executive summary- licensing opportunity for litewalk grating

Licensing Opportunity

For

Litewalk Grating

January 2010

Litewalk™ Grating Project Licensing Opportunity

January 2010

Executive Summary January 2010

Objective

This executive summary (teaser) is specially prepared for prospective investors who are potentially existing industry players to learn about this new invention which is ready for commercialization. It gives a glimpse of what this new product can offer, its economic & technical competitive edge as well as its expected return on investment based on prevailing selling prices and cost of production. It also provides comprehensive basic information to that interested parties to make an informed decision as to whether they would explore further on this proposed investment.

1. Introduction

Litewalk Innovations Sdn Bhd (“Litewalk”) is a private limited company incorporated in Malaysia for the sole purpose of undertaking the research and development, design, fabrication, manufacturing, licensing, marketing, distribution and sale of the new LitewalkTM galvanized steel grating panels. The company is owned and controlled by Mr. Bugs Tan. Bugs Tan has won numerous invention awards and is regarded as an idol amongst budding inventors in Malaysia. Among the 10 national awards won by Bugs Tan over the past years, the National Innovation of the Year award for 2007 went to Mr. Bugs Tan. Bugs Tan is continuously creating, researching, inventing and designing various products to be brought to commercial realisation. The new LitewalkTM grating panel was first designed in 2007. In 2008, new LitewalkTM grating panel passed all the compulsory technical tests conducted by University Malaya for strength and corrosion. During the same year, new LitewalkTM grating system obtained the BS 4591 Part 1 certification from SIRIM The Inventor has conducted numerous dialogues with oil majors and key engineering and construction & fabrication players in the oil and gas industry. Based on its competitive edge in strength and tensile, weight and most importantly cost, new LitewalkTM grating system has received wide and positive feedback on procurement and usage. Among others, Petronas procured the Litewalk™ grating for its Sumandak platform and MITCO procured for the Asian Supply Base, Labuan in November 2007 and February 2008 respectively.


January 2010

2. The Product

The Inventor has named this product LITEWALK. The name which has been trademarked, will become the brand name used during commercialization.

Even though Litewalk™ grating panels are made of the same material as the common grating (it has to be in compliance with, among others, oil and gas safety standards), this indigenous design and invention has, among others, four distinct advantages. They are:‐

(i) Lighter by 35%; and

(ii) Stronger by 12%; and

(iii) Cheaper by 10% (based on estimates and current prices, ranging from 10% to 32%); and

(iv) Safer to walk‐on due to its design of embossed rings on the Load Bearing Rod.

Litewalk™ grating system is new in the market place, but with such strong features, it is very difficult for oil majors, engineers and fabricators to ignore such advantages. In addition, Litewalk™ grating system is a homegrown product which could be marketed globally which essentially means avenue of foreign exchange inflow to the country.

3. Current Grating Manufacturers

There are two existing manufacturer for grating panel in Malaysia. They are as follows:‐

1. Dahe Industry Sdn Bhd

A local Bumiputra‐owned outfit located in Beranang, Selangor.

2. Webforge

A wholly‐owned subsidiary of Delta Ltd (UK). This factory was established in Shah Alam 26 years ago. Delta has 8 Webforge factories throughout the world and has an annual turnover for steel product (grating panels) of about £200.9 million (RM1.4 billion) and a profit of £21.3 million (RM149.0 million) for year 2008.

The estimated market size for grating panels in Malaysia alone is about RM200 million per annum.


January 2010

4. Usage of grating panels

Galvanized steel grating panels can commonly be found in the followings areas:‐

(i) Oil & gas off‐shore platforms; (ii) Oil refineries; (iii) Petrol and Chemical plants; (iv) Power plant;

(v) Other heavy industry factories; and

(i) Ships and shipyards.

5. The Licensing Arrangement

The Inventor, who hereby is also known as the Licensor has filed all necessary patents in regards to this new technology. He now wishes to issue a license to suitably qualified industry player to commercialize this new product.

The interested investor who will be the Licensee will obtains an exclusive rights to manufacture and market the product for a period of 10 years. The territory given to the Licensee shall cover Malaysia, Singapore and Brunei.

The Licensor will assist the Licensee by providing all technical know‐how to set‐up the production facility for this purpose.

