Business

Wednesday August 5, 2009

GBH board plans to turn ops around

By FINTAN NG


KUALA LUMPUR: Ceramic maker and sanitary ware supplier Goh Ban Huat Bhd’s (GBH) board will meet at the end of the month to discuss, among other things, the management’s plans to turn the company’s operations around.

The company is in the middle of a tussle with its largest shareholder, Tan Sri Robert Tan Hua Choon, who owns a 33.11% stake and seeks to wrest management control from the Gohs, the founding family and third-largest shareholder with a 15.94% stake.

“We’ve a scheduled board meeting at the end of the month and I believe we’ll discuss items brought up in the independent advisor’s report,” group managing director Tony Goh told StarBiz.

AmInvestment Bank Bhd, the independent advisor, had last Friday in a circular told shareholders to reject Tan’s offer of RM1.25 per share, which was lower than its adjusted net asset of RM2.92 per share.

»Our intention is to enhance the value of the land by converting it to mixed commercial use« TONY GOH GBH GROUP MD

Goh said among the items to be discussed was the conversion of the land on which the company’s offices, warehouses and factories were located to mixed commercial use.

GBH owns 14.86 acres of mostly freehold land along Jalan Segambut in Kuala Lumpur.

“Our intention, like Tan’s, is to enhance the value of the land by converting it to mixed commercial use,” Goh said.

In an earlier report, he said the company had raised an objection to KL City Hall as under the KL City Plan 2020, most of the land around the area was zoned for light industry.

Goh also said the management, in the ordinary course of business, was working on several sizable “blue sky” deals that could help raise GBH’s revenue significantly.

“We’re looking at three possibilities where if even one of them worked out, it would help the company to turn in a profit,” he added.

Goh said the other plans to turn the company’s operations around as set out in the AmInvestment Bank report were already in the process of implementation.

“We’re already sourcing for ceramic products from cheaper sources for our re-entry into the lower-priced segment of the sanitary ware market. The cheaper products will mean positive margins at current market prices,” he said.

However, Goh stressed that the cost would also depend on the volume, with higher volumes meaning lower cost.

GBH was also rationalising its workforce, which would be brought down to 300 next month from 385 as at December while executive directors were taking a 10% salary cut with senior personnel also taking cuts in their wages.

“This will bring another RM2mil in cost savings while the company will be getting another RM1.56mil in revenue per year from the leasing of 61,000 sq ft of its premises,” Goh said, adding that the lessee might come in by end of the month.

He said these measures would only help the company break even.

“For the rest of this year, it’ll be unrealistic to expect the company to become profitable, especially in the current economic climate.”


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