properly timed and sequenced with the erection/delivery programme. rfhe rest of this page is intentionally left blank]
6. BUSINESS OF OUR GROUP (Cont’dj (iii) The following diagram illustrates the general process flow for structural steel erection and Industrial/Power Plant Installation at project site: Project Site
.—1—-+ Approved Project Quality Plan
Receiving Finished Products for Erection
I ~ Grouting I
Legend: QC -Quality Control Project Schedule, Preparation and Sequence of Erection QC Mobilisation on Site (Manpower, plant and equipment)
QC QC Erection according to Method Statements and Sequence
QC Provide Guy Wire, Scaffolding, Temporary Support, etc.
QC Alignment and Level Check
QC Final Welding or Bolting QC Quality Control and Final Acceptance
Erection/General Arrangement Drawings and Method statements I ..
Access to Foundation and Survey of Anchor Bolts I
———————–~ I I
II Equipment Installation, Piping, —-1
I Ductwork, Cladding, Insulation I (For industrial/power plant I I
I installation) I I ~
Paint Touch-up or Fire Proofing
6. BUSINESS OF OUR GROUP (Cont’d) (a)
Approved project quality plan
Upon award of the contract, a project specific quality plan is prepared and submitted to our client for their review and approval. It is mandatory to follow the approved quality plan in all aspects for execution of the active project including steelwork erection. Project schedule, preparation and sequence of erection A detailed project schedule indicating management, manpower, plant and equipment and sequence of erection is prepared on PRIMAVERA P-6/ Microsoft Project. This schedule is prepared taking into consideration the number of buildings/areas on a particular project together with the work breakdown structures/grids and jointly agreed with our client for implementation. Erection/general arrangement drawings and method statements Specific detailed erection drawings together with the general arrangement drawings will enable the project team to plan and identify the finished products at the site storage yard. This allows the project team to prioritise the sequence as dictated by the project schedule to commence the steel erection activities. Mobilisation on site (manpower, plant and equipment) Mobilisation of manpower, plant and equipment will be tailored to suit the project schedule requirements. Resources will be adjusted based on the quantum of work, interfacing requirements and number of areas to be worked on simultaneously. All this will be carried out using the project management softwares such as PRIMAVERA P-6 and Microsoft Project. Receiving finished products for erection
Finished products are received by the project team and unloaded, stacked and inspected at the site storage yard. Any damages and discrepancies will be documented and reported appropriately for rectification or replacement. Access to foundation and survey of anchor bolts
Our clients will provide us with access to the foundations constructed by others. At the outset, we will carry out a detailed survey of the anchor bolts for accuracy and alignment based on the approved foundation drawings. Any mismatches will be documented and reported appropriately for rectification or replacement. Erection according to method statements and sequence It is imperative that the steel erection strictly follows the approved method statements and sequence to ensure safety and stability during construction. The method statements will also provide guidance to the project team for the successful execution of the project. For industrial/power plants, the additional scope will involve the installation of equipment, piping, ductwork, cladding, insulation and other mechanical and electrical works. 78
6. BUSINESS OF OUR GROUP (Cont’d) (h) Provide guy wire, scaffolding, temporary support
Guy wires and temporary supports as indicated in the method statements are installed to provide stability during the entire construction phase to ensure safety to the partially constructed structure. (i) Alignment and level checks
Upon completion of the steel erection and prior to the release of the temporary works, detailed survey is carried out to ensure that the alignment and levels are within the project quality plan tolerances. Any deviation beyond the tolerance levels will require appropriate realignment/rework. (j) Final welding and/or bolting
Upon successful completion of the alignment and level checks, the connecting members are welded and/or bolted together. Joints are inspected for quality of components and welds before acceptance checking by the client. (k) Grouting
Upon completion of all the steelwork erection activities including alignment, grouting works are carried out at the base plates. (I) Paint touch-up or fire proofing
All damaged paint surfaces due to handling during transportation and erection are touched up according to the project quality plan. We also carry out fire proofing (if required) based on requirements of the project specifications. (m) Quality control and final acceptance
Thorough reviews and inspections of the material, products and adequacy of temporary works are carried out at each stage of the entire erection process. In the event that the material or product does not conform to project specific quality plan, the materials are reworked, or jf necessary, disposed. Final inspection is carried out on a sectional basis after completion of the steelwork erection. Our Group imposes strict guidelines on its products to ensure that all products supplied to our clients are of an acceptable quality and meet the project specific quality plan. Upon completion of the erection process, the cranes and other equipment will be demobilised as per the project schedule. 6.2.7 Modes of marketing/distribution Our Group sources a majority of our projects from Middle East, India and Malaysia. Our Group is able to offer an integrated structural steel turnkey solution and service to our clients. This is achieved with the assistance of our experienced management team, engineers, managers and other key personnel. 79
6. BUSINESS OF OUR GROUP (Conf’dj Our Group recognises that marketing plays an essential role in the success of our Group and attaches great importance to marketing. Our Group’s Executive Directors and managers are actively involved in this process. Additionally, we also market our products and services via the following modes of marketing: (i) Dialogues with main contractors Our management, project managers and tendering personnel are in continuous dialogue with existing and new main contractors for business opportunities and actively monitor the status of new projects in the market. Our bids are submitted directly to main contractors and we generally do not have an exclusive arrangement with any specific main contractor. We are also frequently invited by the winning main contractor or sometimes directly by the client if the main contractor has not been appointed, to be part of the construction team. Some potential clients would invite us to review their designs and provide our views on the feasibility of their designs before approaching the main contractors. This would sometimes lead to an appointment of our Group as a nominated specialist sub-contractor directly by the client. (ii) Project references and repeat clients We often obtain project references through association with reputable main contractors. Project references will only be made when our clients are completely satisfied with our safety standards and quality of our services and products and our commitment to deliver on schedule. To this end, we would also leverage on our association with international main contractors such as Samsung Consortium, IHI Corporation, Arabian Construction Co., Taisei Corporation and Brookfield Multiplex L.L.C. for more project referrals with whom we have worked on several projects through the past decades in different countries. Examples of our long standing collaboration are set out in Section 6.2.2(vi) of this Prospectus. (iii) Media publications and directories Our products and services are promoted extensively in popular trade directories, such as the annual directories of Master Builders Association of Malaysia, CIDB. In addition, our key landmark projects such as the Petronas Twin Tower 2, Burj AI-Arab, Capital Gate and Burj Khalifa have received wide coverage in international media. (iv) Internet
Information about our Group and services can be viewed by our existing and potential clients via our website at www.eversendaLcom.
