FACULTY OF CHEMICAL ENGINEERING & NATURAL RESOURCES

BKF 3142 PROCESS ENGINEERING ECONOMICS

MINI PROJECT

PROJECT TECHNOLOGY : POLYETHYLENE TECHNOLOGY

COMPANY : MASTER TEC CABLE & WIRE COMPANY

LECTURER’S NAME :

SECTION : 03

DATE OF SUBMISSION : 22 NOVEMBER 2019

GROUP MEMBER:

NO NAME MATRIC NUMBER

1 WAN AMAR AZIM BIN WAN MOHD RUSDIN KA17023
2 SUFI xxxxxx
3 JEP xxxx
4 WAN MUHAMMAD AMINZUDDIN BIN WAN GHAZALI KA17106

TABLE OF CONTENTS
 No. Contents Page

1.0 INTRODUCTION

2.0 TECHNOLOGY & ITS SUPERIORITY

3.0 MARKET ANALYSIS

4.0 FUNDING STRATEGIES & IT’S TIMING

5.0 PRO-FORMA FINANCIAL(NEXT 5 YEARS)

6.0 RISK ANALYSIS

7.0 CONCLUSION & RECOMMENDATIONS

8.0 REFERENCES

1.0 INTRODUCTION

Background of cable and wire

A power cable is an electrical cable, a combination of one or more electrical conductors,

usually held together with an overall sheath. The assembly is used for electrical power
transmission. An electrical cable is an arrangement of one or more side-by-side or bundled wires
used to carry electrical current. The composition of one or more electrical cables and their
corresponding connectors is a cable assembly. A cable assembly is not necessarily suitable for
connecting two devices but can be a partial product (e.g. to be soldered onto a printed circuit
board with a connector mounted on the housing).Cable assemblies can also take the form of a
cable tree or cable harness, which is used to connect many terminals. Electrical cables are used to
link two or more devices so that electrical signals or power can be transferred from one device to
another. Cables are used for a wide variety of purposes, each of which must be customized to
that end. Cables are widely used for power and signal circuits in electronic devices. Underwater
cables are used for long-distance communication. For the bulk transmission of alternating and
direct current power, power cables are used, especially with high-voltage cables. Electrical
cables are widely used in building cables that are permanently mounted in buildings for lighting,
power and control circuits.

Physically, an electrical cable consists of one or more conductors with their own
insulations and optional screens, individual covers, assembly protection and protective covers.
By stranding the wires, electrical cables can be made more flexible. Smaller individual wires are
twisted or braided together in this process to produce larger wires that are more flexible than
similar-sized solid wires. Adding the most versatility to small wires before concentric stranding.
In this process, smaller individual wires are twisted or braided together to produce larger wires
that are more elastic than solid wires of the same length. Giving the most flexibility before
concentric stranding to small wires.

Wire is a single strand or metal wire, typically cylindrical, elastic. Wires are used to bear
electrical charges or signals for electricity and telecommunications. Wire is usually formed by
drawing the metal in a die or draw plate through a hole. Wire gauges come in different standard
sizes, as expressed in a gauge count. Often, the word ' wire ' is used more broadly to refer to a set
of such wires, as in "multistranded wire," which in mechanics is more properly referred to as a
wire rope, or electric cable. Wire comes in shapes that are solid, twisted, or braided. While
typically circular in cross-section, wire can be made either for decorative purposes or for
technical purposes such as high-efficiency voice coils in loudspeakers in rectangle, hexagonal,
flattened triangular or other cross-sections. Edge-wound coil springs are made of special
flattened wire, such as the Slinky doll.

Wire has many applications. It forms the raw material of many major manufacturers,
such as the wire netting industry, engineered springs, wire-cloth making and wire rope spinning,
where it occupies an analogous position to a fabric fiber. Wire has a variety of applications. It
forms the raw material of many major manufacturers, such as the wire netting industry,
engineered springs, wire cloth making, and wire rope spinning, where it occupies an analogous
role to a fabric fiber. Wire is again commonly used in the development of stringed musical
instruments and scientific instruments. Carbon and stainless steel spring wire have significant
applications for essential automotive or industrial parts / components in engineered springs.

Background of Master Tec Wire & Cable Sdn Bhd

Master Tec Wire & Cable is an independent Malaysian cable company established in
2005 at Rembia Industrial Park (Melaka), dedicated to the development of high-quality power
cable, Housing Cable, Control Cable, Instrumentation & Communication Cable, Fire Resistance
& Flame Retardant Cable, Conductor, Branch Cable & Fiber Optics for our reputable client
across various industries in the Asia Pacific (Thailand. Cambodia, Myanmar, Brunei, &
Singapore) region. We add value by delivering uncompromising customer-centered focus and
end-to-end technical support as well as a solution provider to develop and produce unrivaled
product quality to meet domestic and global demand.

Quality Assurance

At Master Tee Wire & Cable we believe that quality is the true measure for a world class
manufacturer. Our quality management system has been accredited for ISO 9001, ISO 14001 &
ISO 45001 Quality Management System by third parties since 2007. With many years of
manufacturing experience along with quality assurance program based on inspection and quality
testing, all our products are strictly monitored for mechanical and electrical work specifications.

