information memorandum 2018 - 2019 - eworldtrade

Version February 2019 Strictly Private and Confidential

INFORMATION MEMORANDUM

2018 - 2019

Adding value along the supply chain through

knowledge, experience and innovation

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Strictly private and confidential

I N F O R M A T I O N M E M O R A N D U M – F E B R U A R Y 2 0 1 9

PURPOSE AND OVERVIEW

This Information Memorandum has been prepared to describe TMT Metals’ organization and operations. It specifies the company’s

main activities, the corporate, management and operational structure as well as 2017/2018 tonnages and main financial indicators.

In 2017/2018, thanks to the strong support of its shareholder and its successful business model, TMT experienced an unprecedented

growth of its Turnover with an expected increase by about 111% to reach US$ 1.1 billion in FYE 2018 (31st March). The group aims to

maintain similar growth over the next couple of years to reach a US$ 3 to 4 billion trading book. In consequence, TMT’s financials

needs and working capital requirements have surged and the group is looking to increase its current bank pool along whilst

strengthening its current bank relationships.

TMT Metals has 3 offices globally – UK, Switzerland and India.

TMT Metals AG is the flagship entity of the group incorporated in 2010.

For Financial Year ended 31st March 2018, the group achieved revenue of US$ 1.1bn in current financial year and profit of USD

2.8 Mn and group expects growth of 15%-20% in revenue in 2019.

TMT Metals in one of the largest Tin Traders in the world.

TMT Metals is in discussion with a private equity fund for US$ 25m of equity investment.

TMT Metals Senior Team comprises professionals with diversified backgrounds ranging from metals trading, banking, corporate

finance, capital markets, funds and derivative trading with qualifications from reputed business schools and institutions.

“Sustaining the success of a business is not an easy task. What is even more challenging is elevating the growth of an already

established company. But with an extraordinary foresight, strong determination and a skillful team, one can reshape the business and

take it to escalating heights. At TMT, this is my motive and I am confident that with the support of my team we shall able to grow

exponentially.”

– Prateek Gupta

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COMPANY PRESENTATION

TMT Metals Holding Limited (TMT) is a UK based group engaged in trading of non-ferrous metals, minor metals and ferroalloys and

trading of ferrous metals scrap. Founded in 2010, the group was initially focused on the trading of Tin, Aluminum and Minor Metals.

Between 2010 and 2016, TMT was owned by TMT Holding AG (51%) and Deka Investment GmbH (49%). In February 2016, TMT was

taken over by UD Group ultimately owned by Prateek Gupta & Family purely acting as financial investors into the group. Following

structural changes, the group has recently shifted to higher volumes and is engaged in additional metals markets including Lead, Zinc,

Copper, Nickel and new Concentrates. The group is one of the largest Tin traders in the world and is a Category 5 LME member with

exchange access through partnership with ring dealers, investment banks, brokers, and direct trading via LME Select platform.

The Group’s core traded commodities by sector are:

Memberships:

TMT Metals is a member of the London Metals Exchange and is listed as a category 5 - Associate Trade

Member. The LME is the world’s largest market place for base metals and industrial metals.

TMT Metals is a member of the International Tin Supply Chain Initiative and adheres to the principles of

conflict free trading as set forth by the OECD and United Nations.

TMT Metals is a member of the International Trade and Forfaiting Association, the worldwide trade

association for companies, financial institutions and intermediaries engaged in trade and forfaiting.

TMT Metals is a member of the Zug Commodity Association. A non-profit organization located in Zug with

aims to strengthen the Zug and Swiss based community of companies active in the supply chain of

commodities. ZCA is a member of the Swiss Trading and Shipping Association.

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COMPANY AND SHAREHOLDING STRUCTURE

TMT Metals Group:

TMT Metals operates from two entities, TMT Metals AG, the flagship company focusing on the legacy markets and TMT Metals (UK)

Limited that will develop new markets including Copper, Nickel and ferrous metals. Both entities are consolidated through TMT Metals

Holding Limited.

