Perusahaan Otomobil Kedua Sdn Bhd (Perodua), Malaysia’s largest automotive company by sales, may set aside at least RM140 million for capital expenditure (capex) next year as the company expands its geographical reach, and positions itself for more vehicle orders.
Perodua managing director Aminar Rashid Salleh said its retained earnings and cash were sufficient to finance its capex commitments, details of which would, as traditionally, be finalised between August and September every year.
“We have not run the numbers yet. At the minimum, it will match whatever budget we have this year,” Aminar told The Edge Financial Daily in a recent interview.
Perodua’s financial year ends in December.
Aminar said Perodua had earmarked some RM140 million for its 2010 capex, of which 35% or RM49 million had been utilised as of May.
Of the RM140 million, about RM100 million or 71.4% has been set aside to purchase automotive equipment and finance the expansion of the manufacturing plant.
A sum of RM20 million has been allocated for warehouse expansion, while the remaining RM20 million will be used to finance the expansion and improvement of its sales, service and workshop outlets.
Geographical expansion is on the cards. Aminar said Perodua was conducting feasibility studies on the Thai market, and a decision was expected to be made before year-end.
Going forward, the Association of Southeast Asian Nations (Asean) countries will be fertile soil for Perodua’s future growth. This comes against a backdrop of more liberalised trade policies with the implementation of the Asean Free Trade Area.
Aminar said Perodua’s overseas expansion would emphasise on countries using right hand-drive vehicles, and those whose regulations were relatively similar to Malaysia’s.
“We have had enquiries from Indochina,” Aminar said.
According to news reports, Perodua exported 3,500 cars of all models to seven countries last year. The UK constituted the largest share of 40% of Perodua’s external sales, followed by Singapore, Brunei, Mauritius, Fiji, Nepal and Sri Lanka.
Perodua’s planned expansion into Thailand is deemed crucial to boost exports contribution from some 2% of the car manufacturer’s total sales volume to 10% within five years, Aminar was quoted as saying earlier last month.
Outside Asean, it is worth noting that Perodua already has a market for automotive components in countries like India and Pakistan, both of which are deemed potential export markets for completely-built-up vehicles by Perodua.
In Malaysia, Perodua has a new warehouse on the drawing board. According to Aminar, about 200 acres (80ha) of the estimated 340-acre tract (136ha) accommodating Perodua’s headquarters, manufacturing plant, and warehouse in Sungai Choh, Rawang, have been utilised.
The remaining 140 acres (56ha) may eventually accommodate a new warehouse for vehicle parts and accessories, should the company decide to build one within the area.
“We are looking at a few options,” Aminar said, adding that the firm may also locate its new warehouse near a seaport. Perodua also has warehouses in Sabah and Sarawak.
Perodua’s plant in Sungai Choh, Rawang, has an annual production capacity of 250,000 vehicles, with a utilisation rate of about 76% involving the output of some 190,000 vehicles. Perodua, which accounts for about 32% of new car sales in Malaysia, expects to sell 176,000 vehicles in the country this year.
Set up in 1993, Perodua is a joint venture between Malaysian and Japanese partners. Its Malaysian shareholders are UMW Corp Sdn Bhd with a 38% stake, MBM Resources Bhd with 20% and PNB Equity Resource Corp Sdn Bhd with 10%.
Perodua’s Japanese shareholders comprise Daihatsu Motor Co Ltd with a 20% stake, Daihatsu (Malaysia) Sdn Bhd with 5%, Mitsui & Co Ltd with 4.2%, and Mitsui & Co, (Asia Pacific) Pte Ltd with 2.8%.
Perodua’s first car — Kancil — was rolled out in 1994. As of May 2010, the car manufacturer, with a workforce of about 10,000 people, had sold some 1.7 million vehicles in Malaysia.
Written by Chong Jin Hun
This article appeared in The Edge Financial Daily, July 5, 2010.
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