STRATEGIC PLANNING: Photo shows the Eversendai headquarters in Rawang. Eversendai. Eversendai’s key strategy focuses on a well-spread business across different geographies.
KUCHING: The steel sector is set to ‘grow in waves’ as steadfast growing demand is fuelled by the nation’s Economic Transformation Programme (ETP).
Dato’ AK Nathan
According to Eversendai Corporation Bhd’s (Eversendai) executive chairman and group managing director Dato’ AK Nathan, the robust demand going forward is expected to augur well for the group.
During an interview with The Borneo Post Nathan said, “Our plans for the second half of the year is to remain focused on our core business, that is being a leader in the design, fabrication and erection of structural steel works for high-rise buildings, stadiums, steel bridges, infrastructure projects and the installation of mechanical and electrical works for plants.”
However, he did not discount the possibility of being on the lookout for gainful merger and acquisition (M&A) opportunities of synergistic businesses that would contribute positively to both the company’s turnover and profitability.
Eversendai’s first quarter 2012 (1Q12) results showed increase from 2011, as AK Nathan noted that the company was targeting for its turnover to increase this year with profit after tax and minority interest (PATAMI) target maintained at approximately 11 per cent.
“For 2011, revenue was predominantly derived from projects in the Middle East at 86.4 per cent whilst India and Malaysia contributed 7.8 per cent and 5.8 per cent respectively.
“Going forward in 2012, we will see Malaysia’s and India’s contribution to increase from the power plant projects from Manjung and Tanjung Bin and the Worli Mixed-Use Development Project in Mumbai,” he revealed, stressing that he foresaw the Middle East to be the major contributor to revenue in 2012.
On capital expenditure, the executive chairman noted that Eversendai’s overseas ventures did not require extensive capital outlay apart from those disclosed in its prospectus.
Its fabrication facility in Trichy, India required RM30 million to RM35 million while its six mobile cranes for Manjung and Tanjung Bin power plant projects cost RM10.5 million.
Nathan noted that one of its key challenges was to secure the required resources to match its growth, especially in the human resources aspect.
“We are not aggressively looking at foreign workforce to support our expansion,” he revealed.
The company’s current order book stands at RM1.9 billion as of March 31, 2012.
The CEO believed that further contribution from Malaysia and India would further strengthen the company’s standing with a higher percentage in 2012 compared with 2011.
In the broader picture, Nathan noted that the government’s ETP would ‘definitely boost the steel industry’ with the many planned Entry Point Projects.
“At present, the projects we are targeting under the ETP are still at the preliminary stage which includes the Warisan Tower and My Rapid Transit,” he revealed.
He explained that the government had always and continued extending support to major steel industry players through various approaches and institutions, however, Eversendai’s key strategy focused on a well-spread business across different geographies.
“We are not dependant on a single client or location but in a broader business alignment perspective.
Indeed, the majority of our businesses are from overseas, however, we are slowly and surely intensifying our presence in the local arena.”