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Tek Seng plans to build new manufacturing facility

Tek Seng plans to build new manufacturing facility

21 Jun 2021

Tek Seng Holdings Bhd plans to spend about Rm60mil to build a new manufacturing facility.

Group managing director Loh Kok Beng said the new plant would be located on a 10-acre site near its present plant in Bukit Minyak, Penang.

“It will be used to produce higher-end polyvinyl chloride (PVC) flooring products such as laminated PVC sheets and mats. The plant will raise output of PVC flooring products by

30% when its starts to operate at the end of 2022.

“We are utilising 80% of the production space, generating 12,000 tonnes to 15,000 tonnes of PVC flooring products per month,” he told Starbiz, adding that the plant would be built by the end of the year or early 2022.

Loh said the Rm60mil budget included the cost of land, factory and machinery.

According to Growth Market Reports, the PVC floor market is expected to hit Us$20.2bil (Rm83.63bil) by 2027, growing at a healthy compounded annual growth rate (CAGR) of 5.4% from Us$13.7bil (Rm56.72bil) in 2019.

“The commercial segment such as hospitals, schools, hotels, and offices will expand at the highest CAGR, driving the demand for PVC flooring products. The new work-from-home trend has also boosted the sales of PVC flooring products.

“We plan to tap into new growth markets such as south America when the pandemic is over. We are also seeing the demand from the residential segment recovering, as there are now new household products requiring our PVC sheets,” he added.

The group exports its PVC flooring products to the Asean region, primarily to Indonesia and the Philippines, as well as the Middle East. The export market contributes about 50% to the group’s yearly revenue.

As the pandemic has impacted the global economy, the group expected to see a flat 2021 compared with the previous year.

“In 2020, our polypropylene no-woven vision, which is supplied to personal protective equipment and face masks needs, did very well because of the pandemic, contributing about 30% to the group’s revenue,” he said.

However, 2021 would be a challenging year for its PVC business due to the fluctuation in the prices of raw materials, unexpected rise in shipping cost as a result of the market

uncertainty due to the Covid-19 pandemic and the impact from the fluctuation in foreign currency.

“The shortage of various raw materials had driven the cost of manufacturing to a new high. This unprecedented situation has impacted the global supply chain as our purchases are mainly from Taiwan, China and Singapore.

“We will exercise caution in managing our incoming supplies for 2021 and mitigate the exposure by improving operational efficiency, product quality and product innovation,” he added.

Source: The Star

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