SCGM awards RM54 million contracts for new factory

PETALING JAYA: Food packaging manufacturer SCGM Bhd has awarded RM54 million worth of contracts to commence construction of its RM125 million manufacturing facility in Kulai, Johor.
Upon completion in December 2018, the enlarged production floor space and new machinery would increase the group’s extrusion capacity by 73% to 62.6 million kg per year from 36 million kg per year.
The RM125 million capital expenditure (capex) includes the new factory, land cost, building construction and new machinery. SCGM will finance the capex with internally generated funds, bank borrowings and proceeds from the ongoing private placement.
“As a major producer of thermoform packaging for food and beverages, SCGM has been among the key beneficiaries of higher demand for thermoform packaging in the past year with the regulatory ban on polystyrene products in Malaysia,” managing director Datuk Seri Lee Hock Chai said in a statement yesterday.
He is optimistic that a larger capacity would place the company on a steady growth path to meet current and future demand, as it expects a second wave of uptrend in demand alongside public awareness of food safety and environmental sustainability locally and in the region.
For the six months ended Oct 31, 2016, SCGM’s revenue rose 25.3% year-on-year to RM79.9 million while net profit rose 13% year-on-year to RM10.9 million.
Sales to the domestic market made up 58% of its first-half revenue with RM46.7 million, compared with RM33.2 million in exports.
The company expects the new factory to contribute positively to the group in the financial year ending April 30, 2019.