FIRST SEMESTER

SCHOOL OF ECONOMICS, FINANCE AND BANKING

BWBB 3193 SEMINAR IN BANKING

(GROUP A)

ASSIGNMENT 1: CAELY HOLDINGS BHD LOAN EVALUATION

PREPARED FOR

PROF. MADYA DR. AZIRA BINTI ABDUL ADZIS

PREPARED BY: GROUP 14 (SURVIVOR)

NO. NAME MATRIC NO.

1. T. RAMIYAH A/P TAMILCHELVAN 264268
2. KUMRESWARY A/P SEGARAN 264533
3. ANGGELESWARY A/P MURUGAN 264563
4. NURZAFFIRA BINTI MOHD ZAMRI 265007
5. LAVANYA A/P SARAVANAN 265097

DATE OF SUBMISSION

30TH DECEMBER 2021

TABLE OF CONTENT
 NO. CONTENT PAGE
1.0 COMPANY’S PROFILE
2.0 RATIO ANALYSIS
3.0 SUSTAINABILITY
4.0 CORPORATE GOVERNANCE
5.0 RISK MANAGEMENT
6.0 5C’S ANALYSIS
7.0 DECISION MAKING

1.0 COMPANY’S PROFILE

COMPANY’S HISTORY/ BACKGROUND

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 Caelygirl (M) Sdn. Bhd began as a direct selling company selling ladies
undergarments in 1986. Classita (M) Sdn. Bhd, a subsidiary of Caely Girl, was founded in
1988 with the goal of producing high-quality lingerie with unique designs, superior
craftsmanship, and inventive and modern styling. Brassieres, panties, control briefs, garters,
foundation garments, corsets, bustier, bodysuits, shape wear, camisoles, and nighties are
among the company's lingerie offerings. Today, the company has grown to be one of
Malaysia's premier lingerie brands, serving both the domestic and international markets. The
Caely Group was successfully listed on the Second Board of the Kuala Lumpur Stock
Exchange in 2003.

The company operated out of a 77,000-square-foot production plant with over 1000
local and international employees. The lingerie production complex has a monthly capacity
of 2,500,000 pieces and is equipped with advanced technologies such as a Computer Added
Design System (CAD), a computerised sewing machine, and an in-house product research
facility. Aside from increasing production efficiency and productivity, new facilities provide
the company a competitive advantage by ensuring that products are continually created and
manufactured to fulfil client needs. Most of the company's lingerie was made for big brand
owners, department shops, trading houses, and importers across the world.

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1986 Caely (M) Sdn Bhd was established to promote high-quality lingerie
through direct sales. The company's first headquarters were located on
Jalan Changkat Jong in Teluk Intan, Perak.
1988 It expanded its product line to include apparel and household items.
1990 Classita (M) Sdn. Bhd. was founded by Caelygirl to offer high-quality
lingerie to foreign markets.
1992 It has a ground-breaking integrated business complex.
1994 The Group relocated to Wisma Caelygirl, its new corporate headquarters
and business complex.
1995 The Tan Sri Fatimah-Avon Woman of Distinction Award for
Entrepreneurship was given to Ms Theresa Fong, the Managing
Director. The 10th European Quality Award was given to Classita by the
Madrid Trade Leaders' Club.
1997 Caelygirl Group was selected one of Malaysia's top fifty small and
medium-sized enterprises (SMI) in the Enterprise 50 Award. SMIDEC,
the Business Times, and Accenture collaborated to put on the event
(formerly known as Anderson Consulting) "Slim line," the company's
first slimming lingerie, was created by the company.
1998 Caelygirl was once again named one of Malaysia's top Enterprise 50
companies. The Chivas Regal Achievement Unlimited Award was given
to Ms Theresa Fong, the Managing Director.
1999 For the third year in a row, Caelygirl was named one of Malaysia's top
Enterprise 50 firms.
2000 Caelygirl and Classita have both received ISO 9002 and ISO 9001
certifications.
2001 The Group has made inroads into the Chinese market.
2002 A new three-storey manufacturing structure has been completed.
2003 Caelygirl Boutique has opened its doors. Caely Holdings Bhd debuted
on the KLSE's Second Board.
2004 They have a yearly revenue of over RM100 million and employ over
1000 individuals who produce over 1 million lingerie pieces every
month.
2005 MLM is being used to launch a beauty and health company concept.
(Multi-Level Marketing (MLM).
2007 Systematic Multi-Level Marketing (SLM) Launch Transformation Plan.
2008 The corporate logo was rebranded, and products were divided into
separate series.

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2010 Business expansion into property development and construction, as well
as real estate. The Menteri Besar of Perak officially launched our
'WALLAGONIA' concept for a new township in Tapah.
2011 Our property development initiatives are still in progress.
2012 In the business category, Datin Theresa Fong got the Perak Mutiara
Award for "Women of Vision."
2019 Ventured into the production of face masks and PPE (medical devices)
2020 Obtained MDA license
2021 Achieved 1 million pcs of face mask production

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COMPANY’S VISION

To be No. 1 International Lingerie manufacturer and leading direct selling company through
multi-level marketing system in Malaysia

COMPANY’S MISSION

 Dedicated to producing high-quality, innovative products

 Adapting to economic and technical developments that are occurring at a rapid pace
 Putting a premium on outstanding customer service.
 Taking the lead in the field with a creative and capable team
 Profit growth that is consistent with the needs of our shareholders, employees,
business partners, and the communities in which we operate.

CORE PRODUCT

Caelygirl (M) Sdn. Bhd. has grown to become a leading lingerie company in Malaysia, with
operations in both the local and international markets, and has been listed on the Second
Board of the Kuala Lumpur Stock Exchange since 2003. Caely (M) Sdn Bhd, Classita (M)
Sdn Bhd, Caely Development Sdn Bhd, Marywah Industries (M) Sdn Bhd, and Caely
Ecommerce were formed because of this growth.

