Drb-hicom on expansion mode
The company is positioning itself for further growth in next 36 months
DRB-Hicom Bhd will be looking at various options over the next 36 months as it repositions itself in the face of a changing business landscape, says automotive and defence group director Abdul Harith Abdullah.
PETALING JAYA: Conglomerate DRBHicom Bhd will be looking at various growth options over the next 36 months while it repositions itself in the face of the changing business landscape and market dynamics.
While the company has several catalysts in place to propel it to further growth, the RM7.55-bil 8x8 wheeled Armoured Vehicle (AV8) project will be among the first few to contribute to its revenue beginning from financial year 2013 onwards, peaking in 2016 and 2017.
Commissioned by the government for the Malaysian military, the project will involve the design, development and manufacture of 257 AV8s.
DRB-Hicom automotive and defence group director Abdul Harith Abdullah told StarBiz that everything was progressing very well and that the project was on track to meet deadlines.
“We are about to complete the development of the first two sealed patterns right now and are at the final stage of development for the one-man turret sealed pattern. That will be delivered anytime in the first quarter,” he said.
He added that officials of defence arm DRB-Hicom Defence Technology Sdn Bhd (DefTech) were now in Turkey together with the military to finalise the conformity of the system. Every sealed pattern would be handed over to the military for a complete trial.
While DRB-Hicom, with major original equipment manufacturers or OEMs and now Proton Holdings Bhd, has built its automotive business to critical mass level, it is now leaning heavily on its services sector comprising its concession businesses, Bank Muamalat, Pos Malaysia and also its property division.
Among the key surprises could be its airport ground handler business, KL Airport Services Sdn Bhd, which is set to venture into the logistics value chain by tapping into Pos Malaysia’s courier network. The group noted that the business will expand in tandem with the opening of KLIA2 by the middle of the year. However, numbers have not yet been factored into its financial performance, as passenger traffic growth data is still unknown.
At its media retreat recently, DRBHicom managing director Datuk Seri Mohd Khamil Jamil highlighted that the company would also be enhancing its solid waste management arm, Alam Flora Sdn Bhd.
“We have proposed the setting up of environmentally friendly incinerators to the government. And the waste-to-energy proposition cannot be dismissed, as currently, Alam Flora just passes the solid waste to landfills situated far from the city,” he said.
Alam Flora is also eyeing Kelantan and Terengganu for business expansion and is poised for growth with the implementation of new concession rates.
Meanwhile, Pos Malaysia and Bank Muamalat have a symbiotic relationship where both complemented each other. PosMalaysiais slated toexpand its courier business along with its non-postal revenue with the introduction of the Ar-Rahnu, an Islamic pawn-broking business, and also banking and insurance services to its outlets.
On the other hand, Bank Muamalat is embarking on a network expansion through Pos Malaysia’s branches. Khamil again denied rumours of DRBHicom being taken private and said the group had not received any form of notification by the shareholders.
“DRB-Hicom is a good value company and looking at the exercises that we are undertaking right now, like our asset and business rationalisation plans, I don’t think it would be an appropriate time to take the company private,” he said.
However, when questions along similar lines were posed based on his 10% stake in Etika Strategi Sdn Bhd, the holding company of DRB-Hicom with a 55.92% stake in the conglomerate, he declined to comment.
“I left my shareholder hat back home, and as this is a press conference on DRB-Hicom, I will not answer that question, as that would be between me and the other shareholders. We will have to discuss how we can optimise our value in the company as shareholders,” he opined.
Speaking on the potential collaboration between Proton and Japan auto giant Honda Motor Co Ltd, he said it was not only Honda the group was looking at to pair with Proton, but all of DRB-Hicom partners at the moment in the likes of Volkswagen, Suzuki, Isuzu and Mitsubishi.
“Proton has had a relationship with Mitsubishi over the past 27 years, but we still remain its contractor. We must look at a business model that is a win-win solution. I’ve told my partners we have to experience shortterm pain for long-term gains,” he stressed.
Offering a bit more insight, Khamil said when the group took over Proton, there were offers from manufacturers both from the West and East who had cast an eye on the national carmaker’s Tanjung Malim plant for potential collaboration.
“I’m not one to jump into any agreements. I have to see what’s in store for us. Proton is still a national heritage and being a private company doesn’t mean its national car status will be affected,” he said.
While Khamil and his lieutenants were still mum on specific details during the media retreat, he provided glimpses into the company’s big picture by way of its imminent corporate exercises. Suffice to say that things are moving behind the scenes.
Besides the search for a new foreign strategic partner, Proton has bought the E01 engine from Petronas and is in the midst of vetting out unqualified vendors and rationalising its after-sales operations and network expansion right now. It is also understood that Proton is now working on the Hicom-Potenza sports car project after acquiring HicomPotenza Sports Car Sdn Bhd from Hicom Holdings Bhd last October, as part of the group’s intention to streamline its business.
The sports car project is a joint venture with UK-based Potenza Sports Cars Ltd to produce a new line of eco-friendly and affordable sports cars for the domestic and Asia-Pacific markets.