Thursday, 31 May 2012

KUALA LUMPUR : Boustead Heavy Industries Corp Bhd (BHIC) subsidiary Boustead Defence Technologies Sdn Bhd (BDT) entered into a joint venture (JV) and shareholder agreement with Prokhas Manager Sdn Bhd (PMSB) yesterday for the manufacturing and selling of propellant for the defence sector. PMSB is a unit under the Ministry of Finance Inc.

The JV company, Pyrotechnical Ordinance Malaysia Sdn Bhd, will focus on producing double-base propellant for artillery propellant and rocket propellant, said BHIC managing director Tan Sri Ahmad Ramli Mohd Nor.

He said at the initial stage, the propellant would be supplied to defence equipment manufacturers, which will then supply the end products to the Malaysian Armed Forces, before exporting it to other countries mainly from Asean.

A manufacturing plant for the propellant has been built on a 21-acre tract in Bentong, Pahang, and it will commence production by 2012. To date, RM58 million has been invested in the plant.

“The partnership between BDT and PMSB will foster the growth of high-tech defence-related production in Malaysia in line with the nation’s aspirations to strengthen the country’s defence technology industrial base while introducing new technology and export opportunities,” said Ahmad Ramli at the signing ceremony yesterday.

He noted that the defence industry has been importing propellant for the manufacturing of end products for the armed forces and has had many problems, such as low quality and inconsistent standards. Hence, the investment will enable the industry to control its own supply by having the material produced locally, Ahmad Ramli reasoned.

The JV company will have a paid-up capital of RM35.3 million with BDT owning a 49% equity interest and PMSB the remaining stake.

Also present at the event was Defence Minister Datuk Seri Dr Ahmad Zahid Hamidi. He said the plant would use raw materials from Slovakia.

“Previously, propellant used in the defence industry was imported, and this joint venture marks a significant milestone for our high-technology defence industry,” he said.

BHIC’s share price ended 13 sen lower at RM4.05 yesterday, compared with its close of RM4.29 last Friday. Its 52-week closing high of RM4.84 was reached on April 8, 2011 while its 52-week closing low of RM3.60 was on June 1, 2010.

Ahmad Ramli: This joint venture marks a significant milestone for our high-tech defence industry.