Research and Development

R&D serves as Master Tee Wire & Cable's base leading us as one of the region's
industry's big cable manufacturers. Master Tee Wire & Cable seeks to build and expand core
cable materials technologies and improve the quality and reliability of the brand. After our
inception, we have continually invested in higher and more productive machinery and software
to remain competitive in the industry that is at the forefront of developing processes, customer
satisfaction and quality products manufactured in a highly controlled environment. The initiative
carried out in all business areas of Master Tee Wire & Cable has led us to improve all business
areas, including customer inquiry and technical design, quality control, fully computerized and
integrated processes and procedures.

Laboratory

With a passion for providing our trusted customers with robust technological R&D
support and exceptional service, our laboratory acts as a focal point for consistently offering the
highest level of product quality along with our internal technical expertise in quality assurance
and cable technical support and services.

Production Capability

This distinguishes us from other competitors with our state-of - the-art manufacturing
equipment and advanced engineering technology, and we are able to produce a wide range of
products to meet all industry standards as well as custom wire and cable requirements. We are
specialized in the manufacture of power cables, data and instrumentation cables, fire-resistant
cables, fire retardant cables, branch cables, housing wire, switchgear wire, flexible wire, etc.
Table 1.1: Master Tec Wire & Cable Sdn Bhd achievements

Year Key Milestones / Achievements

2009  Achieved the Golden Bull Award
 Started Production on Low Voltage Cable (Up to 1000V) & XLPE
Cables
 Obtained SIRIM Certification on all Power Cables
 Achieved ISO 14001:2004 Certification-Environmental Management
System
 Master Tec Wire & Cable Moved to Kawasan Perindustrian Rembia,
Alor Gajah, Melaka (Plant 1)
2010  Started Production of Instrumentation & ire Resistance Cables
2011  Achieved SME Recognition Award (SME Export Excellence Award)
 Appointed as Contractor for Ministry of Finance (M0F), Malaysia
 Registered as TNB Contractor
 Expansion of Plant 2-Manufacturing of Instrumentation & Fire
Resistance Cable
 Trade Mark of "Master Tec Wire & Cable" Brand Registered under
Intellectual Property Corporation of Malaysia (MyIPO)
2012  Started Production on Halogen-Free Cables
 Registered Member of SMI Association of Malaysia
 Registered as Corporate Member of the Malaysian Air-Conditioning
& Refrigeration Association (III)(MACRA)
2013  Changed from Ordinary Membership to Life Membership of SMI
Association Malaysia
2014  Obtained JKR Project Certification
2015  Obtained Ministry of State Development Project Certification from
Brunei
 Started Production of Aluminum Conductor
2016  Expansion of Plant 3-Aluminum Cable
 Supplier for Sabah Electricity Sdn Bhd (SESB) & Sarawak Energy
Berhad
 Registered Member of MCMA
 2017  Achieved ISO 9001: 2015 Certification-Quality Management System
 Started Production of Overhead Conductor
 Registered Member of TEEAM
2018  Achieved ISO 45001: 2018 Certification-Occupational Health &
Safety Management System
 Achieved ISO 14001: 2015 Certification- Environmental
Management System

2.0 TECHNOLOGY SUPERIORITY

Nowadays, there are many types of equipment that use the technology of plastrade
especially involving the wire and cable insulation manufacturing and other compounding
activities. The examples are Low and Medium Voltage peroxide XLPE, Halogen Free Flame
Retardant, Cross-linkable mineral-filled flame resistance and conductor shield compounds.

Different types of cables have different kind of specialities. There are few dangers caused
by normal cables. The first one is cable overheating. This happens when the cable have smaller
diameter which will reduces its ability to conduct electricity effectively and causing overheat.
The cable will melt eventually. Next, electrical disruptions. The instability of the cables may
causing short circuits and blackouts, thus bring danger to people in the area. Moreover,
electrocution is also the dangers of normal cables. This will reduced the conducting ability and
lose insulating properties thus lead to circuit malfunction. Lastly, fire outbreak can occur due to
low quality and create sparks which lead outbreaks of fire.

Thus, we believe that it is a loss in investing to low quality product which cannot long
last in the market. Thus, we decided to invest in Master Tec Wire & Cable Sdn Bhd where this
company produced a high quality cables using great technology and used in a new technology
too. They produced cross-linked polyethylene type of cables and wires where also used for
natural gas and offshore oil applications, chemical transportation, and transportation of sewage
and slurries.
 The properties of this type of cables are low-temperature impact strength, abrasion
resistance and environmental stress cracking resistance can be increased significantly by
crosslinking, whereas hardness and rigidity are reduced. PEX does not melt any more and is
thermally resistant. With increasing crosslinking density also the maximum shear modulus
increases. Crosslinking enhances the temperature properties of the base polymer. Adequate
strength is maintained and chemical stability enhanced by resisting dissolution. Low temperature
properties are improved. Impact and tensile strength, scratch resistance, and resistance to brittle
fracture are enhanced.

