KUALA LUMPUR: Automotive leather upholstery maker Pecca Group Bhd, through wholly owned subsidiary Pecca Leather Sdn Bhd, today signed a memorandum of understanding (NoU) to acquire 80% equity interest in PT Gemilang Maju Kencana (GMK), paving the way for its entry into the Indonesian market.
Pecca signed the MoU with GMK’s shareholders – PT Multi Berjaya Asindo (61%), CSC Automotive Sdn Bhd (22%), Tan Kim Cheang (16%) and Herny Pramana (1%).
By acquiring an established upholstery leather wrapping and car seat cover manufacturer in Indonesia – the world’s fourth most populous country – Pecca is set to gain immediate market access and orders in this market, just as the group is doubling its production capacity by end-2023.
GMK is a company associated with Indonesia’s MPI Group of Companies. Post-acquisition, GMK seeks to secure business and marketing support from MPI founder Lim See Poh, to expand its presence in Indonesia.
Meanwhile, Herny will increase her shareholding in GMK to 10%, and Neo Hwee Leong will acquire the remaining 10%.
Neo is GMK’s general manager, while Herny is the head of the finance department. Pursuant to the MoU, Pecca, Neo and Herny will sign a sale and purchase agreement to complete the transaction.
In addition, upon the completion of the sale of shares, an issuance of new shares in GMK will be undertaken to allow Pecca, Neo and Herny inject funds into the target company for working capital purposes. Pecca is expected to inject 2.4 billion rupiah (RM726,000) out of the total 3 billion rupiah injection. Neo and Herny will inject the remaining 600 million rupiah, divided equally between them.
Pecca CEO Foo Ken Nee (pic) said Indonesia is expected to be an important engine of growth for Pecca as it strives to enlarge its foreign presence in the upholstery seat cover segment of the automotive industry.
“We are set to have a physical footprint in the country, we can turbo-boost our future growth as Indonesia is selling more cars than any other Southeast Asian markets.”
Based on market data, Indonesian vehicle sales for the January-August 2022 period were 658,232 units, far outnumbering Thailand’s 559,537 units and Malaysia’s 447,209 units in the same period. This means that there are huge opportunities for an automotive upholstery maker like Pecca in Indonesia.
“In fact, with more than 20 years of upholstery specialist experience, we offer various products, designs, and a mix of materials to match different market requirements. Pecca has the competitive advantage of securing new orders with new customers in the Indonesia market. The well-established market presence of GMK will help Pecca accelerate its presence in this competitive industry.”
Pecca’s venture into Indonesia is taking shape amid the group’s efforts to double its production capacity to 40,000 -50,000 seat covers per month by end-2023. Currently, Pecca manufactures 20,000 -22,000 seat covers per month. The increased production capacity will be accomplished once the construction of Pecca’s second manufacturing facility in Serendah is completed by the end of 2023.
The group is also working towards transforming itself from a Tier-2 (sub-contractor) into a Tier-1 (main-contractor) player that manufactures the entire seat, rather than just the cover. Pecca aims to provide more value to its customers and in turn enjoy a better margin by becoming a Tier-1 player.
