PYOORR CYCLES (M) SDN BHD(853600-H)

TABLE OF CONTENTS

1.0 EXECUTIVE SUMMARY

2.0 BUSINESS DESCRIPTION

2.1 Introduction

Pyoorr Enterprise started its business as a dealer of various types of high performance

motorcycle in January 2008. As a result of spin-off from Pyoorr Enterprise, Pyoorr Cycles (M)

Sdn Bhd (PCMSB) was formed in April 2009 to take over Pyoorr Enterprise’s business and

operation in a more structural manner. At this point, PCMSB has succeeded in securing

exclusive dealership with KTM, a well known brand from Austria for 3 states which are

Selangor, Kuala Lumpur and Johor, entrusting PCMSB with the exclusive dealership of

motorcycles, spare parts, accessories and clothing of KTM. Attain its supplies and being the

exclusive dealer of KTM has made PCMSB the sole dealer in Kuala Lumpur and Selangor with

one current branch in Batu Caves, Selangor.

As to date, KTM sole distributor in Malaysia, that is, Motonation Manufacturer Sdn Bhd

(Motonation) has positive instinct to sell 10,000 units of KTM for model 200 Duke and 690 Duke

yearly via its first-time ever manufacturing plant opened in Jitra, Malaysia to support 20%-30%

local demand. Exhibit 2.1 shown the recent highlight on Motonation and KTM.

2.2 Product and Services

PCMSB has three (3) revenue streams – sales of motorcycles, parts and accessories, and

mechanical services (workshop). Below is the description:-

2.2.1 Sales of Motorcycles

The business will carry a diverse line of motorcycles for on-road and off-road from KTM

for domestic market. In the near future, Motonation will actively manufacture the

motorcycles locally and indirectly will develop distributor relationships with PCMSB to

acquire its wholesale inventories of motorcycles faster. PCMSB expects to sell 8 to 12

motorcycles on a monthly basis.

2.2.2 Sales of Parts and Services

Apart of the main revenue streams, PCMSB will not forget the bread-and-butter of its

business which is sales of parts and accessories and also providing mechanical

services. These two (2) revenue streams will ensure the business to remain profitable by

generating positive cash flow.

2.3 Vision and Mission

Vision

“Providing quality of service and to be number one in our chosen market – performance and

racing enthusiast”.

Mission

“Total Customers Satisfaction”.

2.4 Business Direction and Roadmap

Pyoor Cycle (M) Sdn Bhd (PCMSB) is planning to strengthen its current business at existing

premise by also offering after-sales service; those are workshop and sales of accessories.

PCMSB strategic business direction will closely mirror its country sole distributor’s development

plan. This correlates to the fact that the revenue streams of the company will depend largely on

the Motonation Manufacturer Sdn Bhd (Motonation) strategic moves. In view of this, Figure 2.4

illustrates the 5-years progressive roadmap for PCMSB.

Figure 2.4: PCMSB’s 5-Years Progressive Roadmap

2.5 Information on KTM

2.5.1 KTM in Malaysia

KTM, Europe’s second largest motorcycle manufacturer, and its Malaysian dealer,

Motonation of Penang, are setting up an assembly plant for their motorcycles in Perlis

after been in Malaysian market for three (3) years.

The assembly plant which is located in Pauh is set to be fully operational by this year

and will assemble the KTM 690 Duke and its sportier version, the KTM 690 Duke R.

The 690 Duke will retail at RM 42,500 (US$ 14,072) and the Duke R at RM 46,500. The

prices are about RM 10,000 cheaper than the CBU units. KTM 200 is also expected to

be assembled in Pauh.

Having a strong heritage in the world of off-road racing, KTM has dominated world titles

in MX1, MX2, Enduro and IDM Racing Championship, as well as celebrating its 10 th

consecutive win in the Dakar Rally.

KTM principals are also having plans to expand into automotive production, with some

prototype models already in the pipeline.

2.5.2 History of KTM

Year 1 till Year 3(a) Strengthen current business at Batu

Caves - to take effect of Motonation sales target, 10,000 units KTM sold a year for

model 200 Duke and 690 Duke.

Year 4 till Year 5(a) Open new branch at Shah Alam(b) Attain dealership of other brand

KTM Sportmotorcycle AG is an Austrian motorcycle manufacturer. The company was

founded in 1934 by engineer Hans Trunkenpolz  inMattighofen. It started out as

a metalworking shop and was named Kraftfahrzeuge Trunkenpolz Mattighofen. In 1954

KTM began producing motorcycles. KTM is most commonly known for its off

road motorcycles though in recent years it has expanded into street motorcycle

production.