Almost all pipe and tubing is made from high-density polyethylene. It contains cross-
linked bonds in the polymer structure, changing the thermoplastic to a thermoset. Cross-linking
is accomplished during or after the extrusion of the tubing. A higher degree of cross-linking
could result in brittleness and stress cracking of the material, while a lower degree of cross-
linking could result in product with poorer physical properties.

Almost all cross-linkable polyethylene compounds for wire and cable applications are
based on LDPE. Insulated cables have a rated maximum conductor temperature of 90 °C and an
emergency rating up to 140 °C, depending on the standard used. They have a conductor short-
circuit rating of 250 °C. They has excellent dielectric properties, making it useful for medium
voltage and high voltage cables.

3.0 MARKET ANALYSIS

The company was primarily involved in the manufacture of polyethylene compounds for
wire and cable insulation and plastic master batch, resin additives, plastic compounds and
composites jacketing and compounding. A part of strategies companies is to expand its earning
base, especially in the increasingly challenging plastic manufacturing and compounding market.
As the polymer addictives for wire and cable insulation jacketing demand increases mostly in
Singapore, Indonesia, UAE and Hong Kong. The company plans to further expand its markets to
penetrate the United States of America and Europe. Malaysia will be its regional hub for its
business expansion as it want to enter the Southeast Asian wire and cable market, including
Singapore and Indonesia.Wire and cable insulation that made up of polyethylene compounds,
LDPE and others widely used in all countries. Based on statistics from the Malaysia
Petrochemical Country report 2017 various type of plastic resin has been supplied out across
other country.

Figure 3.1: Malaysian consumption of polymers in line with a GDP growth (in ktpa).

From Figure 3.1, polyethylene plastic record third highest GDP growth expected in 2020.
Ethylene record highest GDP growth in year 2020. Polyethylene is monomer of ethylene. This
number is also predicted to have a continuous growth. Thus, the potential of polyethylene and
ethylene is seen to be high and ever demanding. HDPE and LDPE are still new in market as it
just being introduced into the market and also new product in this company.
 Figure 3.2 : The statistic of LDPE in the market from 2010-2020.

As we can see from figure above, the consumption of material of LDPE among Malaysian
was expected to increase from 2010 until 2020. The exports of LDPE to other country was
expected to decrease as the demand is not really high in 2020. LDPE imports to Malaysia record
lowest score and were also expected to decline by 2020. This prove that the supply of LDPE is
higher than the demand that causes the lower amounts in LDPE import’s by 2020.
 Figure 3.3 : The statistic of HDPE in the market from 2010-2020

. As for HDPE, the consumption among Malaysian is same as LDPE as it also was
expected to increase from 2010 until 2020. However, things are different for exports as it
recorded lowest among others. Other countries ' demands are not consistent as the value
sometimes increases and declines again.. The demands are expected to be increase by 2020. For
imports HDPE into Malaysia, the amount are increased from 2010 until 2019 but are expected to
drop badly and recorded lowest among other by 2020. This shown that the supply will be higher
compare to the demand by 2020.

4.0 FUNDING STRATEGIES AND ITS TIMING

 Funding Strategies & its timing – from Seed Capital until the company is ready to be
listed in ACE Market, Bursa Malaysia.

Seed capital is the initial funding used to begin creating a business or a new product. Obtaining
seed capital is the first of four funding stages required for a startup to become an established
business. Seed capital can be a relatively modest sum of money and might come from the
founder's personal assets, friends, or family. It generally covers only the first essentials such as a
business plan and initial operating expenses. The goal at this point is primarily to obtain more
financing, and that means attracting the interest of venture capitalists or banks. Neither is
inclined to invest large amounts of money in a new idea that exists only on paper unless it comes
from a successful serial entrepreneur.

So, Master Tec Wire & Cable Sdn Bhd was established in 2005. Their seed money provided by
personal savings, family and loan from the banks. They started the production of Housing Cables
in 2006. From year to year (2007-2018), this company got many achievements which we believe
they can stay in main market for a longer time. For examples, they obtained few international
certification for their products such as German Product Safety Certification and Europe CE
Certification. In 2011, this company appointed as Contractor for Ministry of Finance (MOF)
Malaysia and registered as TNB Contractor. With this achievement, they can overcome their first
cost and gain more money (benefits) for company. And lastly, they obtained ISO 45001: 2018
Certification – Occupational Health & Safety Management System which shows that their
products are safe to use.
 R

2004 2006 2008 2010 2012 2014 2016 2018 2020

Figure 4.1: A positive income from 2006-2018

The target for Master Tec Wire & Cable Sdn Bhd to be listed in ACE Market, Bursa
Malaysia is within year 2010-2021. The requirements to be listed in this market are must have
some form of potential growth through the industry, have team of management with appropriate
expertise and qualifications, suitable policies and procedures adhering to laws and regulations,
has a Board of Directors (BOD) who are capable and aware of their duties, the company is aware
of the risks involved with management plan and has a good track record of good corporate
governance.