TMT Metals Organizational Chart:

TMT Metals Holdings consolidated Figures:

Consolidated Net Worth: US$ 14.58M

Consolidated Turnover: US$ 1.1Bn

TMT runs 3 offices and employs 19 people (including 7 Traders): Zug – Switzerland (10 people), London – UK (5 people) and

Bangalore – India (4 people).

Zug and London in the hearth of Europe hold an essential and historic role as two of the top 5 commodity trading centers worldwide.

Thousands of highly qualified professionals make both cities a cluster for commodity trading. They are supported by a wide spread

series of related services, such as shipping, transportation, financing, risk insurance and legal consultancy.

TMT Metals Holdings Limited

TMT Metals AG TMT Metals (UK) Limited

Incorporation: Zug, Switzerland

Markets: Base Metals, Minor Metals and Ferroalloys

Net Worth: US$ 15.62 M

Turnover: US$ 956 M

Incorporation: London, UK

Markets: Ferrous Metals, Nickel, Copper and Ferroalloys

Net Worth: US$ 7 M

Turnover: US$ 170 M

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Shareholding Structure: UD Holdings Limited, Dubai

UD Group is a Global Group with operations in Metal Trading, Wind Power Generation & Mining. UD Group has its presence in Asia

Pacific, Middle East and Europe. Consolidated Group Revenues over US$ 4.4bn (FY 17) with 150 employees & offices strategically

located in 9 countries. The senior team comprises professionals with diverse backgrounds ranging from banking, corporate finance,

capital markets, funds, metal and derivative trading, with qualifications from Harvard, Cambridge, IIT, IIM and European Business

School.

UD Group started its operations by trading steel and steel products. Today, UD Group trades in coal and the supply chain of ferrous &

non-ferrous metals. Globally, it is among the top 50 metal trading companies in terms of annual sales. UD Group diversified into Wind

Power Generation, Mining. The Group has also ventured into providing sourcing & financing solutions for the equipment demanded

by the metals supply chain; mining, smelting, refining, rolling, processing, and waste refining/recovery.

100%

100% 100%

UD Holdings Limited, Dubai

TMT Metals Holdings Limited

TMT Metals AG TMT Metals (UK) Limited

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BOARD AND EXECUTIVE COMMITTEE

TMT Metals Operational and Management Structure:

The Leadership and Advisory Board consists of 5 persons including Prateek Gupta who is the sole owner of TMT Metals. As per Swiss regulation, the Board is responsible for the strategy and development of the company whereas the Executive Committee has to implement the strategy decided by the Board. The Company arranges a monthly call between the Executive Committee and the Board. In this call the Executive Committee provides a brief overview of current non day-to-day on-goings and in particular reports besides other things on turnover, profitability, Human Resources related issues, banking relationships and status of receivables during the period. Further, the company arranges half year physical meetings to discuss in more details the success of the financial periods on the basis of audited and management figures.

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Leadership & Advisory Board

The Leadership & Advisory Board provides Strategy, Guidance and Growth direction. They monitor business performance and risk along with providing TMT with talents and resources. While the Board does not interfere with day to day business and decisions, it approves budgets and risk limits prepared by the Executive Committee.

PRATEEK GUPTA

Director & Board Member – TMT Metals Holdings Limited

Mr. Prateek Gupta’s business acumen can be judged from a simple but impressive statistic - between 1997 and

2013, the time during which he led the change in UD Group’s business model, the Company has grown 1500 times.

Besides – his successful business track record, this 39 year-old MBA Finance was also honoured by the Bombay

Chamber of Commerce and Industry as the co-chairman of their high profile Power and Energy Conversation

Committee in 2005.