The company was founded in 1934 by engineer Hans Trunkenpolz in Mattighofen. It

started out as a metalworking shop and was named Kraftfahrzeug Trunkenpolz

Mattighofen. It wasn't until 1953 that KTM began production of motorcycles. With just 20

employees, motorcycles were built at the rate of three per day. In 1955, a

businessman Ernst Kronreif became shareholder of the company, on acquiring a sizable

portion of the company. It was then renamed Kronreif & Trunkenpolz

Mattighofen. Trunkenpolz died unexpectedly in 1989. During these early years of

motocycle production at KTM, almost all components for the motorcycles were built in-

house by KTM.

Throughout KTM's history, they have been on the leading edge of motorcycle

technology. They were the first manufacturer to produce a liquid-cooled-four motorcycle

engine for an off road motorcycle, a design which has since been replicated by all other

manufacturers (KTM even supplied radiators to Suzuki in their early water-cooling days).

In 1986 KTM became the first motorcycle manufacturer to include both front and

rear brakes on and off road motorcycle. In 1998, they offered a linkless rear suspension,

dramatically reducing the un-sprung weight of the bike (KTM was the first major

manufacturer to do so, although ATK, a small market, niche brand did so as early as

1987). They were also the first to offer hydraulic clutch mechanisms on all models of

motorcycles, and were the first to offer a competition-ready supermotor bike.

Since 1990 KTM motorcycles and automobiles (X-Bow) have been designed by

KiskaDesign, a Salzburg-based design firm with over 100 employees that offers

transportation, product, environmental, identity and branding to an international clientele.

It is responsible for the overall branding for KTM; including the design of the vehicles,

shops, exhibits and printed material. The firm applies a method IDD (integrated design

development) to all of its client projects. Gerald Kiska is the principal.

In 1992 the company became insolvent and was divided into three companies:

KTM Sportmotorcycles GmbH, was renamed 1994 to KTM Sportmotocycles AG

KTM Fahrrad GmbH (Bicycles)

KTM Kühler GmbH (Radiators)

In the fiscal or business year ending in 2005, KTM Sportmotorcycles AG delivered

80,000 motorcycles worldwide and began a partnership with Polaris Industries. Under

the terms of the agreement, the two companies will help one another to extend their

brands into the other's home market, KTM extending their reach into North America, and

Polaris extending into Europe. This partnership is a two year trial arrangement, at the

end of which both parties are giving the option of merging the two companies into one. In

2006 KTM announced that the partnership with Polaris had been ended early, and would

instead only supply their 450 and 525cc RFS engines to the ATV manufacturer. KTM

also announced their intention to enter the ATV market with either a late 2007 or 2008

model-year release.

In November 2007, Indian two-wheeler manufacturer Bajaj Auto Ltd. acquired 14.5%

stake in KTM Power Sports AG (holding company of KTM Sportmotocycles AG). The

two companies have signed a cooperation deal, by which KTM will provide the know-

how for joint development of the water-cooled 4 stroke 125 and 250 cc engines, and

Bajaj will take over the distribution of KTM products in India and some other Southeast

Asian nations. In December 2007, Bajaj increased their stake to more than 20%.

The Swedish motorcycle company Husaberg AB and Dutch WP Suspension are now

subsidiaries of the KTM Group.

Since the major rule changes in Motorcross to make 4 stroke bikes more competitive in

motocross and being given a 125cc 2 stroke to 250cc four stroke advantage the

cheaper, simpler and faster 2 stroke bikes have been dying out.

Since other manufacturers have decided to discontinue their 2 stroke models, KTM has

continued with creating and improving their 2 stroke models and taking up a very high

proportion of the 2 stroke bike market.

KTM has also created a new 2 stroke MX bike with 144cc to comply with the 2008 AMA

motocross class changes. This change has been made to bring back the 2 stroke bikes

to encourage more entry to the market as the 2 stroke bikes are cheaper to maintain and

repair than the expensive 4 stroke bikes.

Environmental agencies have tried to remove 2 stroke machines because they produce

more pollution than 4 strokes. However with newer advances in technology 2 strokes

have begun to burn cleaner and pass green sticker standards.

In recent interviews KTM has revealed that they will continue to produce and improve 2

stroke bikes and have already begun looking at EFI (Electronic Fuel Injection). EFI will

benefit the 2 stroke bikes because they will become more fuel efficient and will also

produce less waste.

Beginning in 2006, KTM has begun the development with a lightweight street legal

(Europe) car known as the X-Bow. It will use an Audi engine and a Dallara sourced

chassis, and have a weight of less than 1400 lbs. This new car will seat two people. On

the 8th of January, 2008 Bajaj announced that it would jointly develop two new 125cc

and 250cc bikes for Europe and the Far East. The bikes would be badged 'KTM'.

3.0 MARKET ANALYSIS AND STRATEGY

3.1 Business / Market Outlook & Prospect

The purchase of mid and high level performance motorcycle has increased by 20% over the

past few years. This is due to the income level and the increasing interest in high performance

vehicle. This is further supported by the increasing of high level motorcycle clubs all over

Malaysia, Singapore and Thailand.