With the assumption of increment 5% of their income annually, Figure 3.1 shows a positive
income from 2006-2018. This shows that the company have accomplished few of the
requirements to be listed in ACE Market, Bursa Malaysia. Furthermore, it is highly
recommended to invest in good performance and high potential growth company. Thus, this
company have higher possibility to be in ACE Market within 2019-2021.
 R

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Figure 4.2: Possible increment when the company already listed in ACE Market.

2005 2010 2015 2020 2025 2030

Figure 4.3 : Overall increment ( listed in ACE Market included)

Based on overall graph, we believe that this company will gain a lot of profits instead of
loss. After listed in ACE Market, we believe that in the following years will also have a positive
feedback. We from Venture Capital Company (VC) invested in their project as there is a
substantial element of risk, typically a new and expanding business in 2019. After 2021, the
company will grow and keep expanding into much bigger company and probably can announce
themself as a public limited company after 5-6 years which is in 2027.

2027
2026

2021
2019

2006

Listed in Ace Market Public Limited Company

(Venture Capital)

2005
Seed Capital

INCOME STATEMENT FOR FINANCIAL YEAR ENDED 31 DECEMBER 2017,

2018 AND 2019
2017 2018 2019
RM'000 RM'000 RM'000
57,639,1 47,303,2 47,328,5
Revenue 14 15 87
(52,695, (44,951, (44,914,
Cost of sales 421) 551) 811)
4,943,69 2,351,66 2,413,77
Gross profit 3 4 6
Other income 372,473 560,571 1,582,36
 6
5,316,16 2,912,23 3,996,14
6 5 2
(769,760 (632,407 (612,554
Selling and distribution cost ) ) )
(2,556,6 (3,089,1 (4,846,7
Administrative expenses 74) 30) 57)
(1,792,4 (3,178,3
OTHER OPERATING EXPENSES - 32) 42)
(607,844 (481,372 (455,504
Finance costs ) ) )
SHARE OF RESULTS IN AN ASSOCIATE, NET (450,981
OF TAX 29,137 ) (58,549)
1,411,02 (3,534,0 (5,155,5
Profit/(Loss) before tax 5 87) 64)
(253,774
Tax income(expense) ) 54,896 89,714
1,157,25 (3,479,1 (5,065,8
Profit/(Loss) after tax 1 91) 50)

Other comprehensive income, net of tax

Items that Will be Reclassified Subsequently to (1,298,4

Profit or Loss - - 58)
Foreign translation reserve reclassified to profit or
loss

Share of other comprehensive expenses of equity (235,797

accounted associate - ) (84,454)
(166,545 (235,797 (1,382,9
) ) 12)
 Total comprehensive(expense)/ income for the (3,714,9 (6,448,7
financial year 990,706 88) 62)

5. 0 PRO FORMA FOR NEXT 5 YEAR:

INCOME STATEMENT:

YEAR Income statement for current year and Pro Forma for next 5 year (Revenue)
(RM)
2019 47,328,587
2020 49695016.35
2021 52179767.17
2022 54788755.53
2023 57528193.3
2024 60404602.97

Revenue for 2019 = RM 47,328,587

Income statement for next year = Income statement of current year*(1+5%)

The sales of company expected to be increased by 5% because the company successfully to

create a long lasting polyethylene technology which is cable and wire with good quality of
product. The sales also expected to be increase much more within years to come because the
company are making more quality and good product for their customers.

Graph Increment of Sales for next 5 year

70000000
60000000
50000000
Sales(RM)

40000000
30000000
20000000
10000000
0
2018 2019 2020 2021 2022 2023 2024 2025
Year
 CASH FLOW STATEMENT:

STATEMENTS OF CASH FLOWS FOR FINANCIAL YEAR ENDED 31 DECEMBER 2017,

2018 AND 2019
2017 2018 2019
RM'000 RM'000 RM'000
CASH FLOWS (FOR)/ FROM OPERATING
ACTIVITIES
(5,155,56
(Loss)/Profit before tax 1,411,025 (3,534,087) 4)
Adjustments for:-
Depreciation of property, plant and equipment 1,336,915 955,888 658,278
Inventories written down 467,758 252,310 544,403
Loss/(Gain) on disposal of property, plant and
equipment (10,000) 360 (17,518)
Impairment loss:
3,178,34
-investment in an unquoted shares - - 2
-property, plant and equipment - 546,597 -
-goodwill - 1,792,432 -
1,290,07
- trade receivables 199,701 - 8
Interest expense 522,888 398,794 374,390
Interest income (272,020) (215,681) (74,716)
Property, plant and equipment written off 3,002 18,091
Reversal of impairment loss on trade receivables 199,701 (50,812)
Reversal of previously written down inventories (169,589) (182,538) (188,582)
Share of results of an associate (29,137) 450,981 58,549
 Operating profit/(loss) before working capital
changes 3,457,541 667,759 (663,519)
Decrease/(Increase) in inventories 53,732 (517,252) 882,439
(Increase)/Decrease in trade and other receivables (2,569,703) (242,190) (23,181)
Decrease in amount owing by an associate 583,580 -
Decrease/(Increase) in trade and other receivables 157,212 134,939
Decrease in amount owing to a related party - - -
Decrease/(Increase) in amount by subsidiaries 1,088,979 -
(3,980,73
(Decrease)/Increase in trade and other payables (616,295) (249,971) 8)
(3,980,73
CASH FROM/(FOR) OPERATIONS 908,855 747,325 8)
Cash generated from/(used in) operations - - -
Interest received 321 25,330
Tax paid (814,292) (645,663) (474,251)
Tax refund 103,782 157,819 -
NET CASH (FOR)/FROM OPERATING (4,101,13
ACTIVITIES 198,666 284,811 0)

