NAZA2.0 charts the path for new growth

THE first half of 2020 has undeniably taught businesses, the world over, many valuable lessons. The impact of Covid-19 has been extensive, far-reaching and likely to be long-lasting.

The ensuing economic volatility has been unprecedented. Businesses worldwide are gearing up for a period of uncertainty, transformation, radical paradigm shifts and “new-normal”.

Identifying new processes, techniques as well as technologies that are not being used to their ultimate capacities, assessing growth potentials and developing a way-forward strategy are partly what business transformation is all about.

The thrust of it is to create additional value, which may include harnessing intellectual property and proprietary technology for additional purposes, unlocking employees’ potentials and emphasising on maximum efficiency.

Continually expanding the scope of what the business offers will not necessarily lead to success if you don’t have the right focus.

The approach towards “leanness” is key for many businesses, as being lean, fundamentally means getting maximum value from every part of your company – focusing on optimising business as a whole and not just individual parts.

Companies may need to thoroughly assess their core businesses, rationalise portfolios and develop “way-forward” strategies and road maps to become leaner and more streamlined for long-term sustainability.

This approach helps companies to gain the agility to acquire new brands and to strengthen their core by investing in their current brands.

Malaysia’s well-known family business Naza Corporation Holdings Sdn Bhd is set to undergo its own transformation, sharpening its focus through strategic divestitures and creating a clear a path to new growth.

After achieving significant milestones over the past 45 years, the Group decided that NAZA2.0 would play an integral part in the path towards its half-century presence in the business world. This strategic impulse aims to achieve a robust structure for the Group in the next five years and to identify a higher-purpose mission.

This will be the common thread for a new growth; repositioning the core in order to adapt to changes or disruptions in the market and to achieve improved financials.

NAZA2.0 is helmed by a Transformation Committee comprising experienced advisers from multiple industries, some of their esteemed board members and also an audit firm, to ensure fair value assessment of the group.This is key in helping decision-making processes, independent of owner-based sentiments.

NAZA2.0 plans will soon be on full gear, akin to successful M&A strategies using divestiture to eliminate brands that do not strengthen the group’s core and right-sizing its organisation to support new growth.

Group executive chairman SM Nasarudin SM Nasimuddin (pic below) said its transformation journey may be regarded by some as radical, which seeks to focus on new core businesses and find new areas of sustainable growth.

Nasarudin added that this would help the group sharpen its focus, creating a clear path to new growth. “We hope to reduce low margin businesses, focus on recurring income and on businesses where the company would have more control, with potentials to bring in higher yield and better profit margins.”

Here are some excerpts from an interview with Nasarudin:

Q: Why the decision to embark on a transformation plan and what does this exercise entail?

To remain relevant and ensure that we will be resilient to weather challenges faced by businesses, globally.

We in fact, started to look at transformation about two years back. However, the Covid-19 pandemic pushed the group to review and “remodel” overall business processes, accelerating this pace of transformation.

We need to change with the times, which requires understanding of how alternate solutions can be applied to further gain market share, increase revenue and customer satisfaction as well as reduce operating costs. The end in mind is to grow into a bigger and better conglomerate, parallel to the economic evolution and demands of the market.

This exercise would include a thorough assessment of core businesses, rationalising our portfolio and developing a way-forward strategy and road map to become leaner and more streamlined for long term sustainability.

We are not afraid of eliminating what can look like a cash cow and may have to accept an interim decline in earnings, and move on. What is important is investment for the future – investing in growth.

NAZA2.0 is about being agile, to develop a way-forward strategy and road map to improve operational and cost efficiencies across all businesses, to create value, and to eliminate redundancies in order to become leaner and more streamlined for long term sustainability.

Q: What do you hope to achieve from this transformation plan? What are your targets?

As we move towards our half-century milestone, we hope to “transform” in the way we do business – to have a lean, robust and resilient structure, with the agility to ensure sustainability of the group through the current economic climate, to adapt to changes or disruptions to the market, embrace current challenges, create opportunities, to be relevant and resilient.

NAZA2.0 will include reducing low margin businesses, focusing on businesses that we have more control over and the potential to bring in higher yield and better profit margins. This involves our property, engineering & construction, asset management and telecommunications brands.

Q: Are there any businesses that you plan to focus on or invest in from this divestment exercise?

From our present highly diversified group structure, spread over multiple sectors, NAZA2.0 will look at transforming into a “centralised-focus” structure across four verticals – Property and Construction, Asset Management, Niche & Premium Automotive and Other Businesses.

Out of this four-vertical, property development and asset management will become the leading sectors to build around.We will reinvest in our other core businesses with recurring income and the potential to bring in higher yield and better profit margins such as our property businesses.

Naza TTDI, for example, is our boutique development arm. It has so much potential to grow and it is our own brand.

To remain competitive in the property sector, we would need to look at enhancing property development and construction revenue streams and market offerings. For example, pipeline projects in this sector are expected to generate an estimated gross development value of RM2.6bil. In fact, there are also potentials for significant returns if we successfully develop our prime land banks.

Q: Naza has always been known for its automotive business. Will automotive still be a key focus area for the group moving forward?

Automotive will still be a part of the Naza business but it will not be our main core business moving forward. We will continue with the niche, luxury and exclusive brands which are profitable. However, moving forward, our auto business may not necessarily continue to be in sales and distribution.

Q: Will the NAZA2.0 transformation plan involve mainly your automotive business or across all sectors of your business operations?

The transformation will cut across all our business operations. We currently have more than 40 active businesses under our brand. We are continuously reviewing and assessing the progress and performance of all our businesses to ensure profitability and optimised returns.

Part of NAZA2.0 is potentially exiting mid-market segments in the automotive sector, with the aim of maximising value of niche segments.

Q: NAZA will be celebrating its 50th Anniversary in five years. Any significant plan/milestone set for the next five years to ensure it remains relevant and resilient?

For the past 45 years, Naza has always been a self-made, home-grown bumiputra brand. We want to enhance that image by taking a somewhat radical stance that serving shareholders should not be the main purpose of a corporation.

Rather, it needs to include serving society, through innovation, commitment to a healthy environment and creating economic opportunities for all.

We hope to expand our initiatives to benefit communities and to support the government’s effort in nation building. We also hope to embark on projects to develop entrepreneurs and small businesses, particularly to enhance the bumiputra entrepreneurial community to create an impact.

On a corporate level, Naza will continue to be a company of its people, constantly evolving and embracing change, putting in place a high standard of professionalism and corporate governance. We will continue to aspire to be a progressive company in leading conversations and promoting good values and sustainable social development.

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