(v) Trade exhibitions and trade shows
The international platform is important in our efforts to market our product and services and we will continue to attend and participate in international trade shows and exhibitions. We also participate in MATRADE trade events. Our participation has given us a good platform to build and promote the ‘Eversendai’ brand name. 80
6. BUSINESS OF OUR GROUP (Cont’d) We have recently participated in the following trade exhibitions and trade shows: Year Event Organiser Venue 2008 Sharjah Exposition MATRADE Sharjah Trade Exhibition Centre, Sharjah 2008 Energy Excellence Confederation of Indian India Exhibition Industries 2009 Malaysia Services MATRADE Dubai, UAE Exhibition 2009 11th International Winmark Services Private Mumbai, India Expo & Summit Limited, Mumbai, India CONSTRU India 2009 2009 Libya Build 2009 ATEX International Libya Exhibition Organizers 2010 Malaysia Services MATRADE Dubai, UAE Exhibition 6.2.8 Quality control procedures Our Group places considerable emphasis on the quality of our product and services. Our Group’s QAlQC Department currently has a team of qualified personnel who are responsible for ensuring that the quality of material used throughout the projects are as specified in the project specifications. It is also important that the quality of our finished products and services are in line with the international building codes and standards as required in the countries that we operate. There is an in-house quality control manual to which our Group adheres, unless the client specifies any additional quality control procedures which would in any case be covered in the project specific quality plan. One of the prime functions of the QAlQC Department is to prepare and ensure compliance with the welding procedures. The quality of the final welded product is checked using testing techniques such as Visual, Radiography, Dye Penetrant and/or Ultrasonic, and/or Magnetic Particle Inspection techniques, based on the individual project requirements. The selection of the technique may depend on the type of weld, location and/or the requirements of the project specific quality plan. Apart from conducting in-house testing, we also carry out third party testing to ensure the transparency of these quality checks, which is welcomed by the approving authorities. The QA/QC Department also ensures that the quality of the final product or service offered to our Group’s clients is maintained throughout all stages including painting and installation. 6. BUSINESS OF OUR GROUP (Cant’e/) We have a certified quality management system in place and have so far garnered the following certifications for our fabrication facilities: Date Certification Certified by Scope of certification Rawang, Malaysia July 2000 to July ISO 9001 : 2008 2012 MS ISO 9001 2008
Dubai and Sharjah, UAE January 2011 to ISO 9001 : 2008 January 2014 ISO 14001 : 2004 December 2010 to OHSAS 18001 December 2013 2007 February 2011 to ISO 9001 : 2008 February 2014 ISO 14001 : 2004
February 2011 to OHSAS 18001 February 2014 2007 Doha, Qatar December 2010 to ISO 9001 : 2008 December 2013 ISO 14001 : 2004 Lloyd’s Register Quality Assurance SGS UKAS Management Systems SGS Swiss Certification SGS UKAS Management Systems SGS Swiss Certification SGS UKAS Management Systems Design, engineering, supply, fabrication, erection, fire proofing and painting of structural steel works for buildings, industrial plants and bridges. Assembly and erection of coal fired power plant.
Structural steel construction and project management including design and engineering, fabrication, blasting and painting, erection and fireproofing works. Structural steel construction and project management including design and engineering, fabrication, blasting and painting, erection and fireproofing works. Civil construction for multi storey residential and commercial buildings and industrial and infrastructure projects Civil construction for multi storey residential and commercial buildings and industrial and infrastructure projects Structural steel construction and project management including . engineering design and detailing, procurement, fabrication, blasting, painting and fire proofing, erection and
commissioning execution of civil construction. 6. BUSINESS OF OUR GROUP (Cont’dj Date Certification Certified by Scope of certification December 2010 to OHSAS 18001 SGS Swiss Structural steel December 2013 2007 Certification construction and project management including engineering design and detailing, procurement, fabrication, blasting, painting and fire proofing, erection and commissioning execution of civil construction.
Strict adherence to the quality procedures set by our quality management system has resulted in our Group receiving numerous letters of appreciation from satisfied clients for the quality of product and services proVided by us. [The rest of this page is intentionally left blank] I Company No. 614060-A I
6. BUSINESS OF OUR GROUP (Cont’d)
6.2.9 Major licences and permits We have obtained all the necessary licences and permits, such as business licences, manufacturing licences, and factory and machinery operation permits for the operation of our businesses from the respective local and federal authorities. In the course of conducting our businesses, we have the following major licences and permits registered in our name which are relevant to the businesses of our Group: Date of Licence no./ Authority commencement Date of expiry permit no. SEVM MITI 17 February 2010 Not applic~ble A 017759 CIDB 28 January 2010 27 January 2013 1971110 WP044350 Kementrian 11 October 2009 10 October 2011 1407A 2001 Ke~a Raya 0812 Malaysia
Equity conditions and/or Nature of licences, permits, major conditions Status of concessions and approvals imposed compliance
Manufacturing license fabricate steel structures to • Registration certificate as International Registered Contractor under Grade G7 which does not limit its tendering capacity • • To permit the company to undertake work for the Works Department for Class C which allows for tendering in Malaysia, building works and other general engineering works. •
100% shares to be held by Malaysians. Complied MITI shall be. notified of any changes in the composition of the Board Noted Must be contractor. an active Complied Required to submit a copy of the contract within 1 month from the date of the award. Noted The license will be terminated if any shareholders hold more than 5% of RM50,OOO of the shares of another company which is also registered with the Works Department. Noted
I Company No. 614060-A I
6. BUSINESS OF OUR GROUP (Cont’d) Authority Date of commencement Date of expiry SEVM (Cont’d) Kementerian Kewangan Malaysia 24 June 2010 23 June 2013 SEVM India Branch (“Branch”) Reserve Bank 31 March 2009 of India (“RBI”) Not applicable
Licence no./ permit no. 344173/35701003130 FE.CO.FID/26 188/10.83.23 6 2008-09 and FE.CO.FID/3 1827/10.83.2 36/2009-10 Nature of licences, permits, concessions and approvals To permit the company to undertake work for the Ministry of Finance in 10 categories of services and supplies. The said approval permits the Branch to carry on the following activities: • Export! import of goods. Rendering professional or consultancy services.
• Carrying out research work, in which the parent company is engaged.
• Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
• Representing the parent company in India and acting as buying/ selling agent in India. Rendering services in information technology and development of software in India.
• Rendering technical support to the products supplied by parenti group companies.
Equity conditions and/or major conditions Status of imposed comeliance None Noted • The Branch is not, Noted without prior permission of RBI, permitted to expand its activities, undertake any new activity or carry on by itself or in partnership or by otherwise associating with others any activity of a trading, commercial or industrial nature other than what is approved by RBI. The entire expenses Complied of the Branch will be met either out of the funds received from abroad through normal banking channels or through income generated by the Branch in India by undertaking permitted activities.