This industry, particularly the upscale market, is growing faster than ever. Potential buyers are

willing to spend moderate to high amount of money on their likings simply not only due to the

fact that they can make them look elegance and good, but also give them the challenging in

bike-riding, hence feel proud about themselves. In addition, KTM’s products are designed to be

seen the inherent value in it.

Day by day, Kuala Lumpur and Selangor are among the two states that having the highest

traffic jammed comparing to the other states. Income level analysis also shows that both states

are having higher level of income comparing to the other states. Due to this, middle and higher

income consumers will and has started to find alternatives to replace the current transportation

mode (car) by not having to lose the freedom of location and time targeted for. Though the

choice of lower scale motorcycle is always there, but through the years, the selling number of

high performance motorcycle such as under the brand of KTM itself, Cagiva, Ducati, Yamaha,

Suzuki and others more has been on a stable mode.

The upscale niche market that PCMSB has targeted is competitive because of the competitors

and the discerning consumers it serve. The competition is based more on the quality and

consumer’s riding taste than the price. The greatest opportunity for PCMSB is being the

authorized dealer for KTM in the area of KL and Selangor. In a nutshell, the set-up of domestic

production line for KTM bikes in Malaysia and sales target by its sole distributor, that is

Motonation has already bring better prospect for PCMSB to expand its business.

Furthermore, the ongoing financial crisis has affected the whole industry badly since year 2008

till to-date. Even so, analysts are saying that the motorcycle can benefit from the financial crisis.

Motorcycle (being more fuel efficient), can take advantage of the drop oil price and positioned

themselves as a transportation solution during this difficult time.

3.2 Porter’s 5-Forces Analysis of KTM

Porter's five forces analysis is a framework for industry analysis and business strategy

development.  It draws upon organization economics to derive five forces that determine the

competitive intensity and therefore attractiveness of a market. Attractiveness in this context

refers to the overall industry profitability. Below are the findings of KTM’s presence in the market

according to 5 factors:-

Threat of new competition

Threat of substitute products or services

Bargaining power of customers (buyers)

Bargaining power of suppliers

Intensity of competitive rivalry

Exhibit 3.2 : KTM’s 5-Forces Analysis

Speech by Tan Sri Dato’ Muhyiddin Yassin, 18 August 2008, Marriot Putrajaya

(partially taken accounting to the motorcycle industry movement)

The increasing demand for motorcycle was witnessed in 2007 when sales recorded a

growth of 6.4% to 449,673 compared to 2006.

Malaysian consumers now have a wider range of motorcycles to make their choice.

In addition, higher energy cost and cautious consumer spending has created demand

for more cost efficient and cheaper alternative means of transportation. This trend is

likely to increase the demand for motorcycles which is considered as cheap

alternative means of transportation.

Demand for motorcycles worldwide is expected to rise at 5.4 per cent annually to

55.7 million units in 2011. In the emerging economies of the Asia Pacific, Latin

America, Africa and the Middle East, motorcycles are seen as primary family and

work vehicles. 

Opportunities for the motorcycle industry remain attractive as global demand for

motorcycles continues to increase.

3.3 SWOT Analysis

The industry involves high investment in technology and R&D which is difficult for a new entrant. Hence

threat of new entrant is weak

Not many suppliers were present which could

provide the resources to KTM reliably. Thus

suppliers bargaining power was strong

The number of players were few in the industry and thus the

competition was not so much. Hence the overall effect was weak

Buyers were ready to pay premiums for the

motorcycles since they were niche buyers. Hence their

bargaining power was weak

The only substitutes to racing bikes were racing cars which were much costlier. Hence the presence

of substitutes was weak.

3.3.1 Strengths

(a) Selling performance and racing

KTM was known for its reputation in producing high quality motorcycles especially on off-

road motorcycles. With many racing titles received KTM continues to provide much premium

in producing technologically advanced racing motorcycles.

(b) Strong brand

KTM has already been included to top motorcycle manufacturers around the globe which

makes it much easier to penetrate various markets since their brand is already popular in the

motorcycle industry.

(c) Only 1 brand dealer

KTM’s employees mostly are motorcycle enthusiast who gives the company enough

knowledge about the needs, trends, preferences and the likes of their target markets. This

would provide competitive advantage for the company.

3.3.2 Weaknesses

(a) Highly competitive market - Competitors can offer similar product quickly

(b) Limited start-up costs

(c) Limited flexibility in pricing

3.3.3 Opportunities

(a) To become a leader in 200 cc and 690cc bike market by launch of Duke

(b)  To increase market share through increased sales

(c) Opportunity for PCMSB to become a well-known local motorcycles dealer through

tie up with KTM Motorcycles (Motonation)

(d) Create a shift in consumer preferences from higher end bike to small cc bikes

which offers more style and fuel economy as compared to traditional bikes

available.

(e) Product variety is increasing

KTM has a diverse product line which provides enough room for the company to easily tap

various market segments like youth, middle aged individuals, and motorcycle fanatics.