 Caely’s Business

Caely's business is divided into four categories which are Manufacturing, retailing, export,
marketing, and direct selling. Regular lingerie, slimming lingerie, health supplements, food
and beverages, cosmetics, miscellaneous items, and personal care goods are among the items
available.

 Caely (M) Sdn Bhd

Caely is a modern lifestyle brand that combines fashion with comfort. Founded in the year
1986, we have specialized in undergarments and a diversified product range that includes
apparel, active wear, and beauty products. Owning the largest undergarment factory in
Southeast Asia enables them to deliver products with premium quality. Backed by the best
R&D team, the factory adopts the latest technology and stringent manufacturing practices and
quality standards. With these competitive advantages, our expert team has continued to

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develop an extensive product range and deliver flawless quality for each individual
masterpiece. Caely aspires to deliver top-notch quality products at an affordable price. Caely
expertise and know-how in the textile industry coupled with a quality commitment to the
customers have made us one of the favourite brands in Southeast Asia.

 Classita (M) Sdn Bhd

Classita is one of Malaysia's largest lingerie makers and exporters. We began operations in
1990 with just a few talented employees on a rented location and have since grown to over
500 employees in our own production complex on a 712-acre plot. Classita is known for
producing high-quality underwear with unique designs, superb craftsmanship, and inventive,
basic, fashion, and modern styles and designs. Brassieres, maternity and nursing bras, panties,
shape wear, camisoles, bodysuits, athletics, and swimwear are among the products available.
T-shirts and underpants for men are made by Classita. Face masks for the community are
made by Classita. Several concepts and beliefs that we deeply value and follow inspired our
exponential growth in such a short organisational history.

 Strong Product Development. 

 Excellent Quality & Services.
 Modern Machineries to enhance manufacturing capabilities.

Because of our modern manufacturing facilities, considerable innovation in design and style,
and computerised pattern and marking systems, Caely has a competitive advantage over other
lingerie manufacturers. Furthermore, their continuous improvement in our raw material
procurement will certainly supply our clients with more value-added features. Caely will
eventually become a profitable company because of its clients' success and benefits.

 Caely Development Sdn Bhd

 Marywah Industries (M) Sdn Bhd.

 Caely Ecommerce

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8
GROUP CORPORATE STRUCTURE

BOARD OF DIRECTOR AND MANAGEMENT TEAM

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  DATO’ WIRA NG CHUN HAU

Executive Chairman

Dato’ Wira Ng Chun Hau was appointed to the Board on 8 December 2020 as Non-
Independent Non-Executive Chairman and subsequently re-designated as Executive
Chairman of the Company on 23 February 2021. Dato’ Wira Ng Chun Hau graduated with a
Bachelor of Electrical Engineering from the University of Teknologi Malaysia in 1992. He
obtained the Dealer Representative License from Bursa Malaysia Securities Berhad and has
more than 10 years of stockbroking experience. Upon graduation, he began his career as an
Electrical Engineer with AMD Devices (M) Sdn Bhd in 1992. In 1995, he joined ECM Libra
as a Remisier, which he held till 2001. He has been the Founder and Executive Chairman of
the Public Gold Group of Companies since 2008. Dato’ Wira Ng Chun Hau is a Substantial
Shareholder of the Company. Other than Caely Holdings Bhd, he holds directorship in
Aurora Italia International Berhad, a public listed company in the Leap Market of Bursa
Malaysia Securities Berhad. Other than that, he does not hold any other directorship in any
other public company or listed issuer in Malaysia. Currently, he also holds directorship in the
subsidiaries of the Company.

 DATIN FONG NYOK YOON

Executive Director

Datin Fong Nyok Yoon was appointed to the Board of Directors on October 2, 2002. She is a
member of the Remuneration Committee. Datin Fong Nyok Yoon has been working in the
lady's underwear industry since 1985, and she has a plethora of knowledge and experience in
this profession. She is the driving force behind the Group's principal source of revenue, the
Original Equipment Manufacturer (OEM) overseas markets. Mr Chuah Lim Tai, the General
Manager of the Direct and Trading Sales department, is Datin Fong Nyok Yoon's son and a
major shareholder. Dato' Chuah Chin Lai, her husband, is also a significant shareholder. She
does not hold other directorships in Malaysian public businesses or listed issuers besides
Caely Holdings Bhd. She currently serves on the boards of directors of several of the
company's subsidiaries.

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  NG BOON KANG

Independent Non-Executive Director

Mr Ng Boon Kang was appointed to the Board as an Independent Non-Executive Director on

October 15, 2018. He is a member of the Nomination Committee and the Remuneration
Committee, as well as the Chairman of the Risk Management and Audit Committee. In 1996,
Mr Ng Boon Kang graduated with A Bachelor of Accountancy from University Utara
Malaysia. He is a member of the Malaysian Institute of Accountants, a Financial Planning
Association of Malaysia Certified Financial Planner, and a Malaysian Financial Planning
Council Registered Financial Planner. In 2010, he received a tax agent licence from the
Malaysian Ministry of Finance. Mr Ng Boon Kang joined Chuah & Associates in 1996 as an
Audit Assistant and rose through the ranks to Audit Senior in 1997. He left Chuah &
Associates in 1998 to work as an Audit Manager for KH Chew & Co. He left KH Chew &
Co. in 2004 to start Crest Consulting, which offers business consulting, planning, and
restricting services. Crest Consulting has been defuncting since January 21, 2006. He has
been a Tax Managing Partner and Audit Principal with BK Ng & Associates and TTP &
Associates, respectively, since 2006. Mr. Ng has no family relationship with the other
Directors and Major Shareholders of the Company. He has no conflict of interest with the
Company and has not been convicted of any offences

 TAN LOON CHEANG

Independent Non-Executive Director

Mr. Tan Loon Cheang was appointed to the Board as an Independent Non-Executive Director
on October 1, 2018. He leads the Remuneration Committee and serves on the Risk
Management and Audit Committee as well as the Nomination Committee. Mr Tan Loon
Cheang graduated from the University of London with an LLB degree and was admitted to
the Malaysia Bar on February 10, 2001, as an Advocate and Solicitor of the High Court of
Malaya. He is a partner at a law practise that handles a wide range of legal issues, including
conveyancing, business law, civil litigation, and family law.

