MRCB and DRB-Hicom get RM310mil construction job

PETALING JAYA: Malaysian Resources Corp Bhd (MRCB) has partnered DRB-Hicom Bhd to undertake an RM310mil construction job at the new integrated immigration, Customs, quarantine and security (ICQS) complex at Bukit Kayu Hitam, Kedah.

Both companies will take up the job via a joint-venture (JV) company in which MRCB owns 51% and DRB-Hicom the remaining 49%.

For starters, the main contract of designing and building the new ICQS complex had been awarded to the JV between Zelan Construction Sdn Bhd and Kiara Teratai Sdn Bhd in 2012. They, in turn, awarded RM310mil worth of construction jobs to MRCB and DRB-Hicom yesterday.

MRCB and DRB-Hicom’s JV has an authorised capital of RM1mil and a paid-up capital of RM2.

Both companies said they would subscribe to shares in the JV company through internally generated funds. They would only pay for the shares in the JV company when the sub-contract starts.

They did not mention the expected timeline of the project.

While construction and property development is MRCB’s bread and butter, DRB-Hicom’s main income source has been the automotive segment. For the financial year ended March 31, 2014, automotive made up 75% of DRB-Hicom’s revenue while its property, asset and construction arm contributed only 5.35%. The conglomerate said the JV was part of its strategy to grow its construction business.

On the other hand, engineering and construction contributed 32.5% to MRCB’s topline, while property development contributed 55.9%.

Both parties would be able to leverage on each other’s expertise to complete the work.

MRCB will appoint three representatives for the joint project committee while DRB-Hicom will appoint two members.

The tie-up is not expected to have material impact on both companies’ financials for this financial year, but positive income contribution is anticipated in the future.