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Kossan to beef up synthetic gloves production

Posted on: June 20, 2009

Bernama – Saturday, June 20

SHAH ALAM, June 19 (Bernama) – Medical glove manufacturer, Kossan Rubber Industries Bhd expects to double up its glove production capacity with the composition of production more skewed towards synthetic gloves.

Its managing director and chief executive officer, Lim Kuang Sia, said the company wanted to beef up the manufacturing capacity for the synthetic (nitrile) segment to 35 percent by end of this year and to 40 percent next year.

“We are moving towards synthetic gloves because of the better profit margin and higher growth rate for the product,” he told reporters after the company’s annual general meeting here today.

Last year, the company produced and sold 8.5 billion pieces of gloves with synthetic gloves accounting for 25 percent.

Lim said the company had allocated RM7 million to upgrade its production lines mainly to increase the capacity for synthetic gloves.

“We are upgrading our eight production lines and expect them to be ready by September this year,” he said.

The company’s manufacturing facilities are located in Meru, Klang and Jeram.

Kossan exports nearly all its gloves, especially to developed countries like United States and Europe, where the standard for gloves is very stringent.

On the impact of the global economic slowdown, Lim said Kossan’s glove business remained profitable as cuts in medical expenditure would usually be a last resort.

“Moreover, with the outbreak of the H1-N1 flu, it has given us more orders for medical gloves,” he said.

He said the glove manufacturing industry was fairly recession-proof because margins were tight and only glove manufacturers with sizeable economies of scale could survive.

The company also has a technical rubber products division which is export oriented. The rubber products which include small spare parts for the automobile industry however will not be spared from the slowdown, he said.

Nevertheless, Kossan’s strong balance sheet and robust track record would enable the company to face the challenges this year and ahead, he said.

The company has been posting a compounded growth of 30 percent in revenue since 2001.

For the first quarter ended Jan 31, 2009, Kossan posted a pre-tax profit of RM21.02 million on a revenue of RM202.37 million. — BERNAMA



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