(f) Fast growing segment

KTM operates on many countries around the globe through the use of various market entry

strategies depending on the government policies of the countries where KTM operates and

distributes its products

3.3.4 Threats

(a) Rumors that other competitors are also coming up in new and stylish bikes in

near future.

3.4 Competitor

Next Bike Sdn Bhd (Subsidiary of NAZA Group)

Hong Leong Yamaha Motor Sdn Bhd

Suzuki Malaysia Automobile Sdn Bhd

Guan How Superbike Centre Sdn Bhd

However, being the exclusive dealer for the state of Selangor, Kuala Lumpur and Johor for

KTM, supported with the difference taste and hobbies of consumers, we envisage that the

competition will be merely on how strong the brand is in the world and local market.

3.5 Competitive Advantages

PCMSB has several competitive advantages, including location, certified mechanics and

exclusive distribution agreements with popular brands. Competing companies are not able to

match these capabilities.

3.6 Keys to success

(a) Customer first

We focus on customers and markets in order to drive profitable growth and to maximize value

for our shareholders. A lean, industry-focused organization, with best-in-class services, aligns

PCMSB closely with its customer. Our existing branch has strong market positions and provide

the best and most complete service to our customer. Our outlet is responsible for sales,

marketing and after sales service while non-core support functions are provided by Motonation.

(b) We offer leading edge innovation.

We enable beneficial features that make everyday products and services better and

breakthrough products and services possible. We offer our customers both quantum leap

innovation as well as steady improvements by fostering a culture of innovation and by sharing

and leveraging our core competencies.

(c) We aim for best-in-class services

We seek lowest-cost operation coupled with focused capital expenditures, while maintaining our

overriding policy of 'safety first'. We are supporting both our operation and customer supply

concerns with streamlined sole distributor supply system that increases efficiency across the

Company. In a nutshell, we want to exceed the customer's expectation for quality, timeliness

and price.

(d) We want the best people to work for PCMSB

We attract, develop and retain the very best. We want our people to be empowered to explore

the creative ideas that will spur us to profitable growth.

(e) Customer referrals.

3.7 Strategy

PCMSB intend to become number one seller of high performance motorcycle in Malaysia and

in the long run they aim to achieve 20% of local market share. For Motonation itself, they are

now aggressively pursue to increase the brand awareness and brand equity of KTM in Malaysia

and the sales record for the last six (6) months shown positive impact to the business overall.

The excerpt from Utusan Malaysia 21/1/2013: 2 model motosikal KTM dipasang di Jitra –

“Dalam tempoh enam bulan lepas, kami berjaya menjual 250 unit sebulan”. (Yeoh Teik

Poh, Financial Director of Motonation)

4.0 HUMAN RESOURCES PLAN

4.1 Organization Chart

4.2 Management Team

NameYears of

Experience

PositionSalary (RM)

Awalluddin Sham Bokhari

15 Years C.E.O7,000

Roslan Bin Ramlee

15 Years Director5,000

Shukri Bin Ibrahim

10 Years Accounts and Administration3,000

Roslan Othman

13 Years Specialist Mechanic1,800

Adnam Bin Besar

7 Years Operation and Sales2,800

Noor liyana Bte Khalid

5 Years Accounts and Administration2,000

Sales & Marketing Manager 3,400

ROSLAN RAMLEEDIRECTOR

AWALLUDDIN SHAM BOKHARI

C.E.O

SHUKRI B. IBRAHIMACCOUNTS AND ADMINISTRATION

ADNAM B. BESAROPERATION AND

SALES

NOOR LIYANA BT KHALID

ACCOUNTS AND ADMINISTRATION

ROSLAN B. OTHMAN

CHEIF SPECIALIST MECHANIC

TAJUL ARIFIN SAIDIN

MECHANIC

SALES & MARKETING MANAGER

TOTAL 25,0005.0 OPERATION PLAN

5.1 Business Hours

PCMSB is operating everyday from 10am till 8pm except public holidays.

5.2 Process Flow

Described below is the process flow of PCMSB’s daily business operation:-

5.2.1 Purchase of Motorcycles by Customer

(a) Buyer choose model

(b) Documents submitted for loan processing (1 – 2 working days)

(c) Interview by bank (1 – 2 working days)

(d) Loan approval by bank manager (1 – 2 working days)

(e) Hirer sign hire purchase agreement (1 working day)

(f) e-perolehan and chassis number process (1 – 2 working days)

(g) Motorcycle allocation from showroom / headquarter (1 – 2 working days)

(h) Motorcycle registration ((1 working day)

(i) Motorcycle delivery to hirer

5.2.2 Mechanical Services (workshops)

This process is when customers bring their motorcycles into the dealership for routine

maintenance or for repair work:-

(a) When a customer first pulls into a dealership's service drive, they are greeted either by a

service consultant or a porter who will direct them to an available service consultant. The

service consultant then will ask what the customer needs help with, and write up a repair

order describing the work to be performed. Once that's done, the customer signs the

repair order--which often has an estimate of the repair costs on it--and heads to the

waiting area or gets a ride home or a loaner vehicle, if the motorcycle will be in the shop

for a while.

