The Star, Friday, 1 July 2016
Deputy managing director Datuk Lim Chiun Cheong said of the investment, RM15mil would be for building a plant adjacent to its current facility in Kajang, while the remaining RM35mil will be for purchasing machinery from Germany
PETALING JAYA: Muda Holdings Bhd, a leader in the local paper milling industry, will invest RM50mil to expand its corrugated carton box plant in Kajang to cater to increasing demand.
Deputy managing director Datuk Lim Chiun Cheong said of the investment, RM15mil would be for building a plant adjacent to its current facility in Kajang, while the remaining RM35mil will be for purchasing machinery from Germany.
The company, which also produced paper at its Tasek Mill plant or Muda Paper Mills in Simpang Ampat, Penang, intended to fund the project via internally generated funds and borrowings, out of which RM40mil would be borrowings.
“The capacity expansion is mainly driven by demand from our clients, primarily from multinational corporations.
“And we also forecast the industry demand for corrugated cartons to grow by about 4% this year,” said Lim after the company’s AGM yesterday.
The expansion will see the Kajang plant doubling its capacity over the next few years, from the existing production of 3,000 tonnes a month, according to Lim.
The 20-year-old Kajang plant is running at full capacity.
He said construction of the new building had commenced and would be completed in November, following which a trial run would begin in December.
On whether it had plans to expand abroad, Lim said the group intended to focus on the domestic front, considering that local consumption for corrugated cartons was in the range of 1.2 million tonnes to 1.4 million tonnes a year.
“With the demand for packaging still growing by about 4% to 6% in Malaysia, we want to focus on our carton box business for the next five years,” he added.
While competition is stiff, Lim said the weak ringgit had lifted the company’s sales and performance, as it enabled it to purchase raw materials at cheaper prices.
For its first quarter ended March 31, Muda Holdings’ net profit rose 112.7% to RM11.08mil from RM5.21mil a year ago, against a 12.8% increase in revenue to RM290.50mil.
Basic earnings per share improved to 3.63 sen from 1.71 sen.
The company did not declare any dividend for the quarter under review.
Muda Holdings is the second-largest corrugated carton producer in the country after paper producer Oji Group.
Apart from Kajang, it has four other corrugated carton plants in Penang, Air Keroh, Merlimau and Johor Baru.
Lim said that its Muda Paper Mills plant would start producing glazed paper for the food industry next month, now that it had solved the technical problems faced earlier.
Last year, Muda Holdings invested RM34mil in a new machine to produce glazed paper to be exported to other countries.
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