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of a subsidiary,
1,673,11
net of cash and cash equivalents acquired 1
Interest income received 271,699 190,351 74,716
Advances to subsidiaries
Repayment from/(Advances to) related companies 284,644
Proceeds from disposal of plant and equipment 10,000 1,415 18,050
Purchase of property, plant and equipment (355,833) (948,251) (301,780)
(Increase)/Decrease in pledged fixed deposits with
licensed banks 445,342 (57,155) (28,316)
 Release/(Placement) of fixed deposits pledged
equivalents - -
NET CASH FROM/(FOR) INVESTING 1,435,78
ACTIVITIES 371,208 (813,640) 1

CASH FLOWS (FOR)/FROM FINANCING

ACTIVITY
2,610,00
Proceeds from issuance of ordinary shares 0
Interest paid (522,888) (398,794) (374,390)
24,635,4
Drawdown of bankers' acceptance 31,049,488 26,947,882 04
(26,575,2
Repayment of bankers' acceptance (34,191,080) (29,028,238) 17)
Repayment of hire purchase obligations - - (59,030)

NET CASH (FOR)/FROM FINANCING

ACTIVITY (3,664,480) (2,479,150) 236,767

NET INCREASE/DECREASE IN CASH AND (2,428,58

CASH EQUIVALENTS (3,094,606) (3,007,979) 2)
CASH AND CASH EQUIVALENTS AT 5,286,85
BEGINNING OF FINANCIAL YEAR 11,389,437 8,294,831 2

CASH AND CASH EQUIVALENTS AT END OF 2,858,27

FINANCIAL YEAR 8,294,831 5,286,852 0

YEAR Cash flow for current year and Pro Forma for next 5 year
(Cash (For)/From Operating Activities)
 (RM)
2019 4,101,130
2020 4,175,846
2021 4,250,562
2022 4,325,278
2023 4,399,994
2024 4,474,710

Net Cash (For)/From Operating Activities for 2019 = RM 4,101,130

Interest Income = RM 74,716

The cash flow of company is estimated to be increased for years to come.

Graph Cash flow for next 5 year

4600000
Cash of Operating Activities (RM)

4500000
4400000
4300000
4200000
4100000
4000000
3900000
2018 2019 2020 2021 2022 2023 2024 2025
Year

BALANCE SHEET:

STATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 2017, 2018 AND 2019

2017 2018 2019
RM'000 RM'000 RM'000
 ASSETS
NON-CURRENT ASSETS
Investments in subsidiaries
7,321,34
Investment in an associate 8,008,123 5 -
10,205,92 9,646,91 10,119,5
Property, plant and equipment 7 6 93
4,000,00
Investment in unquoted shares 0
5,274,68
Goodwill 1,792,432 - 6
Amount owing by related companies
20,006,48 16,968,2 19,394,2
2 61 7
CURRENT ASSETS
10,115,78 10,563,2 9,416,72
Inventories 4 64 4
9,643,90 10,240,8
Trade receivables 9,686,755 2 60
1,894,33
Other receivables, deposits and prepayments 509,413 594,755 0
Amount owing by related companies
Amount owing by an associate 1,088,979 - -
Current tax assets 87,836 524,776 979,641
4,523,40 2,084,22
Fixed deposits with licensed banks 7,587,254 9 5
2,664,85 3,182,39
Cash and bank balances 2,551,831 2 1
31,627,85 28,514,9 27,798,1
2 58 71
 51,634,33 45,483,2 47,192,4
TOTAL ASSETS 41 19 50

STATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 2019, 2020 AND 2021

2017 2018 2019
RM'000 RM'000 RM'000
EQUITY AND LIABILITIES

EQUITY
15,040,0 21,122,4 27,722,4
Share capital 00 53 53
19,762,6 9,965,20 3,262,10
Reserves 45 4 9
34,802,6 31,087,6 30,984,5
TOTAL EQUITY 45 57 62

NON-CURRENT LIABILITY
Hire purchase payables - - 629,475
Deferred tax liabilities 238,000 132,200 27,700
Contingent consideration - - 915,730
1,572,90
238,000 132,200 5

CURRENT LIABILITIES
4,663,71 4,469,85 3,244,11
Trade payables 0 6 5
 1,845,68
Other payables and accruals 924,560 868,443 5
1,923,44
Contingent consideration - - 5
Hire purchase payables - - 161,785
11,005,4 8,925,06 6,985,25
Bankers' acceptance 19 3 0
Bank overdraft - - 324,121
Current tax liabilities - - 150,582
16,593,6 14,263,3 14,634,9
89 62 83
16,831,6 14,395,5 16,207,8
TOTAL LIABILITIES 89 62 88
51,634,3 45,483,2 47,192,4
TOTAL EQUITY AND LIABILITIES 34 19 50
BALANCE SHEET:

