Kossan goes full swing to enter halal market

The company was granted the compliance certificate for the WSM plant


Kossan Rubber Industries Bhd aims to penetrate the “halal” market with another factory expected to be certified Shariah-compliant, after the successful halal certification of its Wear Safe (M) Sdn Bhd (WSM) plant in Klang.

ED Lawrence Lim said Kossan was granted the compliance certificate for the WSM plant, which has a production capacity of about 2.4 billion pieces per annum, at the end of 2017.

“Kossan managed to get the first factory certified by the Department of Islamic Development Malaysia (Jakim) as a halal-compliant manufacturer after two years of effort,” he told reporters after Kossan’s AGM in Setia Alam, Selangor yesterday.

“We are working on another factory right now and the journey to get the full compliance of the system would normally take about two years,” he said, adding another factory in Klang is also expected to be certified by the end of 2018.

According to Lim, it makes sense for Kossan to leverage on this opportunity to further boost the company’s market presence as the growth potential for the rubber industry comes from the halal market.

“I think a lot of people are looking at it as only for Muslims, but it is actually a more hygienic and safe system that gives consumers the confidence to use the products.

“If you look at the overall world market opportunity today, I would say that a third of the people recognise such a system,” he added.

As such, Lim said this initiative, which is not classified as a heavy type of investment is more on a long-term basis.

Kossan’s MD and CEO Tan Sri Lim Kuang Sia said the, company is not eyeing any mergers and acquisitions (M&A) this year and would be depending on optimisation for the creation of value.

“We would not pursue any M&A opportunities if there is no creation of value and volume unless there are specific types of technologies that we need to support our market penetration initiatives,” he said.

Going forward, the halal glove segment is expected to be utilised for food applications which will open new market opportunities for this particular segment Lim explained.

Glove makers need to compete in product quality and not in price, he said.

“We have a wide range of products that can service different sectors of the market in various parts of the world. Therefore, it is essential to have factories for specific products in order to not lose out in terms of efficiency,” Lim said.

At present, Kossan has about 16 operational factories in Malaysia with an annual production capacity of 25 billion pieces.

Factories 17 and 18 are expected to be fully operational by the end of this year with a combined production capacity of 4.5 billion pieces per annum.

Factory 19, which has an annual production capacity of three billion pieces, is still in the construction stage and is slated for completion by middle of 2019.

The company is expecting a 10% increase year-on-year for the present overall production capacity by the end of 2018.