(b) Once the repair order, or R.O., is complete, the service advisor will either hand it to a dispatcher,

who will assign the work to a technician, or if the dealership does not use a dispatcher, the

advisor will assign the work directly.

(c) Once this is done, the technician brings the bikes to his work bay, and begins working. In most

cases, whether performing an oil change or major repair work, the technician will need to order

parts for the job. Sometimes these parts come from the dealership's own parts department, other

times the parts are delivered, if they are not in stock. Once the parts are in the technician's hand,

they are billed to the repair order.

(d) As the technician performs the work, he might look for other problems with the bikes or routine

maintenance needs that could be addressed, thus performing an "upsell." It's up to the service

advisor to suggest this work to the customer and up to the customer to approve or deny it. If the

customer chooses to deny it, the service advisor will likely write a recommendation in his notes on

the repair order, in part to try and persuade to consumer to approve the work next time, and in

part to note that the customer was aware of the conditions and chose not to approve any work,

just in case any safety issues may arise. Either way, for repair jobs that aren't part of preventive

maintenance, the service advisor will usually explain what needs to be done and why it's being

done, and will need customer approval in most cases.

(e) Once the work is done, the bikes might be washed. Washed or not, it will either be parked in a

staging area in front of the dealership (if the customer was waiting on the premises) or in a

staging area out back, where it will sit until the customer arrives to pick it up. The service advisor

will now complete the billing, adding any discounts. He or she will also determine if the job is

being paid for under warranty, if the customer is paying, or if the shop is paying (could happen as

a make-good on a comeback for a failed repair, as an example). Any sublet charges for work

performed off-premises or by an outside contractor (body and paint repair, towing charges, et

cetera) will also be billed at this time. Once all billing is complete, the R.O. is printed. If the

customer is on site, the advisor will walk him or her to the cashier, where he or she will pay the

bill (if they're responsible) or sign off on the work (if it's a warranty claim). If the customer is

picking the bikes up, he or she will proceed directly to the cashier. It's at this time that the service

advisor will explain what work was done, why it was done, and what may be recommended for

next time. The service writer may also look to create a good rapport with the customer, in order to

gain trust and receive favorable treatment on any customer-service surveys.

Service advisor pay varies. Some are on salary, some on full commission, and some on a mixture of the

two. We intend to incorporate customer-service survey scores into pay plans, as well, along with bonuses

for upsells of certain items. Technicians tend to get paid based on how much time that it's expected for

them to perform a certain job.

7.0 MARKETING PLAN

The Motonation and PCMSB intend to maintain an extensive marketing campaign that will

ensure maximum visibility for the business in its targeted market. Below is an overview of the

marketing strategies and objective:-.

7.1 Marketing Objectives

(a) Develop an online presence by developing a website and placing the Company’s name and

contact information with online directories.

(b) Implement a local campaign with the Company’s targeted market via the use of flyers, local

newspaper advertisements, and word of mouth advertising.

(c) Acquire a highly visible location with expansive signage to increase visibility among drivers

and passers-by in the target market.

7.2 Target Market

(a) Performance and racing enthusiast

(b) Young and professional

7.3 Marketing Strategies

There will be a number of marketing strategies that will allow the motorcycle dealer to easily

attract the target market. These strategies include traditional print advertisements and ads

placed on search engines on the Internet. Below is a description of how the business intends to

market its services to the general public.

(a) Internet

The Motonation and dealer will also use an internet based strategy. This is very important as

many people seeking local businesses, such as motorcycle dealers, now the Internet to conduct

their preliminary searches. PCMSB will register its motorcycle with online portals so that

potential customers can easily reach the business. The Company will also develop its own

online website showcasing the Company’s current inventory, its mechanic services, its

management team, hours of operation, and location information. The Company will maintain a

sizable amount of print and traditional advertising methods within local markets to promote the

motorcycles and motorcycle repair services that the Company is selling.

(b) Direct Mail

Direct mail is one of the best ways motorcycle businesses can market their products. They need

to find a reputable list vendor, which is a company that puts together direct mailing lists of

specific customer profiles. These companies can help us identify a list of targeted motorcycle

enthusiasts that we can send marketing messages to inform about our business. Many vendors

have specific demographic profiles for motorcycle riders we can use. Try sending a variety of

materials, such as sales letters, postcards, fliers and brochures. Always communicate the

benefits of what the motorcycle rider will get out of your motorcycles---these are the "reasons

why" a customer should buy from us. Track and measure each direct mail campaign we send

out, note which campaigns are most successful and duplicate these in future mailings. Direct

mail is a way to market our business directly to customers in an efficient and measurable way.

