Business Plan June 27, 2013 CONFIDENTIAL
Company Purpose Mission To provide high quality vocational training through the use of simulation technology for the Indian workforce. Vision A future in which Quantum Learning Systems is the recognized leader among vocational training education for: §Vocational learning §Economic development §Global reach Quantum’s vocational simulation training expertise, equipment and dedicated & experienced management team will help meet such skill demands quickly and cost effectively. §Technology §Engagement and public service §Sustainability - 2 -
Problem and Situation § India has a large population of young people– 50% of population of 1. 2 billion younger than age 25 § Indian government estimates 500 million young people must be trained by 2022 § Nearly 70% of Indian employers have trouble hiring staff members (Study: Manpower) § Only 2% of Indian youth, and 7% of whole working age population have received vocational training (Study: NSSO) § Quality of current vocational training very low-e. g. 60% of those who did textile related vocational training are no longer in the workforce (Study: NSSO) Today’s vocational training centers Percentage of workforce receiving skill training - 3 -
The Solution Quantum will deliver both classroom and technology based training solutions. § Virtual Simulators: An innovative approach to vocational training, simulators offer hands -on training enabling workers to be field ready immediately § E-Learning: Self-service e-Learning tools allow trainees the most flexibility § Classroom: Traditional classroom instruction from experts in their respective fields Solutions Virtual Simulators e-Learning Classroom Example: Flight training and firefighter simulators Virtual e-Learning solutions Classroom training - 4 -
Market and Opportunity The market is large and positioned for growth…. § The overall skill enhancement market in India is estimated at $2. 52 billion and is expected to grow to $20. 5 billion by 2018 § The current child skill development market in India is estimated at $740 million § The IT training Compound Annual Growth Rate (CAGR) in India is about 45% and will be $1. 05 billion in 2015 § The vocational training market has the largest share of about 60% in India, and is estimated to be growing at 15 -20% a year Total Addressable Market: $20. 5 Billion by 2018 - 5 -
Target Market Segments Based on Government of India policy directives and current economic trends, the following market segments will be initially targeted. § § § Machine tools § IT hardware and electronics Textiles and garments Leather and footwear Gems and jewelry Food processing Handlooms and handicrafts § Automotive § Pharmaceuticals § Administrative Services Large Employment Creation High Growth Sectors ICC Manufacturing Technology Enablement Target Markets Capital Equipment Strategic Security Enablement § § Telecom equipment Aerospace Shipping Defense equipment Energy § Solar energy § Oil exploration and transport § Clean coal technologies § Nuclear power generation § Heavy electrical equipment § Heavy transport, earth moving equipment § Mining equipment - 6 -
Competitive Landscape Competition is highly fragmented, with most focused on distribution. Major players are supported by NSDC. § Competition centered around training distribution § Limited competition among content providers § Opportunity to turn potential competitors into channel partners by offering high quality content - 7 -
Competitive Edge Quantum’s solutions are the first of their kind in the India market. Focus on Content Simulation Technology Relationships § Produce quality, custom tailored training content § Not burdened by distribution overhead § Simulators are a novel training platform in India § Simulations are widely accepted as highly effective training tools § Management team’s relationships with CEOs of major corporations § Team’s relationships with senior government officials - 8 -
Business Model Businesses, consumers, and the Indian government will drive revenue to the company. B 2 B Revenue Model Pricing Average Account Size Sales & Distribution Current Customer Pipeline B 2 C Contract-based Subscription-based, Profit-sharing w. training centers Variable pricing model Average of $500 / year / user $1 MM/year/account -- Direct sales to corporations, governments and local municipalities Training centers, online portal and classroom-based Pepsi India, state and federal governments NIIT, Gras - 9 -
Near-term Timeline July / Aug 2013 Aug / Sep 2013 § Approvals § Quantum from Simulators Government applies for of India Offset license funding (3 months)- $10 MM Sep / Oct 2013 Oct / Nov 2013 § Negotiation § File with offset application obligors for term and commercial § Filing loan with agreements banks with Reserve Bank of India § Land acquisition § Import equipment and technology - 10 - March 2014 & Ongoing § Business development activities § Federal/state public sector activities (e. g. BEL, HAL, BSNL, SAIL, etc. ) § Partnerships with polytechnic universities and training schools
Financials – Startup Assumptions • General assumptions in forecasting the investments of the business • Estimated Start Up Costs: $ 10, 000 ‒ Includes Equipment, Software, product launching, trail orders etc, recruitment, training § Estimated Construction Costs: $, 20, 000 ‒ Price of land, Offices/Classrooms, Parking, manufacturing/Warehouses, , Retail, Business Development § Estimated Pre-Operative Expenses: $5, 000 ‒ All additional operational expenses associated with starting up, licensing, § Total Capital Required for Start Up = - 11 - $35, 000
Projected Revenues - 12 -