BALANCE YEAR
SHEET
2018 2019 2020 2021 2022 2023 2024

Total Assets 45,483,219 47,192,450 48,901,681 50,610,912 52,320,143 54,029,374 55,738,605

Total
14,395,562 16,207,888 18,020,214 16,207,888 18,020,214 16,207,888 18,020,214
Liabilities

Bank
overdraft - 324,121 346,421 370,254 395,728 422,954 452,053
(Debt)

5,286,852 2,858,270 2,858,324 2,858,424 2,858,524 2,858,624 2,858,724

Cash and
Cash
Equivalents at
end of
 financial year

47,328,587 57528193.3
49695016. 52179767. 54788755. 60404602.9
Revenue 47,303,215
35 17 53 7

47,192,450 48,901,681 50,610,912 52,320,143 54,029,374 55,738,605

Inventories 45,483,219

2,413,776 4,780,205 7,264,956 9,873,945 12,613,382 15,489,792

Gross profit 47,328,587

47,328,587 57528193.3
49695016. 52179767. 54788755. 60404602.9
Net Sales 47,303,215
35 17 53 7

44,914,811 44,914,811 44,914,811 44,914,811 44,914,811 44,914,811

Cost of sales 44,951,551

*Bank loan interest rate is 6.88%

Gross profit = Sales - Cost of sale

PRO FORMA FINANCIAL RATIO FOR NEXT 5 YEAR:

FINANCIAL RATIO 2020 2021 2022 2023 2024

LIQUIDITY
Current Ratio 2.71 3.12 2.9 3.33 3.09
Cash ratio 0.16 0.18 0.16 0.18 0.16

LEVERAGE RATIO
Debt to assets ratio 0.0071 0.0073 0.0076 0.0078 0.00811

ACTIVITY RATIOS
Inventory Turnover
1.02 1.03 1.05 1.06 1.08
ratio

PROFITABILITY RATIO
Gross Margin Ratio 0.1 0.14 0.18 0.22 0.26
 Financial ratio

Table 5: Financial Ratio for Master Tec Wire & Cable from 2020 to 2024

Current Cash Gross Margin

Year Ratio Ratio Debt to Asset Ratio Inventory Turnover Ratio Ratio

2020 2.71 0.16 0.0071 1.02 0.1

2021 3.12 0.18 0.0073 1.03 0.14

2022 2.9 0.16 0.0076 1.05 0.18

2023 3.33 0.18 0.0078 1.06 0.22

2024 3.09 0.16 0.00811 1.08 0.26

Liquidity Ratio

Current Ratio

Current Assets
Current Ratio=
Current Liabilities

Current Ratio
3.5 3.33
3.12 3.09
3 2.9
2.71
2.5

1.5

0.5

0
2020 2021 2022 2023 2024

Figure 5.1: Current ratio of Master Tec Wire & Cable for the year 2020 to 2024
A current ratio of 1 or more means that current assets are more than current liabilities
and the company should not face any liquidity problem. A current ratio below 1 means that
current liabilities are more than current assets, which may indicate liquidity problems. In
general, higher current ratio is better. The current ratios of Master Tec Wire & Cable from
year 2011 to 2020 are greater than 1. Master Tec Wire & Cable will not face any liquidity
problem because of its current ratio more than 1.

Cash Ratio

Cash∧Cash Equivalent
Cash Ratio=
Current Liabilities
 Cash Ratio
0.19
0.18 0.18
0.18

0.18

0.17

0.17
0.16 0.16 0.16
0.16

0.16

0.15
2020 2021 2022 2023 2024

Figure 5.2: Cash ratio of Master Tec Wire & Cable for the year 2020 to 2024
A ratio of 1 means that the company has the same amount of cash and equivalents as it
has current debt. In other words, in order to pay off its current debt, the company would have
to use all of its cash and equivalents. A ratio above 1 means that all the current liabilities can
be paid with cash and equivalents. A ratio below 1 means that the company needs more than
just its cash reserves to pay off its current debt. For Master Tec Wire & Cable,they need more
than just its cash reserves to pay off its current debt because of it cash ratio is below 1.

Leverage Ratio

Debt to Assets Ratio

Total Debts
Debt ¿ assets Ratio=
Total Asses
 Debt to Assets Ratio
0.01 0.01
0.01
0.01
0.01
0.01
0.01
0.01 0.01
0.01 0.01
0.01
0.01
0.01
0.01
2020 2021 2022 2023 2024

Figure 5.3: Debt to Assets Ratio of Master Tec Wire & Cable for the year 2020 to 2024
Companies with a higher figure are considered more risky to invest in and loan to
because they are more leveraged. This means that a company with a higher measurement will
have to pay out a greater percentage of its profits in principle and interest payments than a
company of the same size with a lower ratio. Thus, lower is always better. If debt to asset
equals 1, it means the company has the same amount of liabilities as it has assets. This
company is highly leveraged. A company with a debt to asset ratio of greater than 1 means the
company has more liabilities than assets. This company is extremely leveraged and highly
risky to invest in or lend to. A company with a debt to asset ratio of less than 1 shows that it
has more assets than liabilities and could pay off its obligations by selling its assets if it
needed to.

