By SHAFIQQUL ALIFF /  Pic by TMR GRAPHIC

PDZ Holdings has identified a 140,000 square feet single-storey detached factory building located in Kulai, Johor which is erected on a 6.53 acres land, to house its proposed expansion into the gloves business. 

PDZ Executive Director cum CEO, Datuk Christopher Tan Chor How stated the facility when commissioned is expected to yield a total production capacity of around 1.94 billion glove pieces per annum.

In a release yesterday, PDZ added the proposed facility will start full operation within 36 months and post an expected return on equity of at least 10%.

Tan noted the company plans to install and commission up to eight double former glove-dipping lines in phases to focus on manufacturing of medical grade nitrile gloves.

“This is premised on the continuous usage of medical gloves among healthcare professionals worldwide during mass vaccination; and in the longer term, supported by heightened awareness of the usage of rubber gloves as general protection against viruses and other diseases.” he stated.

Tan added the diversification initiative into the glove business will involve a total capital outlay of RM104.8 million, comprising RM25 million for the acquisition of factory building, RM56.7 million for capital expenditure and some RM22.1 million for working capital which including purchasing of raw materials, staff salaries and recruitment drive to undertake various roles for the gloves business. About RM1 million will be spent on professional fees.

The expansion will be partly funded with RM19.9 million reallocation from funds raised in the previous rights issue, coupled with the RM56.0 million raised from the issuance of 400.25 million new PDZ shares and 133.4 million free warrants (PDZ-WC) pursuant to the recent Rights Issue.

“The balance of the capital outlay would be funded by bank borrowings, internally generated funds and future funds raising exercise as when required,” Tan added.

Meanwhile, PDZ has inked a memorandum of understanding (MoU) with Protev Asia Ltd (PROTEV) to penetrate the hospital and military ‘niche market’ for rubber gloves in the European Union (EU) as the global demand for rubber gloves is expected to remain high.

PDZ glove venture comes at a time when established glove makers like Top Glove Corp Bhd and Hartalega Holdings Bhd have indicated the average selling prices and demand for gloves is weakening due to increase in supply sources and lower Covid-19 infection numbers due to vaccinations.   

PDZ shares ended four sen lower at 8.5 sen in yesterday’s trade.