Charting a growth path during difficult times

  • SME
  • Saturday, 23 May 2020

Bigger capacity: The new factory will increase Veneer Mark’s monthly production capacity by 25%.

VENEER Mark Sdn Bhd has seen solid progress over the years with consistent double-digit growth year-on-year since it started life as a manufacturer of laminated boards and plywood for fancy veneer in 2007.

It soon expanded into original equipment manufacturing for furniture, renovations as well as revarnishing for hotels and offices.

“Renovation and revarnishing projects come in irregularly but our veneer and plywood products have been more consistent. By diversifying our products and services, we balance out production and expand our revenue channels, ” says Veneer Mark founder KL Chan.

The company has also penetrated several overseas markets via the export of products and services, with its biggest market being the United Kingdom. International markets contribute around 40% to 50% of its revenue, but the company is not resting on its laurels as it has already started new projects in Myanmar and Bangladesh, as well as the Philippines this year.

Currently, it is ‘planting seeds’ into a few countries to bear fruit in the future, through finding partnerships with similar industry players who are strong in marketing, lead generation and distribution.

The reason for its international expansion is simple: the Malaysian market is too small. To expand, Chan says, companies need to tap into overseas markets, but that also comes with its own set of challenges.

Bigger capacity: The new factory will increase Veneer Mark’s monthly production capacity by 25%.Bigger capacity: The new factory will increase Veneer Mark’s monthly production capacity by 25%.

For instance, finding and hiring talent able to communicate in and speak other languages, who are also willing to travel, is a big obstacle for growth.

In terms of sustainability, the company purchases its timber from Forest Stewardship Council (FSC)-certified sources. Enforcing FSC is part of its DNA, as first priority goes towards green products.

He adds, “There’s always a shortage in the timber industry, but you need to have a responsible source. Lamination makes it more economical as it helps scale down the prices, while enabling us to promote being more environmentally friendly at the same time.”

Chan attributes the company’s momentum thus far to financial institutions such as CIMB Bank, highlighting the bank’s ability to support in key areas like working capital financing.

“CIMB Bank has helped us strengthen our cash flow, enabling us to buy raw materials in bulk at cheaper prices and pay our suppliers upfront, instead of creating another cash flow issue. This hassle free and zero collateral SME working capital financing facility gives SMEs faster and easier access to business funds at an affordable rate, ” he shares.

The issue of raw materials had been a pressing one, as supply from China had been disrupted, but the company managed to source its raw materials from different countries as a result of having cash in hand.

He opines, “Cash flow management is the biggest challenge due to the economic climate, but the loan has helped us weather the storm a bit.”

Strong backing: Chan says strong financial support has been crucial to the company’s growth.Strong backing: Chan says strong financial support has been crucial to the company’s growth.

Chan says that Veneer Mark’s business cash flow position has improved with this facility and short term business operational needs like purchasing of materials and operating expenses are fulfilled. This allowed them to allocate some capital for the purchase of its new factory in Beranang, Selangor as well as renovation of the new factory, machinery and equipment enhancement and upgrading, as well as moving costs.

The new factory, which covers 2.1 acres of land with a built-up of around 75,000sq ft, will increase Veneer Mark’s veneer lamination monthly production capacity from its previous 20,000 to 25,000 pieces.

Besides that, he points out that the new factory will also give the company free rein to structure and design its environment to attract a younger generation workforce into the company.

The company had been struggling to expand its factory for some time, and has been postponing this owing to cash flow issues.

“The fresh funds instantly opened a new door for us to have momentum. Instead of postponing plans, it meant we could go full steam ahead. It would have been very challenging otherwise, since a large bulk of our cash flow would be locked up, ” he says.

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This article is part of a series focusing on SME financing, courtesy of CIMB Bank.

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SME , growth path , difficult times , Veneer Mark , Chan , expansion ,


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