I Company No. 614060-A I
6. BUSINESS OF OUR GROUP (Cont’d) Equity conditions and/or Date of Licence no./ Nature of licences, permits, major conditions Status of Authority commencement Date of expiry permit no. concessions and approvals imposed compliance Branch fCont’d) • Profits out of the Noted operations in the Branch may be remitted out after payment of applicable taxes in India. The income eamed by Complied the Branch from parties abroad has to be remitted to India through normal banking channels. • To submit to RBI Complied annually a certificate from the auditor certifying that the branch office has undertaken only those activities which have been permitted by the RBI. • The Branch shall not Complied undertake retail trading activities in India of any nature. EV Sharjah Hamriyah Free 05 July 2005 04 July 2011 1203 Industrial licence for steel None None Zone Authority, fabrication and painting Govemment of Sha~ah
I Company No. 614060-A I
6. BUSINESS OF OUR GROUP (Cont’d) Authority Date of commencement Date of expiry Licence no./ permit no. Nature of licences, permits, concessions and approvals Equity conditions and/or major conditions imposed Status of compliance EV Sharlah fCont’d) Hamriyah Free 09 August 2005 Zone Authority, Govemment of Sha~ah 04 July 2011 1276 Commercial licence for the storage of temporary support steel structure, scaffolding and lifting tools and tackles None None EVSC Department of. Economic Development, Govemment of 12 July 2006 11 July 2011 583599 Licence contracting for building None None Dubai Department of Economic Development, Govemment of Dubai 12 July 2006 11 July 2011 997236 Commercial register stating the registered activities of the company to be building contracting None None Dubai Chamber of Commerce and Industry 12 July 2006 11 July 2011 109483 Dubai Chamber of Commerce and Industry Membership Extract None None EV Dubai Department of Economic Development. Govemment of Dubai 13 August 1996 12 August 2011 243020 Industrial licence to carry out the following activities: • Metal parts and erections contracting; • Steel fabrication and None None • • • welding workshop; Steel constructions contracting; Fire fighting and safety equipment installation; Ins~lation contracting; and
I Company No. 614060-A I
6. BUSINESS OF OUR GROUP (Cont’d) Authority Date of commencement Date of expiry Licence no./ permit no. Nature of licences, permits, concessions and approvals Equity conditions and/or major conditions imposed Status of compliance EV Dubai (Cont’d) • Structural manufacturing steel Department of Economic Development, Government of Dubai 11 August 1996 12 August 2011 243020 Commercial register stating the registered activities of the Company to be: · Metal parts and erections contracting; • Steel fabrication and welding workshop; • Steel and basic steel products trading; • Steel constructions contracting; Fire fighting and safety equipment installation; • Insulation contracting; and Structural steel manufacturing None None Dubai Chamber of Commerce and Industry 13 August 1996 12 August 2011 39427 Dubai Chamber of Commerce membership None None EVAbu Dhabi Department of Economic Development, Government of Abu Dhabi 13 October 2009 4 October 2011 1168256 Commercial licence to carry out the following activities: • All kinds of building projects contracting; • Steel construction contracting; • Industrial establishment building contracting; None None 88
I Company No. 614060-A I
6. BUSINESS OF OUR GROUP (Cont’d) Date of Authorlt¥ commencement EV Abu Dhabi (Cont’d) Date of expiry Licence no./ permit no. Abu Dhabi Chamber of Commerce 20 January 2010 28 September 2011 484133 EV India Ministry of Commerce . Govt of India, New Delhi, India 17 September 2009 Not applicable 0410120029/01 22/00 (Cust. No. 091/ 2009)
Equity conditions and/or Nature of licences, permits, major conditions Status of concessions and approvals imposed compliance • Constructional and engineering contracting works related to technical projects -tum key; and On shore and off-shore Oil and Gas fields services Membership certificate to None None practice the activities of: • Onshore and offshore gas and oil and filed services; Technical project-related engineering and constructional contracting;
• Tum-key projects;
• Industrial establishment building contracting; Metal construction contracting; and General contracting of civil constructions
License for Import and Export None None of Goods through this license only 89
I Company No. 614060-A I 6. BUSINESS OF OUR GROUP (Cont’d) Equity conditions and/or Date of Licence no.! Nature of licences, permits, major conditions Status of Authority commencement Date of expiry permit no. concessions and approvals imposed comeliance EV India (Cont’d/ Commercial Tax Valid from 24 Not applicable Central Sales Certificate of Registration If, at any time, the None Department, August 2009 Tax (CST) under the Central Sales Tax registered dealer (a) Govt of Tamil Registration dated No:1 01 0788 Act, 1956. discontinues or sells Nadu, India 27 August 2009 Tax or otherwise disposes Identification of the whole or any No:3307098 part of any business 7513 carried on by it, or (b) changes its place of business or any of his places of business, or (c) opens a new place of business, or (d) changes the name of business carried on by him, he shall notify the fact to the concerned assessing authority within 30 days thereafter. • When the ownership of the business is entirely transferred, any tax payable and the remaining unpaid at the time of transfer shall be recoverable from the transferor or the transferee as if they were the dealers liable to pay tax.
90 I Company No. 614060-A I 6. BUSINESS OF OUR GROUP (Cont’d) Equity conditions and/or Date of Licence no./ Nature of licences, permits, major conditions Status of Authority commencement Date of expiry permit no. concessions and approvals imposed compliance EV India (Cont’d1 Director General 22 December 2010 Not applicable 0410120029/01 Importtexport license The Duty Credit Script None of Foreign 22/00 under “Served from Trade, India Scheme” under Government of Chapter 3 of the India Foreign Trade Policy may be used for payment of customs duty on import of spares, office equipment and furniture, professional equipment, and consumables provided such goods are freely importable as per the Foreign Trade Policy. Period of Shipment specified to be 24 months and the Duty credit for a maximum amount of RS.1045,962 is available for the Company to avail benefits. Department of 8 November 2010 Not applicable AACCE2174N Central Excise Registration • Certificate is valid only None Revenue, Ministry Finance of ED001 for operating as a Dealer of Excisable Goods for premises at Gala No. 1038, Kantilal for specified premises and is not transferable. Maganlal Estate, LBS Marg, Bhandup (W), Close to Nirmal Lifestyles, Mulund, Mumbai
I Company No. 614060-A I 6. BUSINESS OF OUR GROUP (Cont’d) Date of Authority commencement EV India (Cont’d) Department of 3 February 2011 Revenue, Ministry of Finance Date of expiry Not applicable Licence no./ permit no. AACCE2174N EM002 EV Qatar Ministry of Business and Trade, Qatar 23 June 2005 23 June 2013 30943 Ministry of Municipal Affairs and Agriculture, Doha Municipality, Qatar 27 July 2009 28 August 2011 51737 92
Equity conditions and/or Nature of licences, permits, major conditions Status of concessions and approvals imposed compliance Central Excise Registration • Certificate is valid only None for manufacturing Excisable for specified premises and is notGoods for Plot No. B-5, B-6, transferable.Reddimangudi, Lalgudi Taluk, Trichy, Tamil Nadu Company registration and None None license for to carry out commercial activities: Metal installation works • Iron and other metal covering works
• Industrial equipment works mechanical/ engineering Contracting electromechanical and industrial works
• Coating aluminium and steel
• General civil construction contracting
• Trade in steel
• Trade in official uniforms
Commercial license for: None None • Metal installation works, iron and other metal covering works Industrial equipment works I Company No. 614060-A I 6. BUSINESS OF OUR GROUP (Cont’d) Equity conditions and/or Date of Licence no./ Nature of licences, permits, major conditions Status of Authority commencement Date of expiry ~ermit no. concessions and approvals imposed compliance EV Qatar (Cont’d} • Mechanical and engineering, electromechanical contracting works General construction contracting • Aluminium and steel Qatar Chamber 23 March 2010 16 March 2014 01/10233 Membership Certificate from None None of Commerce the QCCI and Industry (“QCC!”) EV SaudI General 19 February 2011 18 February 2012 102032019168 Service investment license None None Authority for which allows EV Saudi to Investment implement steel construction contracts for all kinds of bUildings, steel construction works related to oil and gas fields, industrial establishment building contracting, fire proofing applications and civil works
6. BUSINESS OF OUR GROUP (Cont’dj 6.2.10 Licences, patents, trademarks, brand names, technical agreements, franchises and other intellectual property rights We market our services under the trademark logo of “Eversendai”. Our Company has, on 22 December 2009, filed for the registration of our logo with the word “Eversendai” (in series) with the Registrar of Trademarks, Malaysia. As at the LPD, the following trademark applications have been gazetted: Proprietor Class Description of class Trademark logo ECB 6 Steel fabrications; all included in Class 6 ECB 37 Construction of structural steel buildings, airports, shopping malls, hotels, stadiums, steel bridges, roof structures, power plants and industrial plants; all included in Class 37
ECB 40 Fabrication of steelwork, welding (custom assembling of materials for others), steel cutting, drilling of materials; all included in Class 40
ECB 42 Engineering consulting services, engineering design; all included in Class
42 On 21 June 2010, ECB has filed applications for registration of trademarks in the Trademark Registry, India. As at the LPD, the following trademark applications are pending for approval: Proprietor Class Description of class Trademark logo ECB 6 Steel fabrications; all included in Class 6 ECB 37 Construction of structural steel buildings, airports, shopping malls, hotels, stadiums, steel bridges, roof structures, power plants and industrial plants; all included in Class 37
ECB 40 Fabrication of steelwork, welding (custom assembling of materials for others), steel cutting, drilling of materials; all included in Class 40
ECB 42 Engineering consulting services, engineering design; all included in Class
42 Save as disclosed above, we do not have any material licences, patents, trade marks, brand names, technical assistant agreements, franchises and other intellectual property rights. We rely on trademark, trade name and internet domain name registration to protect our intellectual property.