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  LIM CHEE PANG

Non-Independent Non-Executive Director

Mr Lim Chee Pang is a Non-Independent Non-Executive Director and was appointed to the
Board on 17th November 2020. Mr Lim Chee Pang obtained his Bachelor of Engineering in
Electrical Engineering majoring in electronics with Universiti Teknologi Malaysia in 1992.
Mr Lim Chee Pang started his career as a trainee production engineer in Motorola Malaysia
Sdn Bhd. He has been involved in numerous operational works such as monitoring testing
process and machine, conducting failure investigation for Final Test failed samples and
supervised the development and implementation for Test Data database system. In 1992, he
was appointed as a Technical Advisor in Microvest Engineering Sdn Bhd in which he was
mainly involved in evaluating and researching IT Technologies. Upon leaving Microvest
Engineering Sdn Bhd in 1994, he was appointed as the Chief Executive Officer and Chief
Technology Officer of Pelion tech Solutions Sdn Bhd.

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  LIM SAY LEONG

Independent Non-Executive Director

Mr Lim Say Leong was appointed to the board as an Independent Non-Executive Director on
November 17, 2020. He is a member of the Risk Management and Audit Committee and the
Chairman of the Nomination Committee. Mr Lim Say Leong graduated from the Chartered
Institute of Management Accountants (CIMA) UK with a CIMA Professional Accountancy
Qualification in 1992 and was enrolled as a Member of the Institute in 1995. In 1996, he
became a member of the Malaysian Institute of Accountants (MIA) and became a Chartered
Accountant. Mr Lim got his Master of Business Administration from Edinburgh Business
School, Heriot-Watt University, UK, in 1999. He was admitted as an Associate Member of
the Chartered Tax Institute of Malaysia in 2000. Mr Lim Say Leong also serves on the board
of directors of LFE Corporation Berhad as an independent director.

 BEH HONG SHIEN

Independent Non-Executive Director

Mr Beh Hong Shien was appointed to the Board as an Independent Non-Executive Director
on December 8, 2020. In August 2008, Mr Beh Hong Shien received his Bachelor of Laws
(LLB) from Northumbria in Newcastle, United Kingdom. In October 2009, he received his
Certificate of Legal Practice (CLP) from the Legal Qualifying Board. In 2010, he joined
Messrs Ismail, Khoo & Associates as a Legal Assistant, where he worked on civil litigation
trials, appeals, and arbitration, including employment disputes, shareholder disputes,
construction contract disputes, and family conflicts, among other things. He started as a Legal
Assistant at Messrs Y.C. Wong in 2013, before becoming a Partner in 2016.

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THE SHAREHOLDERS

No. Name of Shareholders No. of % Of

Shares Issued
Shares
1 ALLIANCE GROUP NOMINEES (TEMPATAN) SDN 54,352,300 21.11
BHD
Pledged Securities Account for Goh Choon Kim
2 FONG NYOK YOON 19,055,400 7.40
3 CHUAH CHIN LAI 14,140,700 5.49
4 KENANGA NOMINEES (TEMPATAN) SDN BHD 13,000,000 5.05
Pledged Securities Account for Ng Chun Hau
5 CIMSEC NOMINEES (TEMPATAN) SDN BHD 12,902,700 5.01
CIMB for Ng Chun Hau (PB)
6 PUBLIC GOLD MARKETING SDN BHD 10,553,100 4.10
7 KENANGA NOMINEES (TEMPATAN) SDN BHD 8,885,000 3.45
Pledged Securities Account for Ng Yan Xun
8 KENANGA NOMINEES (TEMPATAN) SDN BHD 7,155,000 2.78
Pledged Securities Account for Lim Chee Ting
9 CHUAH KIM SEAH 7,000,000 2.72
10 MAI CALVIN 7,000,000 2.72
11 GOH ENG HOE 7,000,000 2.72
12 M & A NOMINEE (TEMPATAN) SDN BHD 6,900,000 2.68
Pledged Securities Account for Ng Chun Hau (PNG)
13 ISLAND SYNERGY SDN BHD 4,490,900 1.74
14 NG CHUN HAU 4,071,800 1.58
15 LUHUR SEJAHTERA SDN BHD 2,045,000 0 0.79
16 ONG AH POH 1,500,000 0.58
17 KHOR TENG TONG 1,400,000 0.54
18 LIM CHEE TING 1,304,700 0.51
19 LIM MOOI CHOO 1,000,000 0.39
20 SOO YOKE MUN 981,400 0.38
21 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 935,000 0.36
Pledged Securities Account for Yap Chin Hock (7003122)
22 TAN JIAN JONG 887,400 0.34
23 CHOON FAH 730,000 0.28
24 OTHMAN BIN MERAH 700,000 0.27
25 KENANGA NOMINEES (TEMPATAN) SDN BHD 700,000 0.27
Rakuten Trade Sdn Bhd for Ahmed Azzaad Bin
Navamukundan
26 RHB NOMINEES (TEMPATAN) SDN BHD 589,300 0.23

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 Pledged Securities Account for Khor Mooi Soong
27 MAYBANK NOMINEES (TEMPATAN) SDN BHD 550,000 0.21
Pledged Securities Account for Zulkifli Bin Ismail
28 HSBC NOMINEES (TEMPATAN) SDN BHD 520,000 0.20
Exempt A for Credit Suisse (SG BR-TST-TEMP)
29 CGS-CIMB NOMINEES (TEMPATAN) SDN BHD Pledged 500,000 0.19
Securities Account for Ng Geok Wah (B BRKLANG-CL)
30 KOID LI YEE 500,000 0.19
TOTAL 191,349,700 74.33

2.0 RATIO ANALYSIS

2.1 Liquidity ratio

Current ratio
3.50
3.00 2.89
2.50 2.47 2.45
2.32
2.00
1.50
1.00
0.50
0.00 0.11

The company's current ratio increases every year. In the year 2020, the current ratio 2.89
indicates that the business has 2.89 times more current assets than liabilities to covers its
debts compared than year 2016, the current ratio 0.11 shows that the company just able to
cover 11% of its current liabilities. To summarise, the firm is in good financial condition and
is less likely to experience financial difficulties.

