SCIB to invest in IBS plant in Sabah

  • Business
  • Monday, 12 Jun 2017

KUCHING: Sarawak Consolidated Industries Bhd (SCIB) will invest in an industrialised building system (IBS) plant in Kota Kinabalu as it expands its operations to Sabah.

Chairman Tan Sri Hamid Bugo said the company had identified a piece of land for the plant project, and hoped to start construction as soon as possible.

“SCIB will utilise the proceeds from a private placement to fund the project,” he told StarBiz.

During its recent EGM, the private placement of nearly 36.4 million new ordinary shares, which is expected to raise gross proceeds of up to RM21.84mil, was approved.

From the proceeds, RM10mil is expected to be used to set up the proposed IBS plant. A total of RM8bill will go to repaying bank borrowings and RM2.84mil for working capital.

Hamid said the expansion into Sabah would be via Carlton Gardens Sdn Bhd (CGSB), which SCIB is expected to complete acquisition in the current third quarter.

SCIB is acquiring the entire equity interest in CGSB for RM9.5mil.CGSB, which is principally involved in the manufacture, supply and installation of construction building materials, owns and operates an interlocking block IBS factory in Lumut, Sabah.

The plant manufactures interlocking blocks and has a maximium daily production of 25,000 blocks/units. CGSB has secured a contract worth RM41.6mil to supply and install interlocking blocks and associated structural and finishing works to Stone EPC (Sabah) Sdn Bhd to a residential development project. The project consists of 620 units of houses, a kindergarten and multi-purpose hall under PR1MA (1Malaysia People’s Housing Programme).

According to SCIB,its acquisition of CGSB is to penetrate the residential sector of IBS supply and installation market where the Government’s affordable housing programmes offers significant opportunities.

SCIB group owns and operates an IBS plant in Kuching with an annual production capacity of some 180,000 tonnes. The plant is operating between 50% and 60% of its capacity, and its main products are precast beams, hollowcore slabs, precast columns, wall panel and precast plank.

To meet the increasing demand for its products especially with the implementation of the Pan Borneo highway project, the group invested RM4.8mil in a new plant to manufacture concrete pipes and beams last year, and raise its annual production by 47,800 tonnes.

Hamid said SCIB had recently secured contracts worth some RM2mil to supply IBS components to nine schools statewide for their extension projects. It was reported that over 50 such schools in Sarawak have been identified for upgrading or extension works.

He sees brighter prospects for the company’s IBS business going forward as most construction companies were facing labour problems.

“With the IBS, it can speed up the construction process and ensure quality of products. More importantly, safety of construction can be enhanced.”

Hamid expected more usage of IBS components with the Government actively promoting it after realising its benefits. (IBS is a modern technique of construction whereby building components are manufactured either off-site or on-site and then installed into ongoing construction works.)

The Federal Government has announced granting incentives, like pioneer status or investment tax allowance, to companies manufacturing IBS components. These incentives are effective for applications received by Malaysian Investment Development Authority up to Dec 31, 2020.

According to SCIB, the Construction Industry Transformation Programme targets that by 2020, 100% of public projects worth RM10mil and above must achieve a minimum IBS score of 70 whereas for private projects, the goal is to attain a minimium IBS score of 50.

SCIB has an order book of RM44mil, about 60% of which are contributed by contracts secured for the Pan Borneo highway project,which is being implemented in 11 work packages.

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