6. BUSINESS OF OUR GROUP (Cont’d) 6.2.11 Research and development Our Group does not have a formal research and development department for its operations. However, our management team holds discussions on latest development in erection methodologies, value engineering to develop innovative solutions that improve on our operations and meet the demanding requirements of our contracts, especially those involving iconic and challenging structures. Group ensures that the engineering and design software and equipment used in our operations are comparable, if not better than those used by the industry in general to meet the requirements of our clients. As such, we do not require the setting up of a research and development department. We periodically review our production processes to improve the quality and efficiency in the delivery of our products and services. This includes improving our fabrication and welding methods by updating the software and equipment used. Our Group monitors the steel and power plant sectors closely for development of new innovations, processes or other technology and are prepared to implement changes if we believe that they are necessary to maintain or improve our quality, efficiency and business performance.
6.2.12 Key milestones/achievements/certification Some of the key milestones of our Group are as follows: Year Key milestones 1993 SEVM was incorporated 1994 Awarded contract for the construction of Petronas Tower 2, Malaysia 1995 Awarded the contract for the structural steel erection works for Kuala Lumpur International Airport Main Terminal Building and Contact Pier 1996 Entered into the Middle East market with the award of the contract to erect the steel structure for Burj AI Arab 1997 Started a full-fledged engineering department to enhance our value proposition to our clients 1998 Awarded contract for structural steel erection works for office and hotel towers for Emirates Towers, Dubai. 2000 Obtained the ISO 9001: 1994 certification from Lloyd’s Register Quality Assurance Ltd 2000 Awarded contract for the installation of 3x700MW Jana Manjung Coal Fired Power Plant in Malaysia 2002 Awarded contract for the structural steel erection works of AI Moayyed Tower, Bahrain 2003 Acquired our first steel fabrication factory in AI Qusais, Dubai. 2004 Obtained ISO Certification for Dubai Operations from SGS. Switzerland 2004 Commenced the construction of our fabrication plant at Hamriyah Free Zone, Sha~ah in UAE 2005 Awarded contract to build Rose Rayhaan Rotana Tower in Dubai, the world’s tallest hotel tower suites 2006 Awarded contract for roof steel work for Dubai Mall, one of the world’s largest shopping mall 2006 Commenced the construction of our fabrication plant in Doha, Qatar 6. BUSINESS OF OUR GROUP (Cont’d) Year Key milestones 2008 Commenced the construction of our fabrication plant in Rawang Industrial Area, Malaysia 2009 Expanded our business operations to India via the 2x600MW power station project in North Chennai and the Chhatrapati Shivaji International Airport (Phase 1) -South West Pier in Mumbai 2010 Commenced operations at our fabrication plant in Rawang Industrial Area, Malaysia 2010 ECa acquired a 49% equity interest in EVSC
6.2.13 Interruptions in business for the past 12 months There has been no interruption in the form of trade disputes or major operational breakdown occurring within and outside our Group that may significantly impair our Group’s business performance during the past 12 months preceding the date of this Prospectus.
6.2.14 Principal markets The revenue contribution of the principal markets of our Group for the last 3 financial years is set out in the table below: FYE 2008 FYE 2009 FYE 2010 Location RM’OOO % RM’OOO % RM’OOO % Doha, Qatar 277,371 35.4 529,074 64.8 266,350 35.8 Dubai, UAE 270,902 34.6 166,832 20.4 62,450 8.4 Abu Dhabi, UAE 143,973 18.4 99,737 12.2 240,232 32.2 Malaysia 91,016 11.6 10,282 1.2 71,488 9.6 India 11,136 1.4 35,480 4.8 Saudi Arabia 47,257 6.3 North Africa 21,669 2.9 Total -783,262 100.0 817,061 100.0 744,926 100.0 For the FYE 31 December 2010, Qatar and the UAE contributed 35.8% and 40.6% of our Group’s total revenue respectively. Our current principal markets are predominantly in Abu Dhabi, UAE and Doha, Qatar. We have secured increasing number of projects in Abu Dhabi, UAE and Doha, Qatar as illustrated in Section 5.1 (ii) of this Prospectus. We expanded our business operations to the Indian market and for the FYE 31 December 2010, it contributed 4.8% of our Group’s total revenue. We were involved in the construction of both the 2x600MW power plant project in North Chennai and South West Pier of Chhatrapati Shivaji International Airport (Phase 1) in Mumbai, India. As at the LPD, we are involved in the construction of Trump Tower, Marathon Futurex, BWE Energy India and BTG Erection Package for 2x300MW EMCO Thermal Power in India. Furthermore, we have expanded our business operations into Saudi Arabia which has contributed 6.3% of our Group’s total revenue for the FYE 31 December 2010. As at the LPD, we are involved in the construction of Capital Market Authority Tower and King Abdullah Petroleum Studies & Research Centre in Saudi Arabia. 6. BUSINESS OF OUR GROUP (Cont’d)