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2.2 PERFORMANCE RATIO

Performance Ratio
30% 25%25%
20%

10% 7%
4% 6%
1% 1% 2% 1% 2%
0%

-10% -5%
-9%
-13%
-20% -18% -19%
-30%
2016 2017 2018 2019 2020
Return on asset Return on equity Sales growth ratio

The performance ratios which are return on asse, return on equity and sales growth keep
decreasing year by year since 2016 till 2020. The declining return on asset shows that the
corporation may have over-invested in assets which have failed to generate revenue growth,
indicating that the company is in crisis. The company's declining ROE shows that it is
becoming less efficient at generating profits and building shareholder value. To summarise,
the firm is less efficient in the use of resources to create sales and revenue.

2.3 GEARING RATIO

300% Gearing ratio

276%
250%
200%
150%
100%
73% 64% 71%
50% 56%

0%
2016 2017 2018 2019 2020

The company's gearing ratio decreased in 2018 (64%), increased in 2019 (71%), and then
decreased again in 2020 (56%). 2020 has the lowest gearing ratio but since it is greater than
50% which is 56% shows that the company will likely need loans to cover operating
expenditures, exposing it to higher risk during economic downturns or interest rate hikes.
This might result in financial troubles, if not bankruptcy.

2.4 INTEREST COVERAGE RATIO

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 Interest coverage ratio
20.00
15.00 14.41
10.00
7.85
5.00
0.00 0.40 0.44
2016 2017 2018 2019 2020
-5.00 -5.74
-10.00

The company's interest coverage ratio has decreased from 14.41 in 2016 to 0.44 in 2018. It
rises slightly in 2019 (0.44) and then falls again in 2020, which is (-5.74). The ratio's decline
in the year 2020 indicates that there aren't enough earnings to cover the debt's interest
expenditure.

2.5 EFFICIENCY RATIO

2.5.1 AVARAGE PAYMENT RATIO

Average payment period

180
160 156
140 136
120 126
108
100
90
80
60
40
20
0
2016 2017 2018 2019 2020

In 2017, the average payment duration climbed to 136 days from 90 days in 2016. The
average period then declined to 108 days in 2019 before rising to 156 days in 2020. The
longest average payment period in the year 2020 shows that the corporation is taking longer
period to pay its debtors compared than in other years.

2.5.2 ASSET TURNOVER RATIO

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 Asset turnover ratio
1.40

1.20 1.16

1.00
0.95
0.80
0.67
0.60 0.58
0.50
0.40

0.20

0.00
2016 2017 2018 2019 2020

Since 2016, the company's asset turnover ratio has been dropping year by year till 2020. The
asset turnover ratio of 0.50 in 2020 indicates that the corporation

produces RM 0.50 revenue every RM1 of assets. The decline in the asset turnover ratio
implies that the firm is working less effectively, since lower ratios indicate that the company
makes little income per ringgit of assets.

3.0 SUSTAINABILITY

Caely Holding Bhd creates long-term value by considering how a particular Caely
Holding Bhd functions in the economy, environment, and social context. Caely Holding
Bhd's long-term viability is based on the premise that such initiatives are developed. As
public expectations for corporate social responsibility rise and transparency becomes
increasingly common, Caely Holding Bhd recognizes the need to act on sustainability.

3.1 ECONOMIC
Caely Holding Bhd speciality in lingerie production, retail, export, direct sales, and
property development and construction. Caely Holding Bhd intends to become a long-
term company contributing to Malaysia's economic growth. With its operations,
Malaysians now have job options thanks to the company. In terms of output, the
company is Malaysia's leading lingerie manufacturer, with its brand and other OEM
brands supplying both domestic and international markets. The firm also engages in
property development, concentrating on small to medium sized residential
developments, and has constructed housing developments for the benefit of the local
community. The organisation also seeks to provide the best bang for our buck by

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 providing high-quality goods and services at reasonable pricing. The company
reviews its position regularly to keep up with and manage ever-changing industry and
customer trends preferences.
Caely Holding's property development and construction segment aim to acquire
materials locally to help the local economy prosper. Because many of the suppliers
are local, the local economy will benefit. Despite the pandemic's disruption of
operations, the company was able to keep all its personnel, both locals and foreigners,
alive and well. Teluk Intan, Perak, has maintained local work opportunities because of
the manufacturing factory. The company has aided residents, and some employees
have been with the organisation more than 30 years. The company also aims to
establish a positive work environment for its employees, allowing them to grow and
succeed. Employees receive competitive pay and benefits and a pleasant working
environment.

3.2 ENVIROMENTAL
Caely Holding Bhd is committed to long-term growth and seeks to operate in a
manner that has the least negative impact on the environment. The organisation work
to solve environmental issues by applying environmentally friendly innovative
technologies and industry best practises, resource-efficient, and promote energy
efficiency. The corporation is conscious that its operations will directly impact the
environment because it is also involved in property development. As a result,
environmental concerns are interwoven into all features of the company's operations
and procedures. Furthermore, the company ensures that its construction sites and
workplaces have proper environmental precautions in place. The company has taken a
few easy steps to lessen its environmental impact.
In addition, the company recognises that using paper has a significant environmental
impact. As a result, the company's waste and material management strategy focuses
on reducing paper waste and reducing paper consumption. Caely Holding Bhd is
constantly aware of reducing paper use to reduce waste. Furthermore, in terms of
environmental safety and preservation, it strictly adheres to the government's
regulations and directions. As a result, we were able to extend the life of the
scaffolding on the job site by reusing it in other projects. Apart from erecting silt traps
to reduce pollution on construction sites, all undesired wastes, materials, and by-

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 products are recycled or disposed of approved disposal zones in a timely manner. and
efficient manner to avoid annoying the surrounding community.