(c) Social Media

Social media websites are a great way for motorcycle businesses to market their products to

consumers. Make a page for the business and invite current customers to join or follow. Try to

connect to their friends through them. Include relevant content on the page that will resonate

with the fan base, including videos and tips for riders. Communicate special deals, discounts,

events and exclusive offers for fans of our page.

(d) Referral Program

Referrals are one of the best examples of word-of-mouth marketing, which is a type of

marketing in which consumers spread the word about our business. Offer some type of

incentive for current customers who refer another customer who buys a bike from us. The

incentive can be a gift card or special savings on a future purchase from our motorcycle shop.

We will partner with other businesses like repair shops, and provide incentives to them for

referring customers to our motorcycle business.

(e) Events

There are plenty of motorcycle events, and these are excellent opportunities to market our

motorcycle business. Find motorcycle events in our local area or nationally, and contact the

event manager to see if we can promote our business at the event. Show up at a bike rally with

information about our business. Showcase our bikes and network face to face with customers at

motorcycle shows. Pass out literature and marketing materials about our business at trade

shows, and show videos and other multimedia that communicate the benefits our bikes offer.

Charity events are also good venue to market our business.

Figure 7.3 (e): Example of event in newspaper

7.4 The Products

Under the dealership with KTM through their distributor, Motonation located in Penang, PCMSB

has been entrusted with the exclusive dealer of the followings:

KTM Motorcycles

KTM Original Sparepart (Power Part)

KTM Accessories (Power Wear)

KTM Bicycles

KMT X-Bow (High performance car)

Exhibit 7.4: Visual of Products

KTM Motorcycle

KTM65SX

KTM250EXCF

KTM 300EXC

KTM 530EXCR

KTM 690 DUKE

KTM 690PRESTIGE

KTM 690SM

KTM 950SM

KTM 950SMR

KTM 990DUKE

KTM 990SMT

KTM ADVENTURE990

KTM ATV525

KTM RC8

KTM RC8R

KTM Power Wear

Power Wear consist of all KTM brand clothing and body accessories such as t-shirt, jackets,

pants, jeans, gloves, shorts, underpants, caps, scarf, bandana, racing attire, goggles, socks,

boots, helmets, sweat heads, protectors, brace, belts, bikini, mildred, bathrobes, towels,

sandals, shoe, sneakers, sliders, bags, backpacks, door mat, camps, umbrellas, chairs, stools,

sunglasses, mugs, watch, key holders, stickers and many more.

All these are under the exclusive brand of KTM. Reference can be made through the

attachment: (Powerwear 2008 brochure).

KTM Power Parts

Power Parts consist of all KTM brand spare parts such as clutch, carbon ignition, light mask,

silencer, cylinder cover, carrier system, side bags, footrest, handguard, fueltap, fender brace,

ignition cap, shock absorber, suspension, air pump, adjuster, damper, performance kit, pipe,

tripmaster and lots more. Reference can be made through the attachment: (Powerparts 2008

brochure)

KTM X-Bow

An aggressive design and sporty potential: the X-BOW is not just a milestone in the KTM

brand’s more than 50-year history, it also sets a new benchmark in the small, but elite segment

of radical, lightweight sports cars. This exceptional position is the result of its original design

concept: for its first car, KTM employs the finest materials, high-tech and the know-how of

respected development partners, such as Audi and Dallara. 

The result is a street-legal sports car with pure-bred racing technology, such as an avantgarde,

carbon fibre monocoque, which is now standard equipment in Formula 1 racing because of the

weight and safety advantages it offers.

Thanks to the basic version’s light weight and the 177 kW (240 hp) Audi 2.0 TFSI engine, the

KTM X-BOW sets new standards and outstrips supersport cars: with a weight of approx. 790

kilos, the KTM X-BOW accelerates to 100 kmh in just 3.9 seconds. And its fuel consumption

and pollution emissions are comparable to those of a compact car with a high-quality engine. 

But the X-BOW isn’t just a racing machine, even if it is going to accomplish spectacular

performance feats on racing circuits. With its modern technologies and exceptional solutions, it’s

much more oriented towards sporty drivers who seek a purist’s driving experience. By foregoing

electronic assistants and extraneous, weighty comfort features, the X-BOW offers an unfiltered

driving adventure. 

This is made possible by the X-BOW's double triangular wishbone axles for the wheels, its

transparent technology and its reduced concept, i.e. no roof, doors or windscreen. This sports

car has only a 70-millimeter, transparent wind deflector. So driving the KTM X-BOW becomes

an experience with an immediacy that otherwise can only be felt when driving a motorcycle or a

Formula 1 racecar.