6.2.15 Seasonality Our revenue is not affected by any ~easonality in the demand of our products and services.
6.2.16 Employees We work towards providing a safe working environment for our employees. As at the LPD, we have total staff strength of 6,424 employees as depicted in the table below. Employee breakdown by years of service, as at the LPD Years of service Employment category < 1 year 1 to 5 years > 5 years Total Management and professionals 10 45 39 94 Engineering/Executive 190 429 76 695 Supervisory 76 331 113 520 Administration and clerical 37 71 8 116 Construction workers (Skilled) 719 1,884 187 2,790 Construction workers (Semi-skilled) 228 329 128 685 General workers 363 1,139 22 1,524 Total 1,623 4,228 573 6,424 Our employees are primarily responsible for a variety of functions including engineering (structural design and detailed shop draWings), fabrication, erection and administration operations of our Group. The majority of our Group’s employees are construction workers accounting for about 54.09% of our total staff. Our Group on average employed 1,020 contract/temporary employees for the most recent year 2010. None· of our employees belong to any union. There has also been no major dispute between the employees and Management for the past 12 months. We have a strong emphasis on safe working environment and we believe in fostering a pleasant relationship with employees within our Group. We also offer training programmes to enhance our employees’ capabilities and potential. For example, our skilled workers are required to undergo practical production training and where relevant, be certified as competent site workers especially for the welders. We focus on staff training through structured and effective training programmes. Performance reviews are conducted on an individual basis to ensure and evaluate the effectiveness of all training programmes developed. We recognise the importance of staff training and development in order to equip our employees with the necessary knowledge and skills to perform their tasks effectively. This is a critical aspect of our efforts to promote an effective and efficient workplace and a safe working environment for our employees. 6. BUSINESS OF OUR GROUP (Cont’d) With the ISO 9001 :2000 and MS ISO 9001 :2000 certifications, we continuously educate our staff to adopt and maintain high quality standards through our Quality Management System. Training courses are provided to train new staff and to keep them updated with the latest developments. Other trainings include accounting and administrative training for administrative staff to strengthen their skills and knowledge and Project Management Professional for project managers and senior management personnel. Our Group also conducts safety induction program for our employees prior to the commencement of new projects. The table below lists some of the training and development programmes completed by the relevant employees of our Group. The programmes encompass external and internal training as well as development programmes: Year Programme Organisers 2007 Safety induction for construction workers • National Institute of Occupational Safety and Health (“NIOSH”), Malaysia 2007 Site induction and training for new • CIOB, Malaysia employees
2008 Site induction and training for new • CIOB. Malaysia employees
2008 Safety related trainings Sky Oryx Joint Venture (“SOJV”) formed by Taisei Corporation & Tepe Akfen Vie Investment Construction and Operation Co. • Overseas Bechtel Incorporated (“OBI”) • Velosi Certification LLC (‘VELOSI”) 2008 Erection and inspection of scaffolding Mirdif Security and Safety Consultants 2009 Site induction and training for new • CIOB, Malaysia employees 2009 ISO -Auditor’s/Safety related training • SOJV
• Technischer Ueberwachungs-Verein Suddeutschland (“TUV”)
2009 Basics of Tekla tool training for design • In-house engineers
2009 Basic methodology to design industrial • In-house structures training for design engineers
2009 Basics of reinforcing bar detailing training • In-house for reinforcing bar engineers
2009 Member placement training in X Steel for • In-house X Steel editors
2009 Hot work procedure training In-house 2010 Site induction and training for new • CIOB, Malaysia employees
2010 Training for scaffold structure· Claymore Security and Safety erectionlinspection Consultant 6. BUSINESS OF OUR GROUP (Cont’d) 6.2.17 Year Programme Organisers 2010 Integrated management system· MRKAYS BIZ Solutions FZE awareness training programme management consultancy and training 2010 Project safety policy and environment • In-house policy addressing
2010 Refresher course on IS 800-2007 for • William Hare India Private Limited senior design engineers
2010 Primavera up-gradation training for P6 • KLG Systel-IT Solutions Provider version 7 for planning engineers
2010 Training for model checking using reports • In-house (Report and template files)
2010 Training in erection methodology • In-house 2010 Training for framing system in steel for • In-house design engineers
2010 Training for connection application in X • In-house Steel for X Steel editors
Location of business Our location of principal assets and principal place of business are as follows: Approximate Company Address Purpose built-up area (sq. ft.) ECB Lot 19956, Jalan Industri 3/6 Investment holding 109,700 Rawang Integrated Industrial Park and provision of 48000 Rawang management services Selangor Darul Ehsan, Malaysia SEVM Lot 19956, Jalan Industri 3/6 Engineering, 109,700 Rawang Integrated Industrial Park fabrication, design and 48000 Rawang erection of mechanical Selangor Darul Ehsan, Malaysia and structural works SEVM (India Plot no. 2/12, Poonthottam Engineering, 5,500 Branch) 1st Street, Nanganallur fabrication, design and Chennai 600 114 erection of mechanical Tamil Nadu, India and structural works
EV Dubai #33 AI Qusais Industrial Area #1 Metal parts fixtures 968,760 Road #204, 19th Street contracting, steel P.O. Box 29537 fabrication and welding Dubai, UAE workshop and steel structure contracting EV Sharjah P.O. Box 42531 Steel fabrication and 1,734,823 Hamriyah Free Zone painting . Sharjah, UAE EVAbu Dhabi P.O. Box 107729 Contractor for (Registered Abu Dhabi, UAE buildings, industrial Office) establishments and
steel structures 6. BUSINESS OF OUR GROUP (Cont’d) Approximate Company Address Purpose built-up area EV Qatar EV India EV Singapore (Registered Office) EVSC (Registered Office) EVSaudi (Registered Office) (sq. ft.) 290,626 5,487 P.O. Box 35283 Doha, Qatar TNPL Building, 1st Floor Office no. 67, Mount Road, Guindy Chennai600032 India 42B Horne Road Singapore 209066 P.O. Box 113914 Dubai, UAE No.3, AI Masif, P.O. Box 305150 Riyadh, Saudi Arabia Engineering, blasting, painting, fabrication, design and erection of mechanical and structural steelwork Business of building, contractors and engineers etc General contractors and general building engineering services Engineering and contracting services Steel construction contracts for all kinds of buildings, steel construction works related to oil and gas fields, industrial establishment building contracting, fire proofing applications and civil works. [The rest of this page is intentionally left blank] 6. BUSINESS OF OUR GROUP (ContJd)
6.3 Major customers Our Group’s major customers that contribute 10% or more of our Group’s total revenue for each of the last 3 financial years are as follows: %of Length of total No. Customer Country Products/services relationship revenue Revenue (years) (RM’OOO) FYE 2008 1. Sky Oryx JV (Taisei Qatar Structural steel design, 3 12.8% 100.136 TAV Tepe Alden fabrication and erection JV) of steel structures
2. AI Habtoor Dubai, Structural steel 6 12.4% 96,852 Engineering UAE fabrication and erection Enterprises Co LLC
3. Nasa Multiplex LLC Dubai, Concrete works, 10 12.3% 96,388
UAE structural steel fabrication and erection
4. AI Habtoor AI Jaber Qatar Structural steel design, 10.4% 81,420
JV fabrication and erection of steel structures
FYE 2009 1. Qatar Petroleum Qatar Structural steel design, 2 32.4% 264.581 fabrication and erection of steel structures
2. Qatar Foundation Qatar Structural steel design, 16.7% 136,151 fabrication and erection of steel structures
3. Sky Oryx JV (Taisei Qatar Structural steel design, 4 15.2% 124,349 TAV Tepe Akfen fabrication and erection JV) of steel structures
FYE 2010 1. SixCo-Samsung JV Abu Structural steel >9 20.5% 152,484 Dhabi, fabrication and erection UAE of steel structures
2. Qatar Foundation Qatar Structural steel design, 2 16.9% 126,178 fabrication and erection of steel structures
Given the nature of the contracting business, we are not dependent on any major customer. Our relationships with the customers are on project basis where contracts are normally awarded after competitive bidding or direct negotiation. Our Group has long standing relationship with major international clients with a long history of successful collaboration on many landmark projects. We are routinely invited by many international clients to participate in the bidding of their projects. 6. BUSINESS OF OUR GROUP (Cont’d)
6.4 Major vendors Our Group’s major vendors (including raw materials, direct labour and subcontract services) that contribute 10% or more of our Group’s total direct cost for each of the last 3 financial years are as follows: Products suppliedl Length of (1) % to total No. Vendor Country services relationship direct cost Direct cost (years) (RM’OOO) FYE 2008 1. Corus Middle UAE Steel 11 14.57% 78,148 East (2) FYE 2009 1. Corus Middle UAE Steel 12 19.9% 111,734 East (2) FYE 2010 1. Hanwa Co. Ltd. UAE Steel 4 17.14% 69,058 Dubai (Branch)
2. Steel N People UAE Steel 5 13.30% 53,592 Ltd
3. J & P (0) Ltd Qatar Subcontractor 2 13.18% 53,128
4. Corus Middle UAE Steel 13 10.59% 42,693 East (2)
5. Hanwa Steel Qatar Steel 10.38% 41,812 Supply Middle FZE
Notes: (1) Direct cost is derived from total cost of sales less rental of premises, staff cost, depreciation, provision for back charges and fixed assets written off.
