Melewar to diversify into waste disposal business

KUALA LUMPUR: Melewar Industrial Group Bhd, which will be left with engineering operation after the disposal of the steel business to its sister company Mycron Steel Bhd, is looking to expand its footprint into the waste disposal sector by the first quarter of 2015.
Despite starting off on a smaller scale, the company hopes the waste disposal business, as part of the company's five-year plan for the engineering division, will grow strongly moving forward.
"This is not waste management or collection, this is purely technology for waste disposal...this will be one field we're going in," said its chief technical officer Uwe Ahrens after the company's AGM and EGM here yesterday.
Even though the engineering business will grow slower than the steel business, he still expects a "meaningful contribution" from the engineering arm.
"Now we've this new opportunity, we look forward optimistically to this field,"Ahrens added that the group will focus on turnkey projects in material handling and operation and maintenance segment for recurring income.
Meanwhile, Melewar managing director and CEO Azlan Abdullah opined that the steel industry is still challenging due to the dumping of cheap steel imports.
"The steel industry is globally facing a rough time because of oversupply and overcapacity in China, there have been literally dumping around the world...Malaysia has recently done a hot rolled coil anti-dumping duty against Vietnam, China and Indonesia," he said, adding that the government should encourage the industries to buy more local steel products.
Fundamentally, Azlan said there is still healthy consumption of steel products but he urged the government to roll out more infrastructure projects to sustain demand for steel products.
Meanwhile, Melewar is also on the lookout for a buyer for its 49% stake in Thailand's Siam Power Generation Company Ltd, to fully exit the loss-making power asset.
Azlan explained the losses at its 160MW power plant have been due to a low utilisation rate of 50%, over the past three years.
To recap, Melewar had in April this year sold a 51% stake in the power asset for RM36 million. Melewar's total investment for that was US$ 250 million (RM872 million).
At the EGM yesterday, Melewar received shareholders' approval for the disposal of the entire stake in Melewar Steel Tube Sdn Bhd to Mycron for RM70 million to consolidate the steel business under Mycron.
Upon completion, Melewar's shareholding in Mycron will increase from the current 54.8% to 71.52%.
Khyra Legacy Bhd is the common shareholder of Melewar and Mycron, with a 36.33% and 54.47% stake respectively.
For the first quarter ended September 30, Melewar's net loss narrowed from RM31.91 million to RM21.48 million.