Company: MAGH
Filing Date: 2025-09-15
Form Type: 20-F
Source: 0001493152-25-013424
Chunk: 53

Company: Magnitude International Ltd
Filing Date: 2025-09-15
Form: 20-F
Item: Item 4
Chunk 53
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Subcontracting

As
we generally act as the main electrical contractor in a construction project, we typically work with subcontractors for flexible manpower
management and to minimize our fixed costs of employing a large labor force. Depending on the scale of the project, the availability
of our resources at the material time and the labor-intensiveness of the work involved, it may be more cost effective for us to delegate
part of the labor-intensive installation work to suitable subcontractors. Our subcontractors are neither our employees nor agents and
they are responsible for paying their own labor costs incurred from providing the necessary manpower for the subcontracted works.

Under
the main contract with our customer, we are liable to pay the cost of our subcontractors and we are generally liable to our customers
for the acts, defaults or neglects of our subcontractors. As such, we closely monitor the performance of our subcontractors to ensure
that their site work progresses according to schedule and will meet our customers’ quality and safety standards as well as the
applicable local laws and regulations.

Selection
of subcontractors and material suppliers

Our
purchasing department maintains and regularly review and update a list of qualified subcontractors and material suppliers that meet our
stringent requirements, including their track record, their ability to meet our design, quality and/or safety specifications and our
time schedule for supply of services and materials as well as the competitiveness of its pricing. As of April 30, 2025, there were 13
qualified subcontractors and 50 qualified suppliers on the list and we select subcontractors and suppliers for our projects from this
list unless there are other subcontractors and suppliers recommended by our customers. In general, our purchasing department would obtain
quotations from at least three subcontractors or suppliers (as the case may be) and prepare a cost comparison table for our COO to approve.

Taking
out performance bonds and insurance

Approximately
one-third of our projects during the fiscal years ended April 30, 2023, 2024 and 2025 required us to provide performance bonds issued
by a bank or insurance company backed by cash or other collaterals and/or guarantees in favor of our customers to secure our performance
under contracts, which is common in our industry. The amount of the performance bond required for each project is typically 10.0% of
the notional contract sum for such project. Our performance bonds normally expire or are released upon completion of the projects or
as otherwise specified in the contracts