Current Status ü Composite application with the FIPB and Ministry of Industry has been filed. Upon approval of which Quantum will be eligible to avail US $10 million as offset funds from the obligors ü 16 ministries from the Government of India have reviewed the application and have given their formal recommendation to the Licensing Board for approval with due diligence done by the Embassy of India in the USA about Quantum and its promoters ü Letter of Intent for the allotment of land for 30 acres by the Government of Gujarat (the most preferred location in India) at a fraction of cost than the prevailing market price has been obtained ü Indian company under the banner of Quantum Simulators (PVT) Ltd. has been incorporated as per the guidelines of the Ministry of Company Affairs ü ü Board of Advisors for the Indian company, Quantum Simulators, has been finalized ü Discussions are underway with the Indian Government owned public sector undertakings and other private institutions for the sales of Quantum’s products and services through direct export until the Indian facility becomes operational Permission is being sought from the Reserve Bank of India to open business account for Quantum Simulators (PVT) Ltd - 13 -
APPENDIX
Solution Approach A consistent service delivery approach will be critical for success. Needs Assessment Plan & Analyze Design & Build Work with customer to perform preliminary analysis and assess costs and benefits. Contract is signed with customer. Analyze trainees’ learning needs and collaborate with customer to define high level requirements. Design and build technical solution, custom tailored to customers’ specifications. Train the trainers; Launch and execute training solution. Deploy Expand Perform enhancements on existing solution and identify new opportunities for customer. - 15 -
Location State of the art manufacturing and training facilities will be located in Gujarat. § We plan to operate at multiple training institutes and well as at company’s training facility and manufacturing plant § Proposed 100, 000 sq. ft. of useable area fitted for manufacturing, assembling, testing, shipping, storage and corporate office § Proposed 200, 000 sq. ft. of useable area fitted for vocational training and education Manufacturing & Training Facilities Artist’s rendition of Quantum’s simulation manufacturing facility Artist’s rendition of Quantum’s vocational training facility - 16 -
Quantum Team Members Lala Mohapatra Chairman & CEO Lala Mohapatra is an experienced international executive with a record of over 30 years of proven accomplishments in the area of international marketing, strategic planning, foreign collaborations and investments. Mr. Mohapatra has been responsible for complete management and sales profit of major multinational companies and their entry into the marketplace of India. He has represented major US companies in Defense Telecom, satellite, media and advertisement, animations and computers in India as a senior advisor to the management generating revenues and profitability Mr. Mohapatra served as President of Commodore in India. He was the first to introduce personal computer in India and recently was responsible to complete a transaction for the sale of a 200 million dollar USA made simulators to the Indian army. Mr. Mohapatra was the Managing Director of a Private Equity fund from Washington, DC and his area of focus was in India for many startup companies which became highly profitable for the US Equity Fund for several hundred million USD. Mr. Mohapatra studied Electrical Engineering at the graduate school at Villanova and holds an MBA from Penn State, USA. Mr. Mohapatra holds a degree in Law specializing in International corporate law Devdas Chhotray Rajesh Grover CFO Delbert Winn Executive VP & General Counsel Rajesh Grover has extensive experience as a successful entrepreneur and in developing business relationships and raising capital for various projects. Mr. Grover was a partner in a CPA firm and played a key role in building a highly successful company, which climbed to over 140 employees and revenues of over $8 million in two years. Three years ago he started another company specializing in security solutions for government and private sector in India. He was instrumental in partnering with a large size IT Company and State owned entity to obtain large size projects. During that project, he met with senior secretaries of the Government of India and discussed about the requirements of Homeland Security and its potentials in India. He travels frequently to India and has built solid reputation among its peers. Delbert Winn is an attorney and acknowledged authority in areas of international business development, overseas manufacturing, transnational joint ventures, product sales and distribution, intellectual property protection, overseas profit repatriation, negotiating with private parties and foreign governments. Mr. Winn’s articles on international negotiations and contracts have been distributed in 75 countries. Mr. Winn’s clients have included numerous military and police simulation training companies who’s worldwide operations have spanned over 50 countries. - 17 -
Quantum’s Advisory Board Quantum has assembled an accomplished and talented group of individuals to serve on its advisory board. § Mr. Devdas Chhotray (IAS Ret. ), former Secretary, Ministry of Home, Government of India § Lt Gen JK Mohanty (Ret. ), was responsible for the coordination of various facts of professional and technical (combat) training in twenty seven training establishments of the Army. § Mr. D. P. Bagchi (IAS Ret. ), former Chief Secretary, Government of Orissa, and former Chairman, Foreign Investment Promotion Board. § Mr. G. B. Patnaik, former Chief Justice of the Indian Supreme Court § N. C. Padhi (IAS Ret. ), former Head of Police, Federal Government of India § Lalit Mansingh, (IAS Ret. ), former Ambassador of India in the US § K. Dhillon, Chairman and CEO, Pepsi India § N. Mohanty, (IAS Ret. ), former Secretary of Industries, Government of India § Col (Ret. ) N. R. Pani, former Member of Defense Offset and Funding Agency § Mr. Robert A. Dare, Jr. Former Command Sgt. Maj. , US Army, and Vice President, Sales for Meggitt PLC These individuals have major distinctions in the world of start-ups, finance, management, law, and marketing & sales. Our advisors provide us with invaluable experience and insight on strategic issues as well as client projects. - 18 -
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