Kossan targets double-digit capacity growth in two years

This article first appeared in The Edge Financial Daily, on May 23, 2018.
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SHAH ALAM: Kossan Rubber Industries Bhd is targeting a double-digit growth rate for its rubber glove production capacity in the next two years, with total capacity expected to hit 32.5 billion pieces by end-2019, from 25 billion at present.

The group estimates that its annual production capacity will rise by 10% by year end on commencement of Plant 16, and by 16% by end-2019 as Plants 17, 18 and 19 kick off operations, according to Kossan managing director (MD) and chief executive officer Tan Sri Lim Kuang Sia.

Kossan said Plant 16 should be operating at full capacity by early July this year after completion of the plant was delayed for about a year due to machine installation and water supply issues. Located in Klang, the plant was initially expected to be completed by July last year.

Going forward, Kossan does not expect any further delay in the completion of its rubber glove plants, Lim told reporters after the group’s annual and extraordinary general meetings yesterday.

“Plant 17 will be completed in the next two or three months. Plant 18 will be finished in January or February in 2019, and Plant 19 will be done by mid-2019,” Lim said.

Kossan, which prides itself as the first company in the world to produce halal-certified gloves, is also aiming to grow its halal glove segment.

It is targeting to raise its total annual capacity of halal-certified gloves to 3.6 billion pieces by year end, from 2.4 billion at present.

Demand for halal gloves is sizeable, said Kossan executive director Lawrence Lim, and given the enormous business opportunities halal gloves present, the overall glove industry will soon come out with its own halal-certified gloves.

“It’s a big advantage for us [being the forerunner]. The glove industry is competitive, [so being competitive] can [take different forms, be it] in terms of compliance, standards or other different aspects. We are designing things differently, not only simply [banking on] competitive pricing,” said Lim.

Kossan’s halal gloves were certified by Jabatan Kemajuan Islam Malaysia at the end of last year. Japan was the first country to import its halal gloves, according to the group, indicating demand for such gloves is not limited to only Muslim or Muslim-majority nations.

Domestically, Kossan has also established the brand CONFIDENZ for its halal gloves, which can also be purchased online.

Going forward, Kossan targets to get all its plants certified halal, with future plants to be designed to comply with halal requirements too.

Kossan’s share price slid 20 sen or 2.76% to RM7.05 yesterday, bringing it a market capitalisation of RM4.54 billion.