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Home / 2015 Annual Report: Managing Director/CEO’s Statement


Steel industry players in Malaysia faced tremendous pricing and cost pressures in the year under review, stemming from both external and domestic aspects. Internationally, the flood of exceptionally low priced steel emanating from China resulted in the closure of many steel mills worldwide including Malaysia. Locally, the upward revision in electricity and natural gas tariffs resulted in higher operating costs, while the drastic weakening of the MYR versus major foreign currencies contributed towards additional import costs challenges.

These negative factors further exacerbated the decline of steel bar prices worldwide of more than 30% in the short span of a year, as well as heightened imports of steel bars into Malaysia. Such imports, while cheap, were often not in conformance to standards set by SIRIM, hence displacing the local steel industry whose market share of steel products was reduced from 62.6% in 2014 to 49.2% in 2015.

Although the environment was not favourable for steel players, the Group performed commendably and remained resilient, and delivered RM1.14 billion in revenue in FY2015. Of this, sales to the domestic market made up 92.3% or RM1.06 billion versus RM1.41 billion earlier. Notably, export sales, which contributed to the remaining 7.7%, more than doubled to RM88.2 million from RM41.9 million in the previous year on the back of the weaker MYR.

Additionally, we had diligently put in place the necessary building blocks to set the stage for the Group’s future growth. The Group had, in October 2015, began commissioning our new rolling mill in Bukit Raja, Selangor, which would effectively increase our total steel bar production capacity from 450,000 metric tonnes (MT) per year to 650,000 MT per year.

Not only would the larger production levels contribute significantly towards additional revenue, but also enhance our bottomline by virtue of offering higher value-added premium steel bars. Moreover, as the new rolling mill adjoins our existing meltshop, we stand to benefit from optimized operating costs due to lower energy consumption and transportation charges.

The new rolling mill is expected to have a positive impact on the Group’s performance in the new financial year ending 31 December 2016 (FY2016) and onwards. To date, our efforts have already started to bear fruit, as witnessed in tangible improvements to our financial health since the fourth quarter of FY2015 with substantially narrower losses compared to the preceding quarters.


The domestic steel industry is set to benefit from resilient demand of steel bars in 2016 and over the coming years, driven by the implementation of key infrastructure projects throughout the nation by the Malaysian Government. This includes the construction of various major expressways and the Klang Valley Mass Rapid Transit (KVMRT), as well as increased property development activity in line with population growth.

A major part of this development boost would be centred in the Klang Valley, where our manufacturing facilities are strategically located. Being one of the two players situated in close proximity to major construction activity in this region, we stand to be more competitive as we are capable of providing fast delivery turnaround, and favourable costs due to the lower transportation and logistics requirements.

Meanwhile, we are heartened to note that international steel bars prices have been recovering as many steel plants in China have closed down due to unsustainable losses. This would likely reduce the potential inflow of dumped steel bars in to the Malaysian market, auguring well for domestic players.

Going forward, the prices and demand for Malaysian-made steel bars are expected to be on an uptrend as more stringent import verification processes are being enforced.

The Group has also noted several laudable regulatory developments that promote a more conducive business environment in the domestic steel industry. The Royal Malaysian Customs, in June 2015, announced a 5% import duty for steel bars which would temper the competitiveness of imported steel bars. The Group is also in collaboration with the relevant regulatory bodies such as the Royal Malaysian Customs and the Construction Industry Development Board (CIDB) to ensure prompt enforcement through the identification and reporting of errant importers, in order to curb false declaration and duty circumvention.

We are confident that these measures will ensure that the local steel industry is accorded a level playing field to thrive and perform its critical role in the supply of steel needed for the fulfilment of the country’s vital economic agendas.


In line with the expanding market for steel bars in Malaysia, we continue to implement strategies that will ensure our operations are being well tuned to operate at the optimum level.

The Group’s use of electric arc furnace to melt scrap metal as our key raw material provides us with a competitive edge. This is largely due to the increasing availability of scrap metal from various countries in Asia in line with rapid industrialization and development, which would augur well for its price trend in the long run.

In this regard, we also strive to improve our operational efficiency and cost control measures in order to increase our competitiveness. We believe that these measures are crucial to sustainable growth.

We also continue on our efforts in working closely with the Ministry of International Trade and Industry (MITI), Malaysia Steel Institute (MSI), Malaysia Steel Association (MSA), Malaysian Iron and Steel Industry Federation (MISIF), as well as the various regulatory bodies to promulgate policies beneficial to the Malaysian steel industry.

On the whole, we believe that our strategies would stand to strengthen our position, and render us ready to support the rapid pace of infrastructure and economic development in Malaysia.


• Joint-Venture Agreement with KUB Malaysia Berhad

The Group remains committed to realizing the proposed Iskandar Malaysia Commuter rail project under our joint venture company Metropolitan Commuter Network Sdn Bhd. The project would comprise an intra-city commuter rail line in Iskandar Malaysia, Johor, and may potentially include other revenue generating developments.

We are regularly liaising with the relevant government authorities with a view to bring this project into fruition, at the same time to complement the existing transportation infrastructure in the Iskandar Malaysia region.

Dato’ Sri Tai Hean Leng @ Tek Hean Leng
Managing Director/Chief Executive Officer

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