(2) Corus Middle East is a trading company of Tata Steel UK Limited located in the UAE. Corus Middle East procures raw steel materials from their mills in Europe and/or from other prominent mills that they have agreements with.
6.5 Governmental laws, decrees, regulations or other requirements which may affect the repatriation of capital and remittance of profits In Malaysia, a Malaysian resident is permitted to make payment of profits, dividends, fees, rental and royalties to a non-Malaysian resident in Malaysian Ringgit or foreign currency without registering the same with the Controller of Foreign Exchange (“ContrOller”) or obtaining the prior pennission of the Controller. However, the Bank Negara Malaysia’s Circular dated 1 August 2007 requires payments exceeding RM200,000 or its equivalent in foreign currency per transaction to comply with the reporting requirement. In UAE, Qatar and Singapore, there are no exchange rules or regulations of the repatriation of profits. In Saudi Arabia, there are no restrictions of the repatriation of capital and remittance of profits. In India, repatriation of capital and revenue is permitted under the current exchange control regulations for foreign investors, subject to payment of applicable income/dividend distribution tax. 6. BUSINESS OF OUR GROUP (Cont’dj
6.6 Relevant laws and regulations 6.6.1 Malaysia (i) CIDB Act 1994 Pursuant to the GIDB Act 1994, no contractor shall undertake to carry out and complete any construction works unless it is registered with the GIDB and holds a valid certificate of registration issued by GIDB. SEVM holds a valid certificate of registration from GIDB. (ii) Occupational Safety and Health Act, 1994 (“OSHA”) The OSHA regulates the safety, health and welfare of persons at work. Every employer shall ensure, so far as is practicable, the safety, health and welfare at work of all its employees. SEVM has a safety team in place in compliance with OSHA requirements. (iii) Factories and Machinery Act, 1967 (“FMA”) The FMA regulates factories and machineries by way of registration and examination of such machinery to ensure the maintenance of health and safety standards, including the welfare of all parties involved. Pursuant to the FMA, no person shall install or cause to be installed any machinery in any factory or any machinery in respect of which a certificate of fitness is prescribed, except with the written approval of the inspector. SEVM has obtained the requisite certificates of fitness for all of its relevant equipments. (iv) Industrial Coordination Act 1975 (“ICA”) Fabrication of steel structures is considered a manufacturing activity which comes under the purview of the IGA. Pursuant to the IGA, no person shall engage in any manufacturing activity unless he is issued a licence in respect of such manufacturing activity. SEVM has obtained the manufacturing licenses issued by the Ministry of International Trade and Industry through its agency, the Malaysian Industrial Development Authority. (v) Employment Act 1955 (“EA”) The EA regulates all employment and labour matters including contracts of service, payment of wages, employment of women, rest days, hours of work, termination, lay-off and retirement benefits and keeping of registers. All SEVM’s workers (inclUding foreign workers) are employed under terms which comply with the minimum conditions of employment. (vi) Employees Provident Fund Act 1951 (“EPF Act”) The EPF Act requires all employers and employees to contribute to the Employees Provident Fund (“EPF”) at the rates of 12% and 11 % respectively of the employees’ monthly wages. However, this requirement is not applicable to expatriates, domestic servants and who are paid from the private account of the employer. They can however elect to contribute to the EPF. SEVM has contributed to the EPF consistently every month. 6. BUSINESS OF OUR GROUP (Cont’d) (vii) Employment of Foreign Workers In Malaysia, foreign workers can be employed only in manufacturing, construction, plantation, agricultural, and services sectors. Only nationals from Indonesia, Thailand, Cambodia, Nepal, Myanmar, Laos, Vietnam, Philippines, Pakistan, Ceylon, Turkmenistan, Uzbekistan, Kazakhstan and India are allowed to work in these sectors. Most of the foreign workers of SEVM are from India and Myanmar and they hold valid work pennits. (viii) Street, Drainage and Buildings Act 1975 (“SDB Act”) According to the SDS Act, no one can occupy or be allowed to occupy any part of a building unless a certificate of completion and compliance has been issued according to the SDS Act. The certificate of completion and compliance for the property in Malaysia has been obtained. (ix) Environmental Quality Act 1974 (“EQA”) The EQA and regulations made thereunder contains provisions and regUlations for the prevention, abatement, control of pollution and enhancement of the environment. No person shall deal with the Scheduled Waste as defined in the EQA unless prior approval of the Director General of Environment Quality is obtained. SEVM confirms that it does not violate any provisions of the EQA.
6.6.2 United Arab Emirates Our subsidiaries, where relevant, are compliant in all material respects with the laws of the UAE to the extent that they are relevant to the business and operations in the UAE. (i) Companies Law The Companies Law requires each company to have a UAE national shareholder which holds at least 51 % of the shares of such company. The memorandum of association of a company may not contain provisions to the effect that a shareholder is not entitled to any profits. However, the memorandum of . association may allocate profits to shareholders in a different percentage to their shareholding. It is a commonly established principle that the maximum allowable profit split is 90/10 in favour of the non-national partner in Abu Dhabi (in very limited circumstances) and 80/20 in Dubai. Further details on the ownership laws in the UAE are set out in Section 5.1 (iv) of this Prospectus. (ii) Federal Law No. 18 of 1993 (“UAE Commercial Code”) The UAE Commercial Code governs banking and commercial transactions in the UAE. The provisions of the UAE Commercial Code apply to traders and to all commercial business undertaken by any person. The UAE Commercial Code contains provisions on who may lawfully conduct business in the UAE, subject to certain exemptions for GCC nationals or companies operating in free zones. No one other than UAE nationals may do so unless in conjunction with UAE partners in line with the requirements of the Companies Law which stipulates a minimum 51 % local ownership. Further details on the ownership laws in the UAE are set out in Section 5.1 (iv) of this Prospectus. 6. BUSINESS OF OUR GROUP (Cont’d) (iii) Federal Law No.8 of 1980 (“Labour Law”) The Labour Law is prescriptive and codifies significant areas that might usually be found in an employment contract. It covers all aspects of the employeremployee relationship including matters related to employment contracts, restrictions on employment of juveniles and women, maintenance of records and files, wages, working hours, leave, safety and protection of employees, medical and social care, codes of discipline, termination of employment contracts, end of service benefits, compensation for occupational diseases, labour inspections, penalties and employment related accidents, injuries and deaths. A failure to comply with any of the compulsory elements of the Labour Law can result in up to 6 months imprisonment or a fine for the directors of the company in breach. No non-national may be recruited for work in the UAE without the approval of the Labour Department and having obtained a work permit. (iv) Federal Law No.5 of 1985 (“UAE Civil Code”) Contractors and design consultants in the UAE are liable, without fault, for the cost of rectifying structural defects that appear in a building or structure within 10 years of handover, in what is known as Decennial Liability. This is the effect of articles 880 to 883 of the UAE Civil Code. Decennial Liability is strict, in other words it is not necessary to prove any negligence or breach of contract. The key points to note about Decennial Liability in the UAE are as follows: (al Trigger events are total or partial collapse of a building and/or a defect threatening the stability or safety of a structure; (b) Liability lasts for 10 years following handover;
(c) No fault is necessary in order for liability to arise;
(d) Contractors and consultants are jointly liable;
(e) Compensation is payable to the client;
(f) Liability attaches notwithstanding that the collapse or defect is caused by sub-surface conditions or that the client approved the defective work;
(g) Claims for compensation must be commenced within 3 years from the collapse or discovery of a defect;
(h) Agreements purporting to exclude Decennial Liability are void; and
(i) Buildings or structures, the life cycle of which is less than 10 years, are exempt.
