Salcon ventures in glove manufacturing
12 Nov 2020
Salcon Bhd has acquired a 51 per cent stake in JR Engineering and Medical Technologies (M) Sdn Bhd (JR) for RM28.56 million, marking its venture into glove manufacturing.
Salcon said today its subsidiary Nusantara Jasakita Sdn Bhd had entered into a share sale agreement to buy the stake in the glove manufacturer.
“The proposed acquisition comes with a profit guarantee of RM 10 million per annum in JR for the financial year January 1 to December 31 for years ending 2021, 2022 and 2023,” it said.
Salcon executive director Datuk Eddy Leong said upon completion of the transaction, it would have immediate access to a trained labour force, existing customers and an immediate source of revenue while cutting down on lengthy product approval and registration processes.
Leong said the acquisition was well-aligned with Salcon’s strategy of growth and diversification.
“We are confident the resulting significant synergies, economies of scale and enlarged market presence will strengthen the group’s growth profile and bring greater long-term value to our stakeholders.
“We believe a structural change in usage of gloves will ensure there will be continued and strong demand in the market in the near to mid term,” he added.
Salcon said JR was currently operating beyond its capacity.
The company has an annual production of over 336 million gloves from four single former production lines in its factory in Zurah Industrial in Rasa, Selangor.
In order to cater to the spike in demand in specific export markets, JR is targeting to increase and ramp up production capacity by an additional 12 lines to a total of 16 production lines within one year.
This will cost JR an estimated capital expenditure of RM150 million, to be funded via internally generated funds and bank borrowings.
“Once completed, this will bring the total production capacity of the company to 3.0 billion gloves per annum.
“JR has already in place the necessary approvals such as the Food and Drug Administration (FDA) certification and the CE Marking Certification (CE) that will enable the group to export to the US, European market and other countries,” it said.
Leong said JR managing director Ganesan Subramaniam would continue to helm the company’s operations, together with his management team.
“We look forward to working with Ganesan, who brings with him an extensive wealth of industry experience, as well as his team of highly committed people, to take our business to the next level of success.
“We will continue to support JR’s employees, customers, suppliers and key stakeholders towards business continuity and enabling positive synergies.” he added.
Source: NST Posted on : 12 November 2020