Tatt Giap mulls more corporate measures to improve financial conditions
KUALA LUMPUR: Tatt Giap Group Bhd, which made a loss in the last financial year and has reported further losses in the first quarter ended Aug 31, 2017 (Q1 FY17), is mulling more corporate exercises to improve its financial conditions.
In its latest quarterly financial report to Bursa Malaysia yesterday, the stainless steel pipe and tube manufacturer said the board was planning several structural measures.
It said it was considering a capital reduction exercise to reduce the company’s accumulated losses, a venture into property development by developing its existing land, and a fund-raising exercise, which may include rights issue, to finance this property project.
Tatt Giap is already implementing a turnaround plan that includes cost-cutting initiatives, asset disposals and fund-raising exer- cise to replenish working capital funds as well as repay bank borrowings.
The company said global steel prices were expected to rebound following the Chinese government’s initiatives to curb steel production overcapacity, and domestic demand for steel products was expected to be supported by the continued growth in the Malaysian manufacturing sector.
“However, the group can only benefit from the above mentioned external factors if it can first overcome the internal challenges faced by its business operations.
These include the clearing out of legacy inventories, high-finance costs and shortage of working capital funds,” it added.
In the latest interim financial report, Tatt Giap announced that it swung to a loss attributable to shareholders of RM975,000 in Q1 FY17 from earnings of RM19.59mil a year earlier. (The results in last year’s corresponding quarter were propped up by a one-off gain on disposal of assets of RM16.23mil.)