This article first appeared in The Edge Financial Daily, on October 12, 2015.

KUALA LUMPUR: Loss-making BSL Corp Bhd, which is involved in the stamping and manufacturing of metal parts, looks to secure more contract manufacturing jobs from Western clients, as part of its strategy for future growth and to turn the group around.

“We have gradually positioned our company for the supply of base metal components required by multinational companies (MNCs) in Malaysia. We have been dependent on Japan-based clients such as Panasonic and Yamaha since the 1990s,” its chief executive officer Richard Ngiam Tee Yee told reporters after the company’s extraordinary general meeting last Friday.

“Now, we want to evolve into becoming a contract manufacturer and aim to get more jobs from Western clients,” he added.

The group started on its transformation journey to venture into contract manufacturing last year, and the early stages of its new business model has yet to see any substantial contribution.

“The volume of orders is quite negligible at the moment as our clients only issue orders to us twice a year or thereabouts,” Ngiam said.

“But we believe that the business will start to grow substantially by the end of this year, and we expect better numbers to come in from the second year onwards,”he added.

The group is currently working with an Australian client for a niche product in the contract manufacturing line, and is banking on the success of this product for its growth.

Ngiam declined to disclose the name of the Australian client.

“Given that it is a niche product, it will spread like wildfire if it becomes successful and if it doesn’t, it will sink to the bottom. It is all about engaging the right client with the right product that will grow. If we are able to do so with three such clients, then I think we will be very comfortable in the near future,” Ngiam said.

The group will maintain its traditional business of components supply, albeit with a smaller contribution to the group’s earnings in three years.

“We will still have printed circuit board assembly, metal stamping, as well as plastic moulding as our core business,” Ngiam noted.

BSL Corp was in the red for nine straight quarters between 2013 and 2015, before returning to the black in its latest third financial quarter ended May 31, 2015 (3QFY15), when it made a net profit of RM2,000.

As at May 31, it had cash and bank balance of RM19.16 million, with reserves amounting to RM17.41 million. According to its annual report dated Aug 31, 2014, it had retained earnings of RM20.71 million at the group level, versus RM1.84 million at the company level.

Ngiam admitted that the group’s order book had not been performing well for the past few years, mainly due to its Japanese clients’ underperformance in the traditional electronic business.

“[But] recently, our orders have been stabilising due to demand from our European clients,” he said.

He added that the group has seen some progress, since it consoldiated and centralised its manufacturing factories into one location in Rawang, Selangor.

Ngiam said with the centralisation, the group has also managed to trim its operating cost and reduce overheads.

Meanwhile, the weakening ringgit has impacted BSL Corp positively as its traditional business of producing and supplying components, as well as PCB assembly have seen a 10% to 20% improvement in orders for the financial year ending Aug 31, 2016 .