For contractual claims other than claims for Decennial Liability (for example for negligent design or defective workmanship), liability continues for a period of 10 years from the due date for fulfilment of the obligation (Le. usually in the context of a construction contract, completion of the works or the end of the defects liability period, depending on the nature of the claim). 6. BUSINESS OF OUR GROUP (Conf’dj (v) Local Order No.3 of 1999 Local Order No. 3 of 1999 regulates construction works in the Emirate of Dubai (Order). This Order applies to the construction of bUildings (including any steel constructions). It provides that no public or private, natural or corporate person may carry out any whole or partial permanent or temporary constructions works or change the features of a plot or a property without first obtaining a licence from the Governmental Buildings and Housing Department (“Construction Licence”). Other than the lands leased by the Government, the term of a Construction Licence shall be six months from the date of issue. A Construction Licence can be cancelled if the construction works have not commenced within three months of the issue of the Construction Licence or stop for more than three consecutive months. The Order also provides that the Construction Licence will only be issued if the applicant makes certain financial deposits with the Dubai Municipality (to ensure that the work commences and is performed in accordance with the terms of the Construction Licence and that the applicant will indemnify any damages to third parties arising out from the construction works). The amounts and terms of such financial deposits, and the circumstances of forfeiture of such deposits are determined by the Dubai Municipality from time to time. The Order provides for the technical conditions which have to be met as a requirement to obtain the Construction Licence. Some of the requirements shall be fixed by the Dubai Municipality from time to time. Under the Order, in principle the contractor and the engineer are jointly liable for the performance and safety of the construction works during and after the performance of the construction works. Such liability shall extend to the buildings adjacent to the site where such works are carried out and to any public utility in connection with any consequent damages. The Contractor shall also be liable for any defaults committed on the construction sites, whether such defaults are committed by the owner or any third parties, from the date of handover of the site to the contractor until any of the events that may terminate the contractual relationship between the contractor and the owner arise, unless the contractor suspends the work on the site and notifies the Governmental Buildings and Housing Department. The Order provides for the rules in relation to monitoring and inspection of construction works and any penalties to be applied in case of default. (vi) Exchange Control There are no exchange rules or regulations of the repatriation of profits in the UAE. 6. BUSINESS OF OUR GROUP (Conf’d)
6.6.3 Qatar EV Qatar is compliant in all material respects with the laws of Qatar to the extent that they are relevant to the business and operations in Qatar. (i) Commercial Companies Law No.5 of 2002 (“Companies Law”) Although the Companies Law provides that every company incorporated in Qatar will have Qatar domicile and nationality, it also clearly states that this does not necessarily lead to such companies being entitled to privileges which are reserved for Qatar; citizens. The articles of association of a company may not contain provisions to the effect that a shareholder is not entitled to any profits. However, it may allocate profits to shareholders in a different percentage to their shareholding. It is a commonly established principle that the maximum allowable profit split is 95/5 in favour of the non-national partner in Qatar. (ii) Foreign Investment Law No. 13 of 2000 (“Foreign Investment Law”) Under the Foreign Investment Law, foreign owners are restricted to hold a maximum of 49% of a company’s capital. In certain circumstances up to 100% may be permitted, for example where the company operates in the industries of agriculture, tourism, natural resources, education etc or the company involves in projects that contribute towards Qatar’s development plans. (iii) Labour Law No. 14 of 2004 (“Labour Law”) The Labour Law covers all aspects of the employer-employee relationship including matters related to employment contracts, restrictions on employment of juveniles and women, maintenance of records and files, wages, working hours, leave, safety and protection of employees, medical and social care, codes of discipline, termination of employment contracts, end of service benefits, compensation for occupational diseases, labour inspections, penalties and employment related accidents, injuries and deaths. A failure to comply with any of the obligatory laws in the Labour Law can result in up to 6 months imprisonment or a fine for the managers of the company in breach. No non-national may be recruited for work in the Qatar without the approval of the Labour Department and having obtained a work permit and there is a positive obligation to employ Qatari nationals. (iv) Qatari Civil Code No. 22 of 2004 (“Qatari Civil Code”) Under Articles 711 to 715 of the Qatari Civil Code, contractors and design consultants in Qatar are liable, without fault, for the cost of rectifying structural defects that appear in a building or structure within 10 years of handover. This is known as Decennial Liability which is a strict liability. For contractual claims other than claims for Decennial Liability (for example for negligent design or defective workmanship), liability continues for a period of 15 years from the due date for fulfilment of the obligation (Le. usually in the context of a construction contract, completion of the works or the end of the defects liability period, depending on the nature of the claim). 6. BUSINESS OF OUR GROUP (Conf’d) The key points to note about Decennial Liability in Qatar are as follows: • Trigger events are total or partial collapse of a building and/or a defect threatening the stability or safety of a structure;
• Liability lasts for 10 years following handover;
• No fault is necessary in order for liability to arise;
• Contractors and consultants are jointly liable;
• Compensation is payable to the client;
• Liability attaches notwithstanding that the collapse or defect is caused by sub-surface conditions or that the client approved the defective work;
• Claims for compensation must be commenced within 3 years from the collapse or discovery of a defect;
• Agreements purporting to exclude Decennial Liability are void;
• Buildings or structures, the life cycle of which is less than 10 years, attract liability for the duration of that life cycle; and
• Contractors/consultants are unable to pass the risk of Decennial Liability down to their sub-contractors/sub-consultants.
(v) Exchange Control There are no exchange rules or regulations of the repatriation of profits in Qatar.