Activity Ratio

Inventory Turnover Ratio

 Revenue
Inventory Turnover Ratio=
Inventories

Inventory Turnover Ratio

1.09
1.08
1.08
1.07
1.06
1.06
1.05
1.05
1.04
1.03
1.03
1.02
1.02
1.01
1
0.99
2020 2021 2022 2023 2024

Figure 5.4: Inventory Turnover Ratio of Master Tec Wire & Cable for the year 2020 to 2024
A high inventory turnover indicates efficient operations while a low inventory
turnover compared to the industry average and competitors means poor inventories
management. It may be an indication of either a slow-down in demand or over-stocking of
inventories. Overstocking poses risk of obsolescence and results in increased inventory
holding costs. However, a very high value of this ratio may result in stock-out costs, when a
business is not able to meet sales demand due to non-availability of inventories. Inventory
turnover is a very industry-specific ratio. Businesses which trade perishable goods have very
higher turnover compared to those dealing in durables. Hence a comparison would only be
fair if made between businesses in the same industry.

Profitability Ratios

Gross Margin Ratio

Gross Margin
Gross Margin Ratio =
Net Sales
 Gross Margin Ratio
0.3
0.26
0.25
0.22

0.2 0.18

0.15 0.14

0.1
0.1

0.05

0
2020 2021 2022 2023 2024

Figure 5.5: Gross Margin Ratio of Master Tec Wire & Cable for the year 2020 to 2024

Higher gross margin ratio means the company is selling their inventory at a higher
profit percentage. High gross margin ratio can typically be achieved by two ways. One way is
to buy inventory very cheap. If retailers can get a big purchase discount when they buy their
inventory from the manufacturer or wholesaler, their gross margin will be higher because
their costs are down. The second way retailers can achieve a high ratio is by marking their
goods up higher. A company with a high gross margin ratio means that the company will have
more money to pay operating expenses like salaries, utilities, and rent. Since this ratio
measures the profits from selling inventory, it also measures the percentage of sales that can
be used to help fund other parts of the business. 
6.0 RISK ANALYSIS

6.1 Health and Safety Risk Analysis

In the context of occupational health, health and safety risk is linked to an evaluation of
hazards that may result in a worker's damage, injury, death, or illness in a given workplace. In
manufacturing, health and safety issues need to be addressed in order to enhance a company's
good reputation on the local and global market, thus increasing a company's profitability.
There is a risk when users handling and storing the process of production of polyethylene to
produce cable. Heat is required in order to melt the polyethylene but the process will
generates carbon emissions. The excessive carbon emissions in the surrounding can causes
greenhouse gas emissions. This causes a long term warming effect with increases in
concentrations of the gases. Greenhouse gas emissions are the primary cause of climate
change. Action must be taken to improve a device in the exhaust of modern machinery in
order to reduce CO2 emission levels. The more effective a combustion process is, the less fuel
will be required and thus less CO2 will be generated from production of factory. In addition,
during a process of production workers are required to wear any personal protective
equipment as the material are flammable and could causes damage to their physical. There are
also variety of chemical in the process of manufacturing that could causes problem in
respiratory system. Thus, workers are also expected to familiarize themselves with the
precautions for health and safety while handling the item.

6.2 Market Risk Analysis

Market risk is an investor's ability to experience losses due to factors affecting the
overall performance of the financial markets in which he is involved. Market risk, also known
as "systematic risk," can not be eliminated by means of diversification, although it can be
prevented. Market risk factors include recessions, political turmoil, interest rate changes,
natural disasters, and terrorist attacks. Interest rate risk, bond risk, currency risk, and product
risk are the most common types of market risks. Master Tec Wire & Cable exposed to a
variety of market risk including political turmoil risk, interest rate risk and insufficient
support to handle market risk. In Malaysia, political change occurs from past 2 years and this
political party will remain manage the country until for 3 more years. The prime minister of
current party political plans to initiating large-scale infrastructure projects across the country
and lead to increase of demand of plastic in market for current years. The increased will
expected to last for 3 more years until political election occurs again. In addition, due to
changes in interest rates, MTWC's fixed-rate deposits put with approved banks and
borrowings are at risk of increasing their fair value. Through securing funding with the most
competitive interest rates on the market, MTWC controls its interest rate risk exposure from
interest-bearing borrowings. By reviewing its debt portfolio, MTWC constantly monitors its
interest rate risk to ensure favorable rates are obtained. Hence, market analysis should be
applied to analyze market demand in relation to prices and product offerings.

