KUALA LUMPUR (April 28): SMIS Corp Bhd is buying a 16,186 sq m parcel of land in Kawasan Industri Terpadu Indonesia China, West Java, Indonesia for 36.5 billion rupiah (RM11.94 million), which will be used to construct factory/factories for its expansion into Indonesia.

SMIS said the group’s foray into the Indonesian market fits into its longer term strategy.

It added that it is positive on the potential and opportunities available in Indonesia as the automotive industry has shown signs of consistent growth.

"The group has decided to own the land and factory as opposed to rental," it said in a filing with Bursa Malaysia today.

SMIS' indirect wholly-owned subsidiary PT Grand Ventures Hartamas (PT GVH) today entered into a purchase and sale agreement with PT Kawasan Industri Terpadu Indonesia China (PT KITIC) for the proposed acquisition.

The group intends to use the land for PT GVH's manufacturing of original equipment and auto carpet parts.

Under the deal, PT GVH is obligated to begin the construction on the land latest by April 28, 2019. Failing which, PT GVH will have to pay a penalty of 0.05% of the purchase consideration per day to PT KITIC until PT GVH has taken action on initial construction and already paid off the penalty.

SMIS said the purchase consideration was derived by comparing the prices offered for similar parcels of land within the vicinity. There was no valuation conducted by the company on the land.

"The proposed acquisition will be financed through internal funds and/or bank borrowings. The final ratio will be decided at a later date," it added.

"Barring any unforeseen circumstances, the proposed acquisition is expected to be completed by the third quarter ending Sept 30, 2017," it added.

SMIS shares closed 1.6% lower at 62 sen today, valuing the group at RM26.15 million.