CCMB investing RM90mil to boost capacity
KUALA LUMPUR: Chemical Co of Malaysia Bhd (CCMB) is investing almost RM90mil to boost its capacity.
This is following the demerger of its listed pharmaceutical entity to fuel the growth of its chemicals and polymers businesses, both of which are enjoying pent-up demand.
Newly appointed group managing director Nik Fazila Nik Mohamed Shihabuddin said the capital expenditure following the demerger was reflective of the group’s capacity to fully subscribe available capital to fuel its ambitions of achieving sustainable double-digit growth.
Currently, CCMB’s chemicals and polymers businesses enjoy robust growth with pre-tax margins of over 10% from the current revenue of RM 350 mil.
Nik Fazila said there was a sizeable gap between demand and supply of chlor-alkali products. In the polymers business, the epicycle in the gloves industry, CCMB’s leading edge polymer solutions provided the group with a strong and compelling platform to invest and seize the advantages of fulfilling its customers’ needs.
“Our chemicals and polymers businesses have direct exposure to the rubber glove manufacturing process. Both segments are set to grow in tandem with the capacity expansion of the rubber gloves players,” said Nik Fazila.
Last year, CCMB announced two major corporate proposals, which called for the demerger of CCM Duopharma Biotech Bhd (CCMD) from the group via a distribution of its entire equity interest in CCMD to its shareholders.
The proposals involved a de-gearing exercise relating to the proposed sale of its three parcels of land in Shah Alam, a private placement of up to 10% of the issued capital in CCM Bhd and the identification of other non-core assets to be divested.
The initiatives were a continuation of the company’s strategic review, which commenced in 2015, to house all of its pharmaceuticals businesses under the CCMD umbrella, to exit from non-performing businesses and strengthen its balance sheet.
This gave the group ample agility to pursue its capital expansion and a sustainable growth strategy for the future.
Headlining CCMB’s growth plans include a RM 68.5 mil investment to reactivate its chlor-alkali plant in Pasir Gudang, Johor, to deliver additional production capacity which will allow its chemical business to capture the available market opportunity currently supplied by importers.
Nik Fazila said the plant was expected to be completed in the second quarter of 2019. It would install an extra 20,000 tonnes per annum in capacity at a lower capex cost vis-avis starting a green field site, as most of the required infrastructure were already in place.