Mr. Gupta successfully diversified UD Group’s business portfolio, and expanded the trading profile of the Group

from predominately steel products to the trading of non-ferrous metals. His foresight helped UIL survive the slow-

down in the steel industry largely unscathed. Additionally, his diversification plans played a critical role in helping

the business attain higher trading margins, leading to exponential growth in EBIDTA in spite of a drop in margins

for ferrous flat products. With this change in strategy, UIL’s sales grew significantly by 100% and as a result, the

business was ranked 6th by Business India magazine in 2009.

Mr. Prateek Gupta received the award for one of Asia’s top 50 Most Promising Leader in 2012-13 by World

Consulting & Research Corporation (WCRC). He was also awarded as “pride of India” by All India Nationality Unity

Council for his outstanding achievements and distinguished services to the nation in May 2014.

MANISH JAIN

Capital Markets and Long-term Fund Raise

Mr. Manish Jain, with over 22 years of experience is a management graduate from IIM – Bangalore and BE from Delhi University. He has vital experience in investment banking in equity raising and merger & acquisition in the Indian markets. He has been associated with broker houses / distressed – debt advisory firms and investment banking arms of SBI / ICICI / Yes bank

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TIMM RAATZ

Finance

Timm Raatz has strong background in international trade finance together with fundamental credit expertise and a

wide network throughout banks and corporates in Germany and abroad he finds settlement and financing structures

for various kinds of requirements. Timm is well-positioned anticipating customer needs and bank demands to

contribute significantly to a successful business cooperation. Out of 28 years in banking, Timm serves for the last 20

years in the field of international business. Before joining HSH Nordbank as department head of Global Trade

Finance, he took various positions in regional German banks and last in ABN AMRO Bank. After a general trainee

program in the international business division he started in credit analysis followed by correspondent banking for

various mainly Asian emerging markets. But as well got strong insides of the demands of corporate clients being

senior sales for trade and working capital management. Through this, he gained fundamental understanding of the

end-to-end process for international transactions whether it is settlement, short term trade finance or long term

export and structured finance under ECA coverage.

ALEXANDER BELLO

New Opportunities

Alexander Bello is an MBA graduate from Hult International Business School in London & Shanghai and holds top academic qualifications and records in defense & aviation, political science. Alexander is a frequent name in investment migration forums, speaking at high profile international conferences and exhibitions around the world, to educate prospective investors and industry stakeholders. Alexander Bello is the Managing Partner of CS Global Partners based in Dubai (U.A.E.), and owner/CEO of Albello Investments, with years of experience across various areas, including in the fields of investment advisory, citizenship by investment & residence planning. Over the years he has developed a robust and highly credible global network, including exceptionally high caliber professionals in their respective fields, both in the private and public sectors.

DAVID GADDES

Trading

David Gaddes started his career straight from Battersea Grammar School with a strong foundation at a French

industrial and trading group with mines, refineries and trading office worldwide where he became a physical trader

of metals. He has over 40 years’ experience in the commodity trading space and was a member of the LME Nickel

Committee from 2003 to 2016. David has served as a physical and LME trader/dealer of LME base metals and

associated products globally including complex concentrates and residues. Further to pursuing his expertise he

holds various management positions to handle and oversee global long term trade flows of different metals and

commodities.

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Executive Committee

The Executive Committee is formed under the direction of the Board. It consists of the CEO, the CFO and the Head of Trading. It

provides guidance and manages day to day business and operational matters. The Executive Committee prepares and implements the

business plan and reports. Finally, the Executive Committee controls and monitors the credit and business risk and develops policies

and procedures accordingly. The Executive Board members meets on a weekly basis to discuss on-going activities in their respective

departments and new developments. This addresses day-today management tasks and less strategic questions which are forwarded

to the Executive Boards meetings.

