15 Mar AT Systematization expects revenue to multiply as glove biz takes off
PETALING JAYA: AT Systematization Bhd is eyeing a multi-fold increase in its revenue as the group opened its glove manufacturing facility today, which is expected to reach a capacity of 2.6 billion pieces of gloves per annum by middle of this year.
The group has targeted an annual turnover of RM846 million from its glove business, an increase of
more than 40 times its average annual revenue over the last five years and is set to see its new
venture in the glove business to breakeven within one year, contributing estimated profit of RM170
million to the group in the coming financial year.
Managing director Choong Lee Aun (pix) said the group has allocated a total investment cost of RM120 million to build 13 gloves-dipping facilities and buildings at its Chemor factory. Currently two dipping lines are operational with another four scheduled for completion by April 2021.
“We have shown our commitment and capability to meet the tight timeline of just over five months to get our manufacturing facility start running. The factory is ‘future ready’ with the Industrial 4.0 ecosystem. This is important because one of the greatest challenges facing the glove industry is human labour. With our expertise in industrial automation and machinery, this could help fast track the growth of our gloves business going forward,” Choong said.
The manufacturing facility in Chemor which is built on a four-acre land, will be equipped with Manufacturing Executive System (MES) to provide real time production monitoring and control, output control and monitoring, record retention to comply with standard regulations.
The opening of its glove manufacturing facility was graced by Minister in the Prime Minister’s Department (Special Functions) Datuk Seri Mohd Redzuan Md Yusof.
Choong further updated that AT has now obtained the CE Marking Certification (allowing gloves to be export to the European region). While AT is the process of applying full certification from the US Food and Drug Administration (FDA), AT has obtained permanent registration with the FDA which allows gloves to be export to USA during this pandemic. Other certifications that are currently in progress of obtaining includes the ISO 13485 and Medical Device Authority (MDA) certification.
Choong also added the group recently announced its expansion plan to build second factory by acquiring 18 acre land for RM10.5 million. The deal, which is to be completed within 60 days, will be
funded fully by cash and it reinforces AT to be an up and coming entrant into the glove making business. Moving forward, the group plans to build at least another 48 glove dipping lines and target
capacity output to add by another 14.5 billion pieces per annum upon completion of 48 glove dipping lines.
In a separate agreement, AT has entered into a memorandum of understanding (MoU) with Kenteam Sdn Bhd for the offtake of the 10 glove dipping lines in its upcoming second factory. Kenteam is one of the world’s leading manufacturers in surgical, examination, high risk and multipurpose gloves with worldwide coverage in every key market sector. The company has obtained the CE Marking Certification as well as the FDA certification, which enable supply of gloves to key markets such as US, Europe and other developed countries. Kenteam’s brand of single-use gloves, has been recognised in various
countries, is also involved in collaboration with PT Hemera International Indonesia, for the Covid-19 diagnostic laboratory in Indonesia.
According to Choong, the production of the 10 glove dipping lines, which is expected to commence
operation by the end of this year, is estimated to be 3 billion pieces of gloves per year. With the MoU, AT would have provisionally secured RM960 million in sales on the assumption of a provisional average selling price of US$8 per one hundred pieces of gloves. The gloves would be distributed on an original equipment manufacturing (OEM) basis.
“The entry into this agreement relieves us of the duty to manage sales and negotiation with various
parties. This would help the group to focus on the optimisation of the production of gloves via
automation. This is important as we are a new player in the gloves industry and we are still building
the level of trust with our customers. It is vital that we accelerate our expansion plans on the
production front to meet our customers’ demand,” Choong said.
In addition to that, the agreement also adds OEM as another channel of distribution for AT’s gloves
production. The construction of the new factory is expected to begin work soon and will be undertaken in phases. The first phase of the construction will focus on the first 10 glove dipping lines in order to meet the offtake agreement with Kenteam, and is scheduled for completion before the end of this year. Production trials is expected to commence by December 2021 and first deliveries for the MoU is targeted by the end of this year.