6. How to be a Licensee

Due to the specificity of the product’s life in the market, the proposed investment in Litewalk and/or licensing arrangement with the Licensor to manufacture and market Litewalk’s products will be low in entry cost in the event the prospective investor has certain existing common/related facilities. The following may be certain of the elements vested in the prospective investor who could result in low entry cost for the proposed investment:‐ (i) Involved in the manufacturing of oil and gas products or steel products with ample

unutilised space for production floor.


January 2010

(ii) Sufficient funds to finance the capital expenditure for the project. The final amount

required for capital expenditure is dependent on the level of utilisation of the existing facilities of the prospective investor.

(iii) Sufficient funds to finance the working capital of the project pre‐commencement

and post‐commencement of commercial operation.

(iv) Has an existing team of technical staffs with experience in manufacturing steel products. This team take pride to produce product of high quality and deliver on time.

(v) Has an existing team of energetic marketing and sales staffs who are inspired to make this business a success

(vi) Wide‐ranging and reputable among the oil majors and oil and gas players in the industry which proves to be one of the marketing competitive edge.

7. Financial commitment

Investment for the main machinery to manufacture this product is about RM1.0 million for a single‐line production plant. In the event that the Licensee does not have existing common/related manufacturing facilities, the total investment will rise to approximately RM3.5 million


January 2010

8. Project Economics

Shown in the table below are the manufacturing data pertaining to a single‐line production plants. Production Capacity for a Single‐line production Year 1 Year 2 Year 3 Machine capable to mfg per yr in m² 56,160 56,160 56,160 Machine capable to mfg per yr in metric tonnage 1,236

1,236 1,236

Forecast mfg per yr in m² 5,616 28,080 36,504 Forecast mfg per yr in metric tonnage 124 618 803 % of mfg per yr 10 50 65

The key financial figures pertaining to the proposed investment are shown in the table below. Figure shown here is as though the investment is RM3.5m which is setting‐up a new factory from scratch. The profits will be even much better if the investor already have an existing on‐going factory with experienced technical staffs and experienced marketing and sales staffs.

Year 1 Year 2 Year 3 RM RM RM Sales 3,453,840 11,858,184 15,877,780 Direct cost 1,610,248 5,565,863 7,605,835 Gross profit 1,843,592 6,292,321 8,271,945 Less : Expenditure 1,359,415 2,122,440 2,335,224 Profit before tax 484,178 4,169,881 5,936,721 Corporate taxation (25%) 121,044 1,042,470 1,484,180 Profit after tax 363,133 3,127,411 4,452,541


January 2010

9. Manpower Requirement

There is no special skill required in order to manufacture this new grating. The only skilled workers required are qualified welders which can be easily sourced from the market. The manpower planning will be as follows:‐ 1st year : About 24 staff 2nd year : About 30 staff 3rd year : About 32 staff

10. Factory Space required

The factory should have a floor space of about 10,000 to 20,000 sq ft. It would be economically beneficial if the proposed location for the factory is nearby to a factory which has hot dip galvanising facilities.

11. Machinery Required

The machine suitable for manufacturing such new Litewalk™ grating panels is imported from Taiwan. They are specially designed for this purpose and are expected to take approximately 3 to 4 months to fabricate. Licensee may need another month or two to install the machine, commission, trial run and fine tuning. The commencement of commercial production is expected to take place approximately six months from first order placed of the machine.


January 2010

12. Material to produce Litewalk™ grating panels

The raw material used to manufacture Litewalk™ grating panels is hot rolled or cold rolled steel which are commonly available in the market from major steel manufacturers and suppliers in town. Upward movement of steel price is expected to have minimal impact on the bottom lines. Other components in the raw materials are non‐material as steel forms bulk of the cost of raw materials and is about 50% of the total production cost.

13. Market Readiness & Market Size

Litewalk™ grating is already known to most civil structural engineers in Petronas Carigali. Petronas has scheduled to fabricate 70 new platforms over the next 5 years. Petronas Carigali has already owned more than 100 platforms and there is always a constant demand for replacement of grating panels. Other requirements of grating are like at the Petronas refinery in Melaka, Kerteh and Bintulu where such facilities are more than 10 years. All existing checked plates for these refineries will be replaced with new grating panels.