6.6.4 India (i) Factories Act, 1948 (“Factories Act”) The Factories Act applies to a place where manufacturing operations are carried on. It provides, inter alia, for licensing of factories, and contains provisions relating to health, safety, welfare of the workers in factories. It also contains provisions relating to hazardous processes, working hours of workers, annual leave to be provided by factories and for certain related matters. At present, EV India and SEVM India Branch (“Branch”) are not directly engaged in any manufacturing activities currently and hence, this law is not immediately relevant. 6. BUSINESS OF OUR GROUP (Cont’dj (ii) The Building and Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (“Building and Construction Workers Act”) The Building and Construction Workers Act regulates the employment and conditions of service of building and other construction workers. Employer shall provide safety, health and welfare measures for the building and construction workers. EV India holds certificates of registration dated 8 November 2010 and 15 February 2011 under the aforesaid law issued by the Registering/Licensing Officer, Government of Maharashtra. Also, Branch has obtained registration dated 21 February 2011 under the aforesaid law issued by the Inspectorate of Factories, Chennai and registration dated 3 November 2010 valid until 4 August 2012 and 11 October 2010 valid until 11 October 2012 under the said law issued by the Registering officer Government of Tamil Nadu. (iii) The Building and Construction Workers’ Welfare Cess Act, 1996 (“Building Cess Act”) The Building Cess Act provides for levy and collection of a cess at the rate of 1% to 2% of the cost of construction as may be levied by the Central Government from time to time. Such cess is payable by the employer in relation to such work. The cess under this law is payable on completion of the project or on completion of every year of the project (where the project takes more than a year to complete). The relevant employers/owners in the projects are expected to discharge such obligations. (iv) Contract Labour (Regulation and Abolition) Act, 1970 (“Contract Labour Act”) The Contract Labour Act regulates the employment of contract labour (i.e. where a person is hired in relation to the work of an establishment by another person called contractor) in certain establishments and for abolition of engagement of contract labour in certain circumstances and for related matters. EV India has obtained contract labour licenses dated 16 March 2011 and 28 November 2010 both of which remains valid until 31 December 2011, under the said law, issued by Registering/Licensing Officer, Government of Maharashtra. Further, Branch has obtained contract labour license dated 27 December 2010 (renewed on 23 November 2009), valid until 31 December 2011 under the said law, issued by Registering/Licensing Officer, Government of Tamil Nadu and two more contract labour licenses dated 4 October 2010 both valid until 3 October 2011, under the above referred law, issued by Registering/Licensing Officer, Government of Chinna Chkkikulam, Madurai. (v) Inter State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 (“Inter-State Migrant Act”) The Inter-State Migrant Act regulates the employment of inter-state migrant workmen and provides for registration of certain establishments and licenses to be obtained by the contractor employing workmen more than the prescribed limit. Branch has obtained license dated 27 December 2010 which is valid until 31 December 2011, under the said law, issued by Registering/Licensing Officer, Government of Tamil Nadu. EV India has informed that they are in process of applying for registration for the projects at Warora and Mumbai. 6. BUSINESS OF OUR GROUP (Conf’d) (vi) (vii) (viii) (ix) Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (UEPF Act of India”) Under the EPF Act of India, an employee is required to pay contribution towards the fund (generally at 12% of the basic salary, dearness allowance and retaining allowance) and an employer is required to an equal contribution, subject to a cap on salary of Rs6,500 per month. EV India and Branch has obtained registration under this law from the Ministry of Labour, India and makes applicable contributions under this law. Employees State Insurance Act, 1948 (UESI Act”) The ESI Act provides certain benefits to employees in factories and certain other establishments, in the case of sickness, maternity and employment injury and for related matters. It applies to an establishment employing not less than 20 persons, under normal circumstances. Employer is required to contribute a certain amount (at present 4.75% of the wages) and an employee is required to contribute a certain amount (at present 1.75% of wages). Only employees that are paid less than a prescribed amount as salary are included in this ESI Act (being Rs15,000 per month from May 2010 and Rs10,OOO before May 2010). EV India has obtained registration under this law from the Employees’ State Insurance Corporation for relevant workers and makes applicable contributions under this law. For the project at North Chennai Thermal Power Station site at Athipattu, Pooneri Taluk, Chennai, ESI Act is not applicable since the location is not a notified area. In respect to the Tamil Nadu Tuticorin projects, even though the area is notified as a covered area, this law is not applicable to the Branch since the Employees State Insurance Corporation has issued a notification to the effect that construction agencies/offices of builders are not required to be covered given the migratory nature of the workers in such industry. Minimum Wages Act, 1948 Under the Minimum Wages Act, 1948 the appropriate government may fix the minimum amount or rates of wages that are to be paid in relation to specified employments and the employers are required to ensure that such minimum wages are paid. The minimum wages or rates of wages payable to for different categories of work may be fixed by the relevant government based on the extent of skill required for a particular category of work. EV India confirms that it is compliant in all material aspects with the said law. Payment of Wages Act, 1936 The Payment of Wages Act, 1936 applies to factories and certain other establishments as notified by the appropriate Government of India and in relation to wages payable to an employed person in respect of a wage period, if such wages for the wage period do not exceed Rs6,500 per month or such higher sum as may be notified by the Central Government of India from time to time. This law contains provisions relating to deductions that may be made from wages and for related matters. EV India confirms that it is compliant in all material aspects with the said law. 6. BUSINESS OF OUR GROUP (Conf’dj (x)
(xii) (xiii) (xiv) Payment of Bonus Act, 1965 The Payment of Bonus Act, 1965 provides for payment of minimum bonus (being 8.33% of the salary) that may be payable even if the establishment does not earn profits and also provides for the maximum bonus (being 20% of the salary) that may be paid. Employees drawing salary up to Rs10,OOO per month are eligible to get bonus though for calculation of bonus maximum salary is considered as Rs3,500 per month. EV India has paid bonus to its employees for the first completed financial year. Payment of Gratuity Act, 1972 The Payment of Gratuity Act, 1972 provides for a scheme for the payment of gratuity to employees (who has served the employer for a continuous service of 5 years) engaged in factories and certain other establishments. The gratuity is payable at the time of resignation, retirement, superannuation, death or disablement due to accident or sickness. EV India is in the process of creating trust in relation to such obligations and is in the process of effecting appropriate insurance policies based on actuarial valuation. For the time being, EV India makes provisions in its books for this purpose. Water (Prevention and Control of Pollution) Act, 1974 (“Water Act”) The Water Act provides that no person shall establish any industry, operation or process, or any treatment and disposal system that is likely to discharge sewage or trade effluent into a stream or well or sewer or on land, without the previous consent of the State Board. Given the nature of operations carried out by EV India and Branch which are not involved in any manufacturing activity, this law may not be immediately relevant. Air (Prevention and Control of Pollution) Act, 1981 (“Air Act”) The Air Act provides that no person shall, without the previous consent of the State Board, establish or operate any industrial plant in an air pollution control area. Given the nature of operations carried out by EV India and Branch which are not involved in any manufacturing activity, this law may not be immediately relevant. . Environment (Protection) Act, 1986 The Environment (Protection) Act, 1986 provides that no person carrying on any industry, operation or process shall discharge or emit any environmental pollutants in excess of prescribed standards. Further, no person shall handle or cause to be handled any hazardous substance except in accordance with prescribed procedure. Given the nature of operations carried out by EV India and Branch which are not involved in any manufacturing activity, this law may not be immediately relevant. 6. BUSINESS OF OUR GROUP (Cont’d) (xv) Tax Laws Apart from the law relating to taxes on income viz., the Income Tax Act, 1961, depending on the activities of the company and the branch, various other laws such as the Customs Act, 1962, Customs Tariff Act, 1975, Central Excise Act, 1944, Central Excise Tariff Act, 1985, the Law relating to Service Tax, as contained in the Finance Act, 1994, Central Sales Tax Act, 1956 and the State law relating to Sales Taxi Value Added Tax, would be applicable. EV India believes that it is compliant in all material aspects with the tax law. (xvi) Exchange Control Laws A person may sell or draw foreign exchange to or from an authorized person if such sale or draw is a current account transaction. This is however subject to any restrictions that the Central Government may impose from time to time. Repatriation of capital and revenue is permitted under the current exchange control regulations for foreign investors. EV India believes that it is compliant in all material aspects with the exchange control law.
6.6.5 Saudi Arabia (i) Exchange Laws There are no restrictions of the repatriation of capital and remittance of profits in Saudi Arabia. [The rest of this page is intentionally left blank]