Company Background

The Company was incorporated in Malaysia under the Act on 18 March 2022 as a private limited company under the name of TSA Group Sdn Bhd. On 1 November 2022, the Company was converted into a public limited company and assumed its present name. On 31 October 2023, the company completed the Acquisition of TSA Industries which resulted in TSA Industries, TSA Pipes, Mitra Bintang, TSA Singapore and Asia Inox becoming its subsidiaries.

The principal activities of the Company and its subsidiaries are as follows:

The Group structure after completion of the Acquisition of TSA Industries is set out below:

Use of proceeds

1. Capital expenditure for the establishment of Semenyih Manufacturing Premises - 12.0% (within 24 months)
2. Working capital - 29.0% (within 36 months)
3. Repayment of bank borrowings - 47.0% (within 5 months)
4. Estimated listing expenses - 12.0% (Within 1 month)

Capital expenditure for the establishment of Semenyih Manufacturing Premises - 12.0% (within 24 months)

The subsidiary, TSA Industries had, on 3 January 2022, entered into a sale and purchase agreement with Sri Cinmal Sdn Bhd to acquire the Semenyih Land from Sri Cinmal Sdn Bhd for a purchase consideration of RM13.1 million. The basis of the purchase consideration for the acquisition of the Semenyih Land was on a willing buyer and willing seller basis after taking into consideration the then prevailing market prices of lands in the same vicinity. The acquisition was completed on 7 October 2022. The Group intends to construct and establish the Semenyih Manufacturing Premises on the Semenyih Land.

The total estimated construction cost for the Semenyih Manufacturing Premises is approximately RM52.0 million, of which the breakdown is set out as follows:-

The company has earmarked RM5.1 million of the gross proceeds from the Public Issue for the construction of the Semenyih Manufacturing Premises. The gross proceeds of RM5.1 million is intended to finance approximately 10.0% of the construction cost of the Semenyih Manufacturing Premises. As at the LPD, the company has obtained an additional banking facility of RM126.9 million from Hong Leong Bank Berhad, where RM45.9 million is earmarked for the construction of the Semenyih Manufacturing Premises, RM46.0 million for the purchase of a reconditioned stainless steel cold rolling line and the balance of RM35.0 million are trade facilities for our working capital to purchase input materials. The balance construction cost will be funded via internally generated funds. The construction of the Semenyih Manufacturing Premises is part of the business expansion plans to expand its manufacturing line to include a stainless steel cold rolling line.

Working capital - 29.0% (within 36 months)

The company has earmarked RM12.33 million of the gross proceeds from the Public Issue for its working capital requirements. The proposed allocations of the proceeds are set out below:

Repayment of bank borrowings - 47.0% (within 5 months)

The company has earmarked RM20.0 million of the gross proceeds from the Public Issue to partially repay the bank borrowings as follows:

Based on the above, the expected annual interest savings ranges from approximately RM1.1 million to RM1.3 million based on the prevailing interest rates ranging between 4.51% per annum and 7.36% per annum for the banking facilities from the above financial institutions. However, the actual interest savings may vary depending on the then-applicable interest rates.

Business model

The business model is depicted in the following diagram:

Click here to continue the IPO - TSA Group  Berhad (Part 2)

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