Malaysian firm YKGI eyes Indonesian, Thai markets

Managing director-cum-chief executive officer Soh Thian Lai said the range of products to be exported included pre-painted galvanised iron coils, galvanised iron coils and cold-rolled coils.

"We are targeting to export 1,000 tonnes of the steel products each per month to Indonesia and Thailand in the first 12 months. Every month, we hope to export between 6 million ringgit (IS$1.9 million) and 7 million ringgit worth of the products," he told StarBiz after the company's AGM here last week.

YKGI, one of Malaysia's top-three flat steel producers among seven players, hopes to raise its group production to 250,000 tonnes this year from 200,000 tonnes last year to cater to improving demand.

The company is in the process of applying for the Standard National Indonesia licence to enable it to export to that country.

If it materialises, then YKGI would be the second Malaysian steel producer to export coated colour steel products.

Soh said the company would set up its distribution hub in both Indonesia and Thailand to facilitate the export business.

"We hope to set up manufacturing facilities in Indonesia and Thailand in three years," he added.

Soh said the group had allocated a capital expenditure of between 5 million ringgit and 10 million ringgit this year for the upgrading of its production lines.

He said YKGI's newly appointed Japanese executive director, Yoshiki Kaneko, had been assigned to head one of the group's biggest manufacturing plants, which had an installed annual capacity of 250,000 tonnes and a workforce of 250, in Selangor.

Kaneko, who was previously a non-executive director, represents Marubeni-Itochu Steel Inc, which saw its stake in YKGI increasing by 8.37 per cent to 26.78 per cent after taking up nearly 48.6 million new shares under a restricted issue earlier this month.

"We want him (Kaneko) to inculcate the Japanese work culture to enhance YKGI's operation and production efficiency.

"His other role is to be involved in negotiations with Japanese suppliers for the competitive pricing, high quality and prompt delivery of raw materials," explained Soh.

YKGI now sources its raw material (hot-rolled coils) from Nippon Steel Corp, which has a 7 per cent equity interest in YKGI. Nippon Steel is Japan's biggest and the world's second-largest steel mill owner.

Soh said Kaneko would ensure that the production of the plant would be able to meet market demand to build up customer confidence and strengthen the company's image.

The group recently commissioned a new 30 million ringgit "continuous colour coating line" to produce coated aluminium and pre-painted products.

Soh said the company had just completed the entire private placement of 39.1 million new shares at 50 sen each.

Together with the issuance of the 48.6 million new shares to Marubeni-Itochu, also at 50 sen each, YKGI has raised gross proceeds of 43.95 million ringgit.

"The proceeds would be used for the group's working capital to enhance operations and production."

Soh said in the first four months of this year, the group's average monthly sales of steel products was 18,000 tonnes, registering an average monthly turnover of 47 million ringgit.

He is confident of YKGI returning to the black this year after two years of losses due to the weak steel industry.

In the first quarter ended March 31, 2013, YKGI recorded a pre-tax profit of 2.63 million ringgit from a loss of 3.1 million ringgit in the corresponding period last year.

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