3.3 SOCIAL
Caely Holding Bhd aspires to provide a secure and risk-free workplace. As a
result, the company established Occupational Safety and Health (OSH) committee to
ensure that the company's safety, health, and environmental policies and procedures
are always followed. Fire drills are done at least twice a year in collaboration with the
local fire and rescue agency. Firefighting equipment, first aid, CPR, evacuation
methods and other danger-avoidance measures are among them. While managing
human capital, the company encourages a corporate culture of providing a healthy and
safe workplace with a good working environment for the entire staff. For example,
employees do not need to go outside for Friday prayers because the company has
provided a Surau on the factory grounds.
Caely Holding Bhd has actively organised activities to foster a healthy lifestyle for
employees while celebrating holidays, can build relationships during the annual
dinner and families' day events. Workers can also use the company's transportation to
and from work from their houses. In addition, the Minimum Wages Order 2018
increased the minimum monthly basic remuneration from RM1,000 to RM1,100.
Human resource development and training programmes emphasise leadership, self-
assurance, and personal and professional competence. Training can be done in-house
or by a third-party provider. Traditional classroom instruction, on-the-job training,
and action-based learning are all part of these programmes. By giving such training,
the individual would be more equipped and motivated to carry out their obligations
and achieve their full potential.
Caely Holding Bhd has always had a "Caring and Sharing" approach toward
society as a caring firm. By allowing the less fortunate and need to work among their
peers, the company contributes to the local community and society. With the guidance
and cooperation of the local institution, Bethany Home of the Handicapped, the
company has continued to employ some of its pupils following adequate training. In
addition, the corporation provided Bethany Home and several other old folk homes
with money or consumer items every month. In addition, the corporation supports
local schools and non-profit organisations.

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 Caely Holding Bhd is committed to ensuring that none of its operations has a
major negative environmental effect. As an exporter, the manufacturing segment must
meet the overseas buyer's strict requirements that the raw materials used have been
examined and are free of dangerous chemicals according to Oeko-Tex Standard 100, a
global system of independent testing and certification for raw, semi-finished, and
finished textile products. According to the company, all suppliers must comply with
this criterion. We follow the Standard due to our efforts, as mentioned earlier, to
improve our sustainability. Prequalifying screening, a detailed review of their
qualifications, a call for bids process, as well as follow-up meetings and interviews
are all part of our property and construction segment's selection process.

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 CORPORATE GOVERNANCE
4.1 BOARD LEADERSHIP AND EFFECTIVENESS

4.1.1 BOARD RESPONSIBILITIES

4.1.1.1 ROLES AND RESPONSIBILITIES OF THE BOARD

The Board of Directors is in charge of the company's goals, policies, and resource
stewardship. Executive Directors make operational choices, whereas Non-Executive
Directors contribute to policy formation and decision-making by drawing on their expertise
and experience in comparable or different firms and areas.

Non-Executive Directors are free of any company affiliations that would affect their ability to
make independent decisions and are independent of management. Several Board Committees,
including the Risk Management and Audit Committee, the Nomination Committee, and the
Remuneration Committee, also support the Board in carrying out its tasks and obligations.
All these committees were constituted under terms of reference authorised by the Board.
4.1.1.2 ROLE OF EXECUTIVE CHAIRPERSON, MANAGING DIRECTOR AND
INDEPENDENT DIRECTORS

Two different people hold the Executive Chairperson and Managing Director positions, and
the Board Charter's clear job division ensures power and authority balance. The Executive
Chairperson is involved in the manufacturing and sales activities of the Lingerie Division.
The Managing Director is responsible for the overall business and day-to-day activities
Company's Recreational, Property, and Construction Division. The Independent Non-
Executive Directors are highly qualified and trustworthy individuals. In carrying out their
tasks and obligations, they give professional and impartial opinions, knowledge, and
judgement.

4.1.1.3 COMPANY SECRETARIES

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 Boardroom Corporate Services provided two properly qualified and professional
Company Secretaries to the board. The board of directors has complete access to the
Company Secretaries' advice and services. The Company Secretaries attended all
Board and Board Committee meetings for the fiscal year ending March 31, 2020, and,
verified that accurate and adequate records of the proceedings were kept. The
Company Secretaries also guide the board on issues such as the Company's
constitution and compliance with applicable regulatory requirements, rules,
regulations, and laws.

4.1.1.4 ACCESS TO INFORMATION AND ADVICE

The agenda for each board meeting and complete reports and material are sent to all
Board Members promptly before the meeting. Board papers, which include financial
and corporate data, major operational, financial, and corporate issues, performance
reports, and management ideas for Board approval, are also given before board
meetings. In addition, senior management employees are asked to attend Board
Meetings as needed to provide additional explanations and clarification on problems
being discussed.

4.1.1.5 BOARD CHARTER

The Board emphasises the importance of the Board's and Management's roles and
obligations. The Board has defined these functions as part of the corporate
governance process and obligations in the Board Charter to ensure accountabilities for
all stakeholders. The Board will conduct a review, the Board Charter regularly to
make sure that it remains relevant to the Board's objectives and responsibilities.
4.1.1.5 CODE OF CONDUCT AND WHISTLEBLOWING POLICY FORMALISED
ETHICAL STANDARDS
Following section 17A of the Malaysian Anti-Corruption Commission Act 2009, the
Board of Directors accepted the Code of Conducts and Ethics in 2020 and updated
Whistleblowing Policies and Procedures and the Company's Anti-Bribery and Anti-
Corruption Policy. Accordingly, the Company must adhere to the Code of Conduct
and Ethics.