DHAVAL HARISH SHAH

President - TMT Metals Holdings Limited

Head Nickel & Copper

MBA, New York

Mr. Dhaval Shah holds a MBA Degree from New York University and has over 7 years of extensive experience in spearheading ferrous and non-ferrous metal trading, including Corporate Commercial & Structured Trade Finance functions in Singapore over the last 5 years. He has recently moved to Switzerland as President at TMT Metals Holdings Limited, concentrating on the business development front to support TMT’s expansion plans in the European region

DRAGAN KILIBARDA

Head of Trading – TMT Metals AG

Head Tin Concentrate

BA (Honors), Middlesex University Business School

Dragan started his career as commodity trader in 2002 with MD International UK Limited. In his career he traded in minor metals, ferroalloys, metal scrap and copper. He joined TMT in 2011 to develop the Tin and Tungsten trading book. Under his guidance, TMT has become largest Tin trader in the world. Dragan has work experience in the Middle East, Europe, Africa, China and Russia. Dragan is part of TMT Metals executive committee and head of trading.

POOJA NAGALLA

Head of Risk

Pooja started her career at Sempra Energy in 1997 and worked her way up from back office to front desk and has been part of high performing Compliance and Risk teams at JP Morgan (NY) and Mercuria Energy (Geneva). She has cross asset experience ranging from Energy to Softs due to her work experience in refineries and commodity trading companies. In her previous role, Pooja has managed the hedging program and exposures on the refinery business of European Oil trading company.

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RAY WEBB

Head – Structured Trade Finance

Ray has been engaged in Trade and Export Finance for more than 36 years. He started as a Manager at merchant

bankers Hill Samuel and later joined Hungarian International Bank in London – the leading forfaiting bank at that

time - to set up the Export Financing Desk and develop new products for the bank. In 1996 he set up Aon Forfaiting

operating as Managing Director and ran the business profitably for 11 years before the team joined Deutsche Forfait

where he established the new London Office as Managing Director. Ray recently joined TMT Metals to source,

establish and develop new financing for the group.

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BUSINESS DESCRIPTION

TMT Metals’ key business model is that of profiting from physical arbitrage opportunities in the global commodities market. The Group

invests in strategic metals with strong fundamentals and aims to bring extensive solutions to its clients. The core strategy is to acquire

direct suppliers and consumers’ relationships that enable the company to obtain long-term frame contracts and off-take agreements.

The group continuously develops its networking base which consists of producers, consumers and independent local agents all across

the world.

At all stage of the process, TMT Metals pays detailed attention to manage and mitigate the risks.

Products

Thanks to TMT Metals’ experienced traders and diversification, the tonnage substantially increased by 65% in 2017-2018.

Consolidated Volumes (MT) Turnover (US$) UD Take over

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In 2017-2018, the Aluminum book dominates the

total tonnage traded reaching 65% of the book. In

2018, following new growth direction and the

introduction of new markets, TMT Metals expected

to improve its diversification and reduced its

concentration risk.

TONNAGE

Aluminium17%

Zinc0%

Tin5%

Lead7%

Copper23%

Nickel8%

Ferrous Metal14%

Scrap3%

Tin Concentrate0%

Lead Concentrate1%

Columbite Concentrate0%

Manganese Concentrate3%

Manganese Ore14%

Ferrochrome3%

Antimony2%

Kaolin1%

Minor Metals24%

FY 2019 Expected 01/04/2018 – 31/03/2019

Zinc0.3%

Aluminium65.1%

Tin2.1%

Copper6.4%

Ferrous Metals8.5%

Lead6.5%

Nickel2.6%

Scrap1.5%

Minor Metals7.1%

FY 2018 01/04/2017 – 31/03/2018

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Key Points:

- The Copper and Nickel desk substantially increased thanks to TMT Metal’s New Traders Copper & Nickel

Aluminium8%

Zinc0%

Tin21%

Lead4%

Copper34%

Nickel19%

Ferrous Metal1%

Scrap0%

Tin Concentrate2%

Lead Concentrate0%

Columbite Concentrate2%

Manganese Concentrate1%

Manganese Ore2%

Ferrochrome1%

Antimony3%

Kaolin1%

Minor Metals 12%

FY 2019 Expected 01/04/2018 – 31/03/2019

Although Aluminum still represents almost half of the

tonnage traded, the turnover is far more diversified.