Shown in the table below are some of the major projects that are currently going on at various fabrication yards:‐

Name of Project Fabricator Estimated

Project Cost

Estimated Contract Value

for Grating Panels

Shell Gumusut, Pasir Gudang MMHE USD1.0 billion USD50.0 million Malaysia Vietnam ‐Ruby FPSO Conversion Project

MMHE USD200.0 million USD10.0 million

Petronas carigali‐ Kumang Cluster Project, Pasir Gudang

SDESB USD300.0 million USD15.0 million

Petronas Carigali‐ MLTTB SDESB, Kencana

and OilFab USD400.0 million USD20.0 million

Shell Chilli Padi F23 SDESB USD500.0 million USD25.0 million

Petronas Carigali‐ Kinabalu Oil field SDESB and Kencana

USD300.0 million USD15.0 million

Petronas Carigali & Shell, Kebabangan TBA USD900.0 million USD45.0 million Tanjung Agas Oil & Gas Maritime Ind Park and Supply Base

TBA USD1.7 billion USD85.0 million

Suria B Well Head Platform TBA USD100.0 million USD5.0 million CPOC Muda B Well Head Platform OilFab TBA TBA West Berlumut Well Head Platform Kencana USD50.0 million USD2.5 million Bakun Dam, Sarawak TBA TBA TBA

Total USD5.45 billion USD272.5 million Note : The estimated contract value for grated panels for platforms is about 5% of the estimated

project cost.


January 2010

14 Licensing Fee & Royalty

Interested parties shall pay a technology license fee of RM250,000 flat to the Licensor. And the Licensee is also subjected to pay a royalty of RM2.00 per kg for every piece of Litewalk™ grating panel manufactured. Licensee shall also pay a royalty of 10% for the accessories related to this Litewalk™ grating system.

The detailed terms and conditions will be discussed when interested parties are keen on this proposed investment.

15. Minimum Quantity

The Licensee is subjected to perform and must achieve certain quantity per year. They are:‐

Year 1 min 50 tons

Year 2 min 300 tons

Year 3 min 400 tons

Year 4 min 500 tons

Year 5 min 600 tons

Year 6 min 700 tons

Year 7 min 800 tons

Year 8 min 900 tons

Year 9 min 1,000 tons

Year 10 min 1,100 tons

16 Who owns the Business

The inventor does not have any interest in the Licensee’s company. Hence, the Licensee is the full owner of his business.


January 2010

17. Contacts

Bugs Tan Litewalk Innovations Sdn Bhd Inventor/Chief Executive Officer Mobile : +6 013 388 7800 Email : [email protected]


January 2010

IMPORTANT NOTICE This Teaser is an executive summary of the Litewalk™ Grating project and is a private document fully belonged to the Inventor, Mr. Bugs Tan. It is not to be reproduced, quoted or referred to, in whole or in part, in any private or public documents, submissions to any regulatory bodies or any forms of announcement without the prior written consent of the Inventor in each specific instance. Each section of this Teaser must be read along with the contents of the entire Teaser. the Inventor do not assume responsibility or liability for losses however occasioned to you or any other party as a result of the circulation, publication, reproduction or use of this Teaser, in whole or in part. The Inventor, any of their members, employees nor agents undertakes responsibility arising in any way whatsoever to any person in respect of this Teaser, including any reliance, any error or omission herein, however caused. The Inventor is under no obligation to update this Teaser in respect of events or information that comes to their attention subsequent to the date of this Teaser. Notwithstanding this, the Inventor reserves the right, should they consider it necessary to revise this Teaser, in light of any information that existed at the date of this Teaser but which becomes known to the Inventor subsequent to the date of this Teaser. Although certain information contained herein has been obtained from sources believed to be reliable, the Inventor, any of their members, employees or agents expressly disclaim any and all liabilities for incomplete or inaccurate information or representations, whether expressed or implied, as contained in this Teaser. This Teaser is not a public offer document and has been compiled to provide information on the Inventor’s and/or Target’s activities at the request of selected recipients of this Teaser. Each recipient of this Teaser must rely upon its own investigations, evaluations and due diligence to establish its own conclusions as to the merits of this project or transaction. All the limitations and restrictions stated in this section of this Teaser specifically and anywhere in this Teaser are not meant to be exhaustive. The Inventor reserves the absolute right to vary and/or amend the limitations and restrictions in the light of changing circumstances. The act of receiving this Teaser by the Recipient signifies that the Recipient, its members, employees or agents agree that they, singularly and collectively, will not divulge any information in regards to this project to any third party without the prior consent from the Inventor. Participating in transactions of any nature with Target or enter into any form of discussions, negotiations or communication with any third party, its members, employees or agents in respect of the Target is prohibited.

oooooooo0oooooooo

executive summary- licensing opportunity for litewalk grating

Documents