4.1.2 COMPOSITION OF THE BOARD

4.1.2.1 Composition and Independence of the Board

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 The board currently has two Executive Directors, two Independent Non-Executive
Directors, and one Non-Independent, Non-Executive Director. This board's
composition complies with Bursa Securities' MMLR, which calls for at least two
independent directors or one-third of the board, whichever comes first. It also
complied with the Code's requirement that at least half of the board is to be
independent members. If a post on the Board of Directors becomes vacant, the
Company must fill it within three months to avoid non-compliance with Bursa
Securities' MMLR.
4.1.2.2 Annual Assessment of Independence
The Board evaluates the independence of the Independent Directors on a yearly basis through
its Nomination Committee (NC). The purpose of this evaluation is to guarantee that the
Independent Directors will provide the Board with independent and impartial judgement and
opinion. The Independent Directors have displayed a high level of independence, which the
Board appreciates. During the fiscal year 2020, which ends on March 31, the Nomination
Committee had two meetings to examine each individual Director's contribution and
performance, including an assessment of the Independent Directors' independence. The
Board of Directors is pleased with each Director's participation and performance. The
Independent Directors meet the MMLR's independence standards.

4.1.2.3 Tenure of Independent Directors

Following the Code's suggestion, an Independent Director's total tenure should not exceed
nine years. The Board thinks that the length of time an Independent Director has served as an
Independent Director has no bearing on his or her ability to make independent judgments and
observations. The capacity and suitability to effectively carry out his or her functions and
obligations are heavily reliant on his or her competence, experience, and personal traits. This
limit on tenure might result in a loss of knowledge and competence, detrimental to the
Board's efficiency. The Board has examined all Independent Directors' independence and
thinks that they are all unbiased and independent in expressing their viewpoints and
participating in Board and Board Committee deliberations and decision-making.

4.1.2.4 Recruitment and Appointment of Directors

The NC created to help the board suggest appropriate fresh nominations for the Board of
Directors and Board Committees as needed and analyse the Directors' talents and other traits
on an ongoing basis. The board has given the NC the authority to form on the board of

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directors' suggestions in appointing new Directors or filling board vacancies when needed.
The NC will examine the needed combination of skills, knowledge, competence, experience,
and other attributes for a new Board member when making their proposal. The Group
currently there is no policy addressing gender, race, or age group since all candidates will be
treated fairly and equally. Character, knowledge, experience, time commitment, and honesty
in satisfying the Group's needs determine candidates' eligibility.

4.1.2.5 Annual Assessment of Directors

The NC assesses the required skill and experience balance for Directors on an annual basis
and the fundamental competencies that Directors should contribute to the Board. The NC also
evaluates the Board's overall competence and the contributions of each Director, including
Independent Non-Executive Directors. The NC is presented with a summary of each
Director's evaluation and comments, then reported to the Board. During the fiscal year under
review, the NC performed an annual evaluation and determined that the Board and Board
Committees are successful, with the right combination of abilities, size and composition,
experience, skills, and other criteria. The NC convinced directors must have the necessary
character, experience, honesty, competency, and the time to carry out their obligations are all
important factors to consider.

4.1.2.6 Directors’ Training

The Group realizes the value of ongoing education and training for board members to stay
current on the status of the economy, technological advancements, regulatory changes, and
management strategies to execute their duties and obligations properly. There are education
and training programmes to guarantee that the Directors have the chance to improve their
skills and expertise continually. All the Directors have received training, either in-house or
via a third party. Furthermore, the Board of Directors recognises the value of having a
knowledgeable management team and workforce. To that aim, managers and employees are
urged must take part in training and education programmes to stay up to date on the latest
advances industry news.

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4.1.3 REMUNERATION POLICIES AND REMUNER OF DIRECTOR AND
SENIOR MANAGEMENT
4.1.3.1 Remuneration
The Remuneration Committee (RC) formed to guide the Board in evaluating the directors'
compensation packages at the Company and its subsidiaries. The RC is responsible for
recommending the Directors' remuneration scale to the Board. After considering the RC's
recommendations, the Board will decide. Salaries, fees, allowances, and bonuses are paid to
Executive Directors based on their performance, services, seniority, experience, and
responsibilities are all factors to consider. As needed, further typical benefits are made
accessible. Other considerations, such as market rates and industry norms, are considered
during salary reviews as the Board sees fit. For example, the basic compensation considers
the individual's performance, the scope of responsibility, data from independent sources on
salary rates for similar positions, and other relevant indications.

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 4.2 INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL
RELATIONSHIP WITH STAKEHOLDERS
4.2.1 Communication with Stakeholders
The Board recognises the significance of keeping shareholders up to date on any significant
corporate events affecting the Group. Accordingly, the Board is dedicated to timely and
important information is disclosed in a high-quality manner to shareholders and investors.
4.2.2 Leverage on Information Technology for Effective Dissemination of Information
The company is aware of the significance of openness and responsibility to its
investor and shareholders. As a result, the Board guarantees that shareholders and investors
on the company’s financial performance and essential business information are maintained up
to date. Bursa Securities receives a variety of notifications and disclosures, including
quarterly interim financial statements, annual reports, and, if necessary, circulars and press
releases are used to disseminate this information to shareholders and investors.
4.2.3 Conduct of General Meetings
The AGM is the primary means to communicate with shareholders. The Executive
Chairperson will advise shareholders at the AGM that they are encouraged to attend and will
have the chance to ask questions or seek further information about the Company. In addition,
during the AGM, the Executive Chairperson, Managing Director, and other Board Members
are accessible to answer shareholders' questions.

4.2.4 Encourage Poll Voting

The Company will vote by-poll on any resolution stated any notification given in advance of
a general meeting or any notice of a resolution that may legitimately be moved and is
intended to be moved during any general meeting. An impartial examiner will certify the
results of the general meetings’ votes.

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4.2.5 Effective Communication and Proactive Engagements with Shareholders

The Board is dedicated to improving communication and encouraging proactive shareholder

participation. As a result, at general meetings, the Board members, Company Secretary, and
External Auditors would be present to answer any questions that could arise. In addition, the
Executive Chairperson would invite shareholders to ask doubts about each agenda item in the
general meeting.

