Watta Holding Bhd has decided to stop its loss-making automotive batteries business under the Leko and Watt brands by Dec 31, 2017.
KUALA LUMPUR: Watta Holding Bhd
has decided to stop its trading and distribution of its loss-making automotive batteries business by Dec 31, 2017 and focus on its telecommuniations products business.
It said on Friday its two units Watta Battery Industries Sdn Bhd (WBI) and Syarikat Perniagaan Leko Sdn. Bhd (SPL) had decide to cease the battery operations in line with the group's revamp plan to reduce operating costs and overheads.
WBI and SPL's combined after-tax losses had increased from RM268,000 in FY ended Sept 30, 2014 to RM1.55mil in Sept 30, 2016. Revenue had alsom declined from RM22.14mil to RM14.89mil.
Watta said since the implementation of AFTA in 2007, there has been influx of foreign brands and importation of automotive batteries into Malaysian markets.
“The manufacturing and distribution of automotive batteries business have since been very competitive and challenging. In the recent years, the competition has gone stiffer and the market has not been able to adjust the selling price to align with the increase in costs.
“Thus, the margins have reduced significantly and unable to cover the operational costs and overheads,” it said.
Watta said the proposed cessation would allow the group to reduce the operating costs over the longer term and enable the management to focus on re-organisation and business diversification.
It explained the automotive batteries business account for 30.1% of group's revenue for the nine moths ended June 30, 2017.
The move would see it focusing on servicing and trading of telecommunication products which contributed 69.8% of group revenue as at June 30, 2017.
Watta said there would be a one-off redundancy cost and impairment loss on assets of RM1.95mil.
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