SHAH ALAM: Boiler manufacturer Mechmar Corporation Bhd hoped to clear its debts of RM43 million and shake off the Practice Note 1 tag by 2010, the company said.
“We are making efforts to repay the debts. The process is going on smoothly,” executive director Loh Kiat Loon told The Edge Financial Daily recently.
For its first quarter ended March 31, 2008, the company’s net profit almost doubled to RM8.9 million from RM4.8 million a year earlier despite a 26.6% drop in revenue to RM40.3 million from RM54.9 million.
The lower revenue was due to the low off-take from Tanzanian Electricity Co (Tanesco). Mechmar is assured of profits from the project via contractual capacity charge payable irrespective of the actual power off-take.
The company’s balance sheet as at March 31, 2008 had RM289.6 million in short-term borrowings secured in the financing of the Tanzania power generation project.
Loh said Mechmar was looking at the possibility of expanding its business in Southeast Asia and Central America to increase and diversify its revenue stream. He said overseas businesses accounted for some 67.3% of the company’s total revenue. Mechmar has operations in Hong Kong, Indonesia, Sri Lanka and Singapore.
“We have sold out six units of palm oil boilers, valued at RM4 million each, in Honduras this year. We are also focusing on Southeast Asian countries, such as Vietnam and Cambodia,” Loh said.
He added that the company had mitigated the impact of surging steel prices by direct purchases from mills in China and Korea. He said the company began direct bulk purchases two years ago at 30% discount to market prices.
Loh said the company was also looking at promoting biomass power plants with a capacity of 5MW to 10MW to process renewable resources such as wood waste. The company’s biomass power plant had received enquiries from Indonesia and Thailand, he added.
“We are targeting two projects, each valued at US$10 million (RM33 million), in the next 18 months. We have secured a project in Indonesia in principle,” said Loh
Source : The Edge