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5.0 RISK MANAGEMENT
5.1 CREDIT RISK

If a counterparty fails to meet its promises, credit risk refers to the likelihood of a loss on
outstanding financial assets. The company's key sources of credit risk include trade and other
receivables, payments due from customers on contracts, and bank balances. The management
reporting systems used by the organisation keep track of trade receivables regularly. The
company has no major exposure to any client or counterparty and no significant credit risk
concentrations on any financial instrument. The credit worthiness of trade receivables that
aren’t past late or in default. comprises significant amounts outstanding from customers with
a strong collecting history with the Group and the Company. The Group will keep track of
past-due trade receivables regularly.

5.2 INTEREST RATE RISK

Interest rate risk refers to the possibility changes in market interest rates will affect the
value of a financial instrument or future cash flows. Because the group rarely deposits with
Malaysian financial institutions, interest rate risk is minimal. Most of the loans are for a
variable term.

5.3 LIQUIDITY RISK

Liquidity risk refers to the possibility that the Group and the Company will have
difficulty satisfying financial obligations due to a fund’s shortage. Mismatches in the
maturities of financial assets and obligations provide a liquidity risk to the Group and the
Company. The Group and the Company keep enough cash on hand and ensure financing
availability by acquiring credit from Malaysian financial institutions in a sufficient but
flexible amount. Furthermore, borrowings with variable maturities, to guarantee that adequate
cash inflow from operation is accessible to satisfy all payback obligations. In addition,
intercompany advances are a source of additional funding for the Group and the Company's
working capital.

5.4 FOREIGN CURRENCY RISK

The Group is exposed to foreign currency risk due to its typical trading activities, which are
denominated in a currency other than RM. Most of the sales are in USD and RM and to a
lesser extent, Euros, while purchases are USD, RMB and RM. The Group controls its foreign
currency exchange risk by establishing a natural hedge by using deposits from export

29
revenues denominated in the same foreign currency to pay for imported commodities. The
Group also executes foreign currency forward contracts to hedge some export income and
import purchases when it deems it necessary.

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6.0. 5C EVALUATIAN OF CAELY HOLDINGS BHD

In layman's terms, credit analysis is more about identifying risks in instances where the banks
see a potential for lending. The total evaluation of the company includes quantitative and
qualitative assessments. This, in general, aids in determining the entity's debt-servicing
capability or repayment ability. Character, Capacity, Capital, Collateral, and Condition are
the five Cs of credit analysis.

Character

Character is one of the main criteria that lenders look at the company. For example,
the company history credit and past payment reveal Caely Holdings Bhd proclivity for
repaying a loan on time. On the other hand, past defaults reflect carelessness or
irresponsibility, which are negative personality qualities. For example, look at the Average
Payment Period (APP) for Caely Holding to see how long it took the company to pay down
credit accounts payable on average. APP that more than 90 days or 3 months considered ‘bad
accounts.

From the trend can be seen that in 2020, Caely Holdings took about 156 days to settle
their payment, and that was the highest period compared to 2019, which is only 108 days.

From this APP, can be said that Caely Holdings may take months to pay off the loan
and cannot pay the debt on time.

Capacity

"Capacity" refers to a company's ability to repay loans. Investors and creditors use the
current ratio to assess a company's liquidity and the ease with which it can pay off its current

31
liabilities. A high ratio reflects a company's ability to satisfy its short-term obligations. The
higher the ratio, the more competent the company is. If a company's current ratio is less than
one, it means it cannot pay down its short-term debt with cash.

Current ratio
3.50

3.00
2.89

2.50 2.47 2.45

2.32
2.00

1.50

1.00

0.50

0.11
0.00
2016 2017 2018 2019 2020

As evidenced by the chart, the ratio was in good shape as it was more than one. The
ratio in 2020 is the highest among the five years studied which is 2.89, indicating that it has
2.89 times its liabilities in assets and is currently able to satisfy its debt.

Caely Holdings can pay its debts in the short term, according to the current ratio.

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CAPITAL

The amount of money invested by the business owner in the company is referred to as
capital. This is significant because banks are more inclined to lend to business owners who
have put part of their own money into the endeavour than those who require 100% start-up
cash from the bank. Instead, the gearing ratio was employed for capital analysis. It is a metric
that assesses the financial risk of a corporation. A company's financial health can be harmed
by excessive debt. A high gearing ratio means a high debt-to-equity ratio, whereas a low one
means the opposite. A more than 50% gearing ratio is regarded as highly levered or geared,
while a ratio of less than 25% is considered low risk for lenders.

Gearing ratio
300%
276%
250%

200%

150%

100%
73% 71%
64%
50% 56%

0%
2016 2017 2018 2019 2020

According to the trend, the ratio drops to 56% in 2020 from 71% in 2019. And it can
be argued that this was the lowest ratio for the five years from 2016 to 2020. However, even
though the ratio has decreased, it is still higher than 50%, regarded as average and highly
geared for this organisation.

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Collateral

An asset promised by a borrower to protect a lender's interests in providing a loan is

known as collateral. The bank will assess the value of the business's assets and the guarantors'
assets, particularly accounts receivable, inventory, equipment, and real estate. These asset
classes can be collected or sold to raise funds to repay the loan in a liquidation scenario. If a
company fails to pay a secured obligation, the lender may take and sell the collateral to
recoup their losses.

The current asset exceeds the current liabilities, according to the chart. When a
company's current assets exceed its current liabilities, its working capital is healthy. In a short
amount of time, a current asset can be quickly transformed into cash. Lenders prefer current
assets since they are valued and easy to collect. Caely Holdings' financial strength may be
shown in its ability to fully fulfil its short-term liabilities, which is ensured through working
capital.

If Caely Holding Berhad cannot repay the loan, their collateral is valuable as a means
of recouping the debt.

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Condition

In addition to a borrower's money, lenders analyse other financial factors such as the
economy's overall health and the loan's specifics. For example, the loan interest rate,
principal amount, and intended use of loan funds are usually provided. In addition, lenders
often consider external factors such as the overall status of the economy, industry trends, and
other factors that may affect loan repayment.