6.3 Operation Risk

Operational risk is the risk that occurs due to processes, activities, human factors or
external events being ineffective internally. Operational risk arises from the internal decision-
making and practices of the company, and it summarizes the risks a company faces when
trying to operate in a field or industry. Operational risk is known to be the non-financial,
systemic or market-wide threat risk. It is the remaining risk after funding and systematic risk
determination and includes risks resulting from breakdowns in internal procedures, systems
and people. Maintenance of the necessary systems and equipment is one area that may involve
operational risk. If two maintenance activities are required but only one can be provided at the
time, deciding to carry out one over the other changes the operational risk depending on
which system is left in disrepair. The same can be said for not having proper staff to avoid
certain risks. In manufacturing, choosing not to have a competent mechanic on staff, and
having to rely on third parties for that work, can be classified as an operational risk. Master
Tec Wire & Cable has about 150 workers or more. Each workers must complete the training
and realised to not underestimate the risk and danger that could lead to accidents. Special
training are important to staff that are responsible toward manufacturing equipment to ensure
that they expertised in each of every part of it. For example, if the machine or equipment is
not functioning due to technical error, the production rate will be affected. The technician
needs to spend time maintaining and repairing the machine, thus causing the delay in
production. Workers who are poor in tracking and regulating their behavior may impact the
safety of workers and the workplace, leading to disruption of business or regulatory penalties.
6.4 Social and Economic Risk

Due to real or perceived business impacts on a wide range of issues related to human
welfare and human rights, social risk is described as challenges by stakeholders to business
practices. Social risk is the risk that the returns of an investment may suffer as a result of a
country's political changes or instability. One of Master Tec Wire & Cable’s potential social
threat is increased employment of foreign workers in the production line due to low wages
compared to local workers. Nevertheless, the overflooding of foreign worker can result in
several social issues such as crimes and cultural disputes affecting the stability of society,
causing the company to suffer severe reputational damage if it is found that the company's
employees are engaged in such social issues. The government must formulate and strictly
enforce the laws and policies necessary for foreign jobs in order to overcome the challenges
of foreign employment. Economic risk is the likelihood that the performance of a venture will
not have a sales price that will cover its operating and maintenance costs and debt service
requirements. Economic risk is one of the factors behind higher-risk international investment
relative to domestic investment. In general, bondholders and investors face the risk posed by
international firms. Master Tec Wire & Cable also faces the threat of R&D on a new cable or
wire product that may turn out to be ineffective and this may impact its profitability. MTWC's
rivalry with other stronger financial firms could lead to a decline in the market for cable and
wire supplements. Master Tec Wire & Cable should create a secure supply chain with cable
and wire suppliers through long-term supply contracts whereby payment for R&D research is
made in advance.
7.0 CONCLUSION AND RECOMMENDATION

This project was carried out to implement the production of cable and wire from the
polyethylene. From the polyethylene, we produce many types of cable and wire that can be
used in much condition and has its own characteristic. Besides, this project proposed is
established under the Master Tec Wire & Cable Sdn Bhd whereby it is mainly focus on
supplying, manufacturing and R&D the wire and cable. After conducting several analyses on
the financial status, risk assessment, market analysis of product, costing and budgeting of
proposed project, we are confident that cable and wire has high potential to fulfil the future
high demand in production of cable and wire. Moreover, after evaluating the income
statement, cash flow, equity and liabilities statement of Master Tec Wire & Cable Sdn Bhd, it
provides stable financial status by holding increasing trend in cash ratio, current ratio and
slightly low debt to assets ratio or past three year. Hence, it is competent to carry out this
project under Master Tec Wire & Cable to improve the financial ratio up to five years later.

Furthermore, risk analysis such as market risk, operation risk, social and economic
risk as well as health and safety risk have been conducted in the project to ensure the
technology employed and product can be formed in safe condition and will not pose any risk
to producers and consumers. The risk analysis is also important to evaluate the
competitiveness of Master Tec Wire & Cable Sdn Bhd with the other related company and
implement some improvements to increase the profit of company.
8.0 REFERENCES

1. Malaysia Petrochemical Country Report 2017, retrieved from August 2018, from
http://cpmaindia.com/pdf/apic-country-2018/apic2018-malaysia-report.pdf.
2. Guanjun Wang ,Tingjun Yan , Jiedong Zhang , linna Zhao ,Jianfei Chen.(2011). Risk
Based Inspection on the equipment of low density polyethylene. Retrieved from
https://www.researchgate.net/publication/276481587_Risk_Based_Inspection_on_the
_equipment_of_low_density_polyethylene.
3. Chonung Kim,Pingkai Jiang,Fei Liub, Songchol Hyon,Myong-guangRi, Yongmyong
Yu, Myongsong Ho. Investigation on dielectric breakdown behavior of thermally
aged cross-linked polyethylene cable insulation. Retrieved from
https://www.sciencedirect.com/science/article/pii/S0142941819305537.
4. Risk Analysis and Risk Management. Retrieved 7 November 2018 from
https://www.mindtools.com/pages/article/newTMC_07.html.
5. https://www.investopedia.com/terms/s/seedcapital.asp
6. http://www.mastertec-wirecable.com/about.html
7. https://www.fortune.my/ace-market.htm
8. https://www.foundersworkbench.com/financing-strategies/
9. http://www.statssa.gov.za/?p=9227
10. http://www.bursamalaysia.com/market/listed-companies/list-of-companies/plc-
profile.html?stock_code=0038#