KUALA LUMPUR (May 14): Handal Energy Bhd, formerly known as Handal Resources Bhd, has started a series of cost-cutting measures.

In a statement, Handal said this was to manage what could be regarded as a perfect storm for the oil and gas industry with the ongoing Covid-19 pandemic coupled with oil price volatility arising from the Saudi Arabia-Russia oil price war.

Handal said it has begun implementing a cost optimisation programme involving 11 key operational areas including staff costs, travelling expenses and overheads. 

The firm said it aims to cut operating costs by 40% for which staff costs represent the largest cost component.

The top management will lead by example as their salaries will be trimmed by 25% whilst for other levels, between 15% and 25%, save for employees earning less than RM2,000, who will be excluded.

Handal said its monthly staff costs are expected to be reduced by 21% representing an aggregate reduction of approximately RM4.2 million in the next six months.

Handal group managing director Sunildeep Dhaliwal said the business world is always facing peaks and troughs and urged shareholders to remain patient.

“I have no doubt in Handal’s capabilities to weather through this current challenging situation,” he said.

Dhaliwal said despite the slight recovery in oil prices and progress seen in controlling the pandemic situation in Malaysia, it still remains challenging and will affect projects trickling down from oil majors.

“We will tread cautiously and continue to be vigilant in our planning and executions in this new normal.

“As part of the oil and gas supply chain in Malaysia, Handal will be ready to carry on once the projects that are on hold are reinstated,” he said.

Handal shares last traded at 23 sen, for a market capitalisation of RM50.33 million.