7.5 The Pricing

Pricing of the products are as stated below:

Price (RM)Item Name/Model

On the Road Price1 50 SM 14,500.00

2 50 SX 14,500.00

3 65 SX 18,500.00

4 85 SX 22,900.00

5 125 SX 38,136.79

6 200 EXC 41,270.09

7 300 EXC 49,691.14

8 250 EXC 46,421.34

9 250 SX 33,500.00

10 300 EXC-E 36,800.00

11 450 SXF RACING 39,500.00

12 450 EXC RACING 39,500.00

13 450 EXC FACTORY 52,813.49

14 450 SMR 42,500.00

15 525 EXC RACING 40,500.00

16 525 EXC FACTORY 42,500.00

17 560 SMR 44,900.00

18 1190 RC8 R 149,990.00

19 1190 RC8 119,220.00

20 990 SMT 100,542.00

21 990 SMR 100,542.00

22 990 SM 84,800.00

23 990 SUPER DUKE R 100,542.00

24 990 SUPER DUKE 93,341.00

25 990 ADVENTURE R 100,542.00

26 990 ADVENTURE 100,542.00

27 950 SM 83,500.00

28 690 DUKE 51,000.00

29 690 SM PRESTIGE 50,500.00

30 690 SMR 59,042.69

31 690 SM 49,300.00

32 690 ENDURO 59,042.69

33 990 ADVENTURE DAKAR 97,446.00

34 990 SMT LTD 2012 105,673.00

35 570 FE HUSABERG 57,032.19

36 570 FS HUSABERG 60,110.94

37 530 EXCR 50,856.90

38 250- EXC 44,429.89

38 ATV 525 50,000.00

39 X-Bow 350,000.00

7.6 The Place

The business premise@showroom is currently located at No. C 23-A-G, Jalan Medan Selayang

1, Medan Selayang, 68100 Batu Caves, Selangor Darul Ehsan.

Exhibit 7.6: Visual of Business Premise@Showroom

8.0 FINANCIAL PLAN

PCMSB is currently positioned for business expansion and optimistic of its capability to

generate higher sales, however hampered by the limited showroom space of the current

business premise. On this note, PCMSB has identified a new business premise located at B-20-

G, Menara C, Medan Selayang together with parking lot which can now cater for more

motocycles and other products for better customer viewing. The new premise owner, Hua Yang

Berhad had made an offer to PCMSB through their letter dated 11 May 2009 as attached

(Appendix XX).

The financial plan hence reflects PCMSB’s expansion plans and future business growth with the

following assumptions:-

1) Change in business premise to bigger corner lot premise. The new business premise will be

renovated as a showroom to suit the business needs. Renovation cost is approximately

RM280,000.00 as per the quotation provided by Az Global Business as attached (Appendix

XX);

2) PCMSB to bring in X-Bow starting from mid-2013;

3) Expansion of 1 additional new branch in Shah Alam in 2016.

8.1 FUNDING REQUIREMENT

Provided the above expansion plans and PCMSB’s future business direction and opportunities,

PCMSB foresees a funding requirement of RM1,000,000 to be injected to the business to

support its immediate to medium term capital and operational expenditures.

PCMSB will be injecting fresh capital of up to RM200,000 and plans to apply for financial

assistance for the remaining RM800,000 to be serviced in 7-years.

The anticipated financing structure is as follows:-

Funding StructureRM %

Financing 1,000,000Equity 200,000.00 20%Loan Amount 800,000.00 80% Tenure 7 years Interest Rate 5% per annumTotal Interest Amount (RM) 280,000.00Average Loan Repayment (RM) 154,285.71 per year

12,857.14 per monthTotal Loan Repayment (RM) 1,080,000.00 7 years

The new funding will be utilised for the following immediate and medium term costs:-

1) Renovation of cost of approximately RM300,000 in 2013 and future new business premise of RM 300,000 in 2016.

2) Escalation of operational expenditure anticipated from the new business premise and additional staffing

Previous years

2013 onwards*

Overhead 3,000 6,000 per month

Rental 10,500 15,000 per month

Salary and Wages 10,000 25,000 per month

Sponsorship/Marketing 1% 5% of Sales *With an anticipated 10% increase yearly

8.1 Current Sales Scenario

PCMSB’s past 3-years sales are as follows:-

Revenue Analysis (Based on 3-years Trending)

2010 2011 20121,200,000 1,800,000 1,050,000

Motorcycle Sales Off Road 50% 600,000 900,000 525,000 On the Road 15% 180,000 270,000 157,500Workshop 25% 300,000 450,000 262,500Accessories 10% 120,000 180,000 105,000Total Revenue 100% 1,200,000 1,800,000 1,050,000

8.2 3-years Projected Future Sales

Based on the business strategy as outlined above and the anticipated business opportunities

due to aggressive marketing efforts, new business premis, X-Bow sales and better inventory

supplies from Motornation, PCMSB is confident that it can achieve the following sales target:-

Scenarios Analysis

RM

Average Bike Price (ex XBow)

