Luster bags RM1b contract to build glove production lines in US


LUSTER Industries Bhd announced that Glovconcept Sdn Bhd (GSB) has entered into an agreement with American Nitrile LLC (AN) to provide engineering, procurement, construction, and commissioning (EPCC) services and glove technology solutions for glove production lines in the US.

In a filing to Bursa Malaysia yesterday, Luster said GSB, a 60%owned subsidiary of Glovmaster Sdn Bhd, which in turn is a 56%owned subsidiary of Luster, had secured a EPCC contract for up to 12 glove production lines, and a further forecast of 72 glove production lines, whose value was estimated at more than RM1 billion.

Luster is among the first Malaysian companies to offer EPCC works for a glove manufacturing plant, to be located in Grove City, Ohio, US.

“GSB will undertake the designing, building and delivery of a glove manufacturing factory on a turnkey basis, with glove output of not less than 38,000 to 40,000 per line, per hour.

“AN is responsible for the sourcing and procurement of the plant, machinery and infrastructure such as electricity and water, raw materials, workers and utility,” it said in a statement.

Luster said the estimated cost to be borne by AN in building the glove production plant is around US$3.6 million or RM14.9 million per line.

“A minimum of 12 production lines shall be placed into two separate orders which works out to RM178.8 million in value. AN aspires to purchase from GSB up to 72 additional production lines within the first 24 months from the date of the agreement,” it said.

Upon commencement of the production lines, GSB will be entitled to a percentage of the sale proceeds generated by all the production lines, with a minimum entitlement of US$2 million per annum, and capped at US$50 million for every 12 lines.

“Once all the 84 production lines are running at full capacity, Luster could see earnings of up to US$350 million coming from the sales proceeds of gloves by AN,” it added.

The remaining equity interest in Glovmaster is held by Fortune Tac Sdn Bhd, a company that specialises in the glove business, from setting up to operating glove production lines.