The high liquidity on the Aluminum market leads to

bigger ticket sizes with lower margin per MT.

TURNOVER

Zinc0.4%

Aluminium45.0%

Tin Concentrate4.0%

Tin13.9%

Copper14.5%

Ferrous Metals1.3%

Lead5.3%

Nickel9.7%

Scrap0.2%

Minor Metals5.8%

FY 2018 01/04/2017 – 31/03/2018

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RISK MANAGEMENT

Risk management is a key function in a trading company. TMT Metals holds a Risk Management and Trading Policy Manual providing

guidelines, procedures and policies for trading and business development activities. Complying with the manual is a mandatory

requirement for all staff of TMT Metals either directly or indirectly involved in trading activities.

The Group is exposed to various types of risks and addresses them on to the following key areas:

- Market Risks

- Credit Risks

- Operational Risks

Market Risks

Market Risks arise from changes in the premium/discount and prices of the commodities (‘physical’ and ‘paper’) held by the Group.

They may have an adverse effect on the Group’s financial condition.

Trading limits are established and govern the trading activities. The limits are reviewed and revised on a semi-annually basis by the

Executive Committee taking in account the Group’s risk appetite, change in trading/hedging strategies and prevailing market

conditions. When a breach of trading limit occurs, designated head and traders are required to take corrective measures to bring the

exposure down below the approved limits unless ad-hoc approval has been approved by the Executive Committee.

Hedging

The company has its strength in managing derivative exposure. Derivative risk is mostly assumed by entering into new positions

associated with physical transactions. Paper swaps, futures and options transactions are mainly used for hedging purposes. No

speculative options trading is allowed unless explicit approval from the Executive Committee is obtained.

This risk is managed by 2 dedicated derivative traders who reports directly to the Executive Committee.

Credit Risks

Credit Risk is the risk that a borrower or counterparty fails to perform on an obligation. This could mean a failure to provide promised

goods or services, a refusal to provide promised loan facilities or a failure to pay amounts owed in full and on time.

It is recognized that credit risk is an inherent aspect of the business. The objective is not to eliminate credit risk but to recognize it and

manages it proactively so as to achieve the highest possible return on mobilized credit risk capital while providing capacity to grow

the business. The aim is to effectively employ credit mitigation techniques to maximize business volumes for a given credit appetite.

The company applies a low credit risk appetite approach. Along with the Client-On-Boarding and KYC process, credit insurance has to

be obtained for transactions involving payment terms with clients. It remains at the discretion of the responsible Executive Manager

to allow an open risk with regards to credit risk of up to US$ 100’000. Any amount exceeding this threshold shall be forwarded to the

Executive Committee for approval.

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New counterparty on-boarding process:

A trading company lives by its reputation and its client and supplier relationships. Hence strong weight is put on the on-boarding

process. Every trader who wants to on-board a new client/supplier relationship has to complete the KYC form and obtain all requested

information from the counterparty. The KYC form and documents are then presented to the responsible Executive Manager who will

review the files and do the necessary check under the KYC procedure (with a particular focus on the reputation, track record and the

business acumen of the counterparty). Upon review of the files, the Executive Manager approves rejects or requests further

information.

Operational Risks

Operational risk includes all elements resulting from inadequate or failed internal processes, people, and systems. It includes

documentation check, insurance viability, execution of trades, review of contracts, legal aspects of contracts, etc.

TMT Metals focus on operational excellence with regards to hiring top talent and focus on the processes: Knowledge in contracts,

known fraud-plays and other areas of logistics are essential. The group has a mitigation approach by questioning all documents

throughout the process. The dedicated Executive Manager is overlooking the process.

information memorandum 2018 - 2019 - eworldtrade

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