62,800.74

XBow Price 350,000.00

Base Case

Escalation 5% 5% 5%

Annual Sales InputBased on Last 3

yrs 2013 2014 2015Motorcycle

- Bikes 40per year 877,500.00 2,512,029.63 2,637,631.11 2,769,512.67

- XBow 6per year 0.00 1,050,000.00 2,100,000.00 2,100,000.00

Workshop 337,500.00 354,375.00 372,093.75 390,698.44Accessories 135,000.00 141,750.00 148,837.50 156,279.38 Total Revenue 1,350,000.00 4,058,154.63 5,258,562.36 5,416,490.48

Please refer to Appendix XX : Sale Assumption for full 7-year projection

8.3 3-years Pro-forma Cashflow

PROFIT & LOSS STATEMENT

Base Case 2013 2014 2015

Revenue 4,058,154.63 5,258,562.36 5,416,490.48

Cost of Goods Sold 4,041,982.92 5,089,557.06 5,225,924.92

Other Cost 22,674.82 26,076.04 29,987.44

Operating Profit -6,503.10 142,929.26 160,578.12

Interest -20,000.00 -31,428.57 -25,714.29

Taxable Profit -26,503.10 111,500.69 134,863.83

Tax 18% 0.00 20,070.12 24,275.49

Net Profit -26,503.10 91,430.56 110,588.34

B/f Profit 45,511.89 19,008.78 110,439.35Retained Profit / (Loss) 19,008.78 110,439.35 221,027.69

The anticipated net loss in 2013 is due to normalization of sales target against capex and higher overheads

8.4 3-years Pro-forma Balance Sheet

BALANCE SHEETBase Case 2013 2014 2015

Asset

Inventories 669,545 717,809 611,304Machinery and Equipment 70,000 70,000 85,000Cash and Cash Equivalent 658,576 673,295 709,575Other Assets 175,257 28,750 33,063

1,398,121 1,489,854 1,438,941Liability

Account Payable 272,508 322,817 284,494Borrowings 762,857 668,571 554,286

Tax Payable 2,911 30,421 34,302Other Liabilities 90,836 107,606 94,831

1,129,112 1,129,415 967,9138.4 3-years Pro-forma Balance Sheet (cont)

Net Asset 269,009 360,439 471,028

Equity

Shareholder Fund 250,000 250,000 250,000

Retained Profit/ Loss 19,009 110,439 221,028269,009 360,439 471,028

1,398,121 1,489,854 1,438,941

8.5 3-years Projected Cashflow

REVENUE % 2013 2014 2015

Scenario 1 Base Case 5% 5% 5%

%

Motorcycle Sales % of salesMotor

Breakdown

Off Road 43% 70% 1,758,421 1,846,342 1,938,659 On the Road 19% 30% 753,609 791,289 830,854 KTM XBow 26% 1,050,000 2,100,000 2,100,000Workshop 9% 354,375 372,094 390,698Accessories 3% 141,750 148,838 156,279

Total Revenue 100% 4,058,155 5,258,562 5,416,490

OUTFLOW

Capital expenditure

Renovation 300,000.00

Operating ExpenditureEscalation 1.00 1.10 1.10

Motorcycle KTM Bikes 85% of Sales 2,135,225 2,241,986 2,354,086 KTM XBow 80% of Sales 840,000.00 1,680,000.00 1,680,000.00Workshop 60% of Sales 212,625 223,256 234,419Accessories 70% of Sales 99,225 104,186 109,396Overhead 6,000 per month 72,000 79,200 79,200Rental 15,000 per month 180,000 198,000 198,000Salary and Wages 25,000 per month 300,000 300,000 300,000Sponsorship/Marketing 5.0% of Sales 202,908 262,928 270,825

Total Expenditure 4,041,983 5,089,557 5,225,925

CASHFLOW BEFORE TAX 16,171.71 169,005.30 190,565.56

Tax 18% 2,911 30,421 34,302CASHFLOW AFTER TAX 13,260.80 138,584.35 156,263.76

8.5 3-years

Projected

Cashflow

CASHFLOW FOR FINANCING

100%Equity 20% 200,000.00Financing 80% 800,000.00Tenure (months) 84.00Interest Rate 5.00% per annumInterest Repayment (Straight Line) 280,000.00 20,000.00 40,000.00 40,000.00Interest Repayment (Reducing Balance) 124,285.71 20,000.00 31,428.57 25,714.29Principal Repayment 800,000.00 57,142.86 114,285.71 114,285.71

Opening 0 742,857.14 628,571.43Drawdown 800,000.00 800,000.00 0.00 0.00Repayment 800,000.00 57,142.86 114,285.71 114,285.71Closing 742,857.14 628,571.43 514,285.71Interest 280,000.00 20,000.00 40,000.00 40,000.00

CASHFLOW AFTER FINANCINGOpening Cash flow 19,546.75 658,575.61 673,295.19Closing Cash Flow 658,575.61 673,295.19 709,575.04

Please refer to Appendix XX : 7-years Cashflow which reflect the full repayment of the loan.