The sales growth ratio began to decline in 2018, even though the return on asset
(ROA) and return on equity (ROE) remained positive (ROE). Furthermore, it deteriorated in
2020, when the ROA, ROE, and sales growth ratios began to fall. When a company's return
on equity is negative, it loses value to its shareholders. This is usually a bad sign for investors
and lenders. From 2018 to 2020, the sales growth ratio has been negativing for the past three
years, suggesting a drop in firm sales or earnings. The weakest sales growth ratio was in the
year 2020, which is understandable given that it was the year the Covid19 pandemic struck
the world, and there was an economic crisis at the time.

In conclusion, Caely Holding, as a three-decade-old corporation in the industry,

cannot react quickly to a downturn since the chart presented a poor performance sign in 2020.

7.0. DECISION MAKING

After doing the thorough analyses, you are required to give recommendation whether
to approve or deny the loan application

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 Upon performing a thorough evaluations of Caely Holding Bhd's loan application
with using qualitative and quantitative data, quite particularly, after consciously assessing the
loan application by using 5 C's, that are either Character, Capacity, Capital, Collateral, and
Credit Condition, by acknowledging every one of the C’s, In addition to the 5Cs, examine on
ratio analysis which including liquidity, performance, gearing ratio, interest coverage ratio,
and efficiency, that is a comparative study which covers the business's prior performance in
terms of financial ratios too. Given appropriate ratios for previous data (years 2016, 2017,
2018, 2019, and 2020) to assist the review process, my advice would be to deny Caely
Holding Bhd's loan application.

If you rejected the loan application, provide justification why the application should be
rejected.

As our bank is one of the Principles for Responsible Banking signatories, we prioritise
providing a framework through which banks can align their strategy, portfolio, and business
practices with society's social and environmental goals.

Going through the credit analysis on Caely Holding Bhd to determine the risk
associated with making a loan and the credibility, ability to repay debt and the amount of
credit risk involved with providing Caely Holding Bhd with the loan. This credit analysis is
based on five key factors, including the five Cs of Credit. The five Cs consist of Character,
Capacity (Cash flow), Condition, Capital, and Collateral; we have concluded that Caely
Holding Bhd is not qualified to get the loan approved. This is because the character in the
five Cs analysis is mostly used to assess the loan applicant's creditworthiness. In Caely
Holding Bhd, to reach the character aspect in our 5C analysis, we looked at the most recent
profiles of the company's Board of Directors (BOD) and Management Team (MT), which is
known to have a degree in the relevant field as highest education level. Unfortunately, some
BODs and MTs do have family relationships, which would affect the interest of the business.
As for the next aspect, when evaluating the capacity of the Caely throughout the five years,
sales growth was good only in 2016 and the following year decreased very badly. 2018, 2019
and 2020 experienced negative growth indicate that the company's sales are not going well.

Meanwhile, the cash flows generated by its operational activities establish its capacity
to earn cash from its operations. According to the 5-year cash flow statement, Caely had up
and down cash flow for the examined 5 years, which does not favour to approve loan. In the
aspect of Condition for Caely Holding Bhd, from the analysis that has been conducted, Caely

36
Holding performs poorly in the sector, suggesting a reduction in business sales or earnings in
years such as 2020, which is unsurprising considering that it was the year the Covid19
epidemic rocked the world. There was an economic crisis at the time.

Capital, according to the gearing ratio of Caely Holding for the past 5 years, the trend
gearing ratio is going up and down year to year. From the highest number in 2016 and
become lowest in 2020, 56%. This indicated that the company had had an increasing debt
compared to its shareholder's equity over the past 5 years. As a result, the company has more
debt to service, resulting in financial trouble or going bankrupt. Collateral as a secondary
source of repayment for the loan for Caely the company owns the number of assets like
property, plant and equipment, investment properties, and more to be pledged as collateral
which shows the total amount of assets are higher than total liabilities If Caely Holding
Berhad cannot pay the debt, their collateral is valuable to recoup the unpaid amount.

Ratios are important since they give a peek into business operations without visiting
the business in person. As a loan evaluation process, ratio analysis was also used to determine
why we should reject Caely Holding Berhad's loan application. One of the important factors
that we would like to know profitability ratios like ROA, ROE, and sales growth of Caely to
identify the capacity to cover costs as they arise is critical. As for Caely Holding Berhad, it
has negative results for the ROA, ROE and sales growth in the year 2020 also sales growth is
continuously having a negative trend for the years 2018, 2019 and 2020 eventually,
profitability ratio of Caely is one of the weakest parts that support our decision not to approve
the loan.

We also wanted to know how Caely Holding Berhad will pay the loan and interest;
we checked their interest coverage ratio. The interest coverage ratio of Caely is at the worst
as it shows a continuous declining trend and eventually in 2020 recorded with the negative
value, which concludes that Caely does not have enough income to back up their loan's
interest expenses. We used the current ratio as our indicator to evaluate the business's
liquidity. Caely's current ratio is the strength of the business to support this loan application.
Carly has enough current assets to cover their debts as the trend of the current ratio keep
increasing every year and recorded the highest in 2020 despite pandemic due to Coronavirus.
Eventually, the firm is in good financial condition and is less likely to experience financial
difficulties. The asset turnover ratio of Caely is one of the weakest factors for the business
as the ratio implies that the firm is working less effectively since lower ratios indicate that the

37
company makes little income per ringgit of assets. The same goes for the gearing ratio of
Caely, which shows the poor result, which might lead to financial troubles, if not bankruptcy.

Furthermore, we analyse the business's average payment period ratio to know they
make payments to their suppliers, other debtors, and stuff. In 2020, the business took 156
days to make the payment to their debtors compared to in other years. To be concluded, it is
obvious that if we approve the loan, it has a higher percentage of risk and might end up
defaulting. Therefore, to avoid taking a risk, we are rejecting the loan application of Caely
Holding Berhad.

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