Mesuma claims sales drop after OCM deal cancelled

KUALA LUMPUR: There was a significant drop in the total annual sales of a sporting equipment and apparel company after the expiry of a sponsorship agreement with the Olympic Council of Malaysia (OCM), a High Court heard today.
V. Shanmuganathan, an auditor who also performs the function of external auditor for companies, said he noticed the plaintiff, Mesuma Sports Sdn Bhd's financial statement from year 2013 to 2015 and there was a significant drop in the total annual sales.
"As there was a correlation between the sponsorship agreement entered and the company's total annual sales, I believe that such drop in the plaintiff's total annual sales happened as a result of the non-extension of the sponsorship between Mesuma and OCM," said Shanmuganathan.
Shanmuganathan was testifying in a civil suit filed by Mesuma against OCM for alleged breach of contract.
The first ever lawsuit faced by OCM in its 60-year history began on Monday.
According to the witness statement of Heng Kiah Choong, a consultant of the company, there was no confirmation on the extension of the sponsorship despite several follow ups, through letters dated Oct 23, 2013 and Oct 29, 2013.
"On March 14, 2014, OCM wrote to Mesuma, informing the plaintiff it had received an offer from a third party for a fresh sponsorship of the official sports attire for a seven-year sponsorship period from Jan 1, 2014 till Dec 12, 2020."
Heng stated that OCM had further given notice in the same letter to exercise its first of right to refusal within 21 days, failing which, the plaintiff would be deemed to have waived its rights to exercise "first refusal".
As they were interested to continue sponsorship, they informed through a letter dated April 4, 2014 of their wish to exercise their rights but there was no reply.
The sports brand filed a suit against OCM after a new sponsor was allegedly appointed for the provision of sporting attire for the Malaysian contingent participating in multi sports events.
Mesuma claimed that in doing so they were not given the opportunity of exercising their right of first refusal which was a contractual term in their agreement with OCM.
The case is being heard by Judge Datuk Zaki Abdul Wahab.
Maya Heng, manager for the sports brand, was the second witness who gave evidence and was cross-examined on Monday.
Heng claimed that they were the exclusive official attire sponsor for the Malaysian contingent during the period of the sponsorship.
Mesuma has been the official sponsor of OCM since 2006 and the first contract expired in 2008 while the second contract was from 2009 to 2012.
Trial continues today.