This article first appeared in The Edge Malaysia Weekly on April 24, 2017 - April 30, 2017

FASHION retailer Voir Holdings Bhd is considering venturing into the logistics business to gain a steadier source of income, says its chairman Datuk Zarul Ahmad Mohd Zulkifli.

“We are thinking about entering into logistics because of the current volatility in the apparel market,” he tells The Edge. “In whatever we do, we think of our shareholders and we make sure they get the best benefits. The paper is being prepared by management and it will be presented to the board once it’s ready.”

According to Zarul, the apparel business has been impacted by foreign exchange rates as the company imports a substantial amount of its products.

“We are trying to maintain our pricing because inflation is up. If we were to raise our prices, demand would drop. That’s why we think we need more sustainable businesses that can provide the company with better and more regular income,” he says.

Zarul is confident that the proposal to add a logistics division to Voir will come to fruition this year but he adds that the timing will depend on when the board gives its approval. “If the board is satisfied with the paper, we will take the next step of holding an EGM. Then, we can move on from there.”

It is worth noting that Zarul has been linked with Asia Freight Rail Sdn Bhd (AFR), which is pursuing a licence from the government to operate rail freight. But Voir’s involvement in this project has not been determined at this point.

Last September, The Edge Financial Daily reported that a RM1.7 billion, two-pronged plan to set up the Perlis Inland Port and develop the national rail cargo business was slated to be tabled by the Transport Ministry.

The plan is to be implemented through an alliance between AFR and Keretapi Tanah Melayu Bhd (KTMB).

“At the moment, rail freight is seriously under-utilised while the cargo business is monopolised by hauliers. There are lots of accidents (with hauliers) and the cost of goods is high because of fuel costs. But where trains are concerned, it’s much cheaper. One train can carry about 40 containers whereas hauliers can only transport one at a time,” Zarul says, adding that there is growing demand for rail freight based on some studies.

“We’re not there to compete with KTM but to complement it,” he says.

KTMB has a monopoly in rail freight services in the country through subsidiary Multimodal Freight Sdn Bhd.

Zarul, who bought into Voir slightly over a year ago through Vista Lestari Sdn Bhd after taking up Marvellous Future Sdn Bhd’s 50.71% stake, says logistics is a sustainable business with recurring income.

Voir seems to have hedged its bets by also venturing into the construction business, which contributed RM3,000 to profit before tax and RM172,000 to revenue in its fourth quarter ended Dec 31, 2016. The company still derives most of its earnings from its apparel business.

Recently, Voir proposed a private placement of up to 10% of total shares to raise funds to build 1,000 apartments worth RM24.62 million in Kelantan under Projek Perumahan Rakyat.

When asked if the company would need further funding in the immediate future, Zarul says: “Yes, if we go into logistics and construction, we would definitely require more capital in the near future.”

In its financial year ended Dec 31, 2016, Voir managed to return to the black after two consecutive years of losses. It chalked up a net profit of RM618,000 on revenue of RM168.85 million. In FY2015, it recorded a net loss of RM4.27 million on revenue of RM160.9 million.

According to the company, the turnaround was thanks to higher sales and the closing of its loss-making food and beverage as well as beauty and wellness divisions.

Zarul believes Voir will be profitable from now on. “Our objective is to ensure that Voir posts good profits. And one of the things we want to consider in the future is a dividend policy. Voir will be profitable, boosted by its construction and potential logistics divisions.”

At its closing price of 63 sen last Thursday, the stock had fallen 16% year to date.

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