SEB aims to return to the black in FY17
> Engineering firm banks on leaner management, cost-cutting measures to turn around
BUKIT JALIL: Seremban Engineering Bhd (SEB) aims to make a profit in the current financial year ending June 30, 2017 (FY17) with the broadening of its customer base, cost-cutting measures, which include job cuts, and a project management team (PMT) for site works, said executive director and COO Wong Wai Hung.
SEB has an outstanding order book of RM60 million. It is cautiously optimistic that it is on the right track to obtain an encouraging order book in the coming periods.
“Together with a leaner management, cost-control and order book in hand, we can turn (around) the company into (returning to) the black,” Wong told SunBiz after SEB’s AGM here yesterday.
SEB has been in the red for the last two years, registering a net loss of RM36.38 million in FY16 and a net loss of RM6 million in FY15. The losses were mainly due to cost overrun from the Sabah Ammonia Urea (Samur) project as a result of weaknesses in project management.
Wong said the impairment of Samur project trade receivables will come in FY17 and SEB is confident that its planned strategies and remedial counter-measures will see the group successfully delivering positive results in FY17.
“Samur is purely an installation job (of equipment), which we are not familiar with and not our strength. That is a bitter experience to us and now we’re focusing back on our core business of fabrication of vessels and tanks,” he said.
SEB will focus on its strength in the core business of storage tanks and vessels fabrication for industries such as oil and fats, water treatment, food industries, chemical plants and oil refineries. It is also exploring other opportunities by securing turnkey order books from bigger projects that include power plants, new petrochemical plants, pharmaceutical industry and high volume structural steel and shop piping fabrication works.
SEB is also looking to go into industries such as palm oil refinery, chemical, waste management, petrochemical, food and pharmaceutical with wider product range including structural steel and shop piping fabrication works. Wong said it now has 40 new customers in various industries.
In a move to cut costs and consolidate resources it is closing down all four of its subsidiaries and two associates by way of disposal and voluntary winding-up. This exercise is expected to be completed by year-end.
“We’re in the midst of downsizing to an optimum level,” said Wong, adding that SEB plans to cut its total workforce of 280 by 5%-10%.
SEB has established a PMT for site work to manage and resolve all related matters in a more efficient manner. It is putting emphasis on building trust and better relationship with clients during the bidding stage of any project as well as on establishing a strategic alliance with companies and individuals based on the group’s fabrication capabilities.
The setting up of the PMT has enhanced the efficiency and effectiveness of the costing system for better project management, coordination and control within the group.
Wong said SEB has no immediate plans to appoint additional board members after two resigned, and is confident that the four board members left will be able to carry out the turnaround exercise for SEB.