Ramunia ridding high on jobs
The Star(StarBiz)
12 February 2007

IT’S business as usual at Ramunia Holdings Bhd despite the cloud of uncertainty hovering over the group. 

The oil rig fabricator started the year with a bang when it received a letter of intent for a RM308mil contract from Carigali-PTTEPI Operating Co Sdn Bhd, with more expected to come in throughout the year. 

The group is also investing RM200mil to develop and upgrade its recently expanded 170-acre fabrication yard in Teluk Ramunia, Johor, to cater to more oil rig and platform fabrication work.  

As part of its yard development project, Ramunia purchased parent company Ramunia Energy & Marine Corp Sdn Bhd’s yard for RM108mil. 

Ramunia jumped into the spotlight in September last year when news leaked out that Sime Darby Bhd was proposing to acquire a 50.8% stake in the group currently held by Ramunia chairman Datuk Azizul Rahman Abdul Samad. 

However, the acquisition has been put on hold by Sime Darby due to the ongoing RM31bil plantation merger exercise involving the company, Golden Hope Plantations Bhd and Kumpulan Guthrie Bhd. 

Takeover talks aside, managing director Arshad Ahmad is very bullish about Ramunia’s prospects. 

“Work is feverishly going on at the yard. Things are changing fast – more workshops are being built and we are buying more sophisticated equipment as well.  

“We expect the development of the yard to be completed by the third quarter of next year,” he told StarBiz. 

On financial performance, he expects the group to at least double its revenue for this financial year (FY) ending Oct 31, up from RM351.6mil in FY2006, as it would be bringing forward secured sales of over RM600mil from the last FY. 

“This does not include any new contracts secured. Our current order book is about RM1.2bil and this is expected to last until mid 2008. We are currently bidding for contracts worth RM8bil, of which about half a billion are local projects to be awarded in March or April. 

“Our objective is to hit a revenue of RM1bil by FY2008. We are moving very fast and may even achieve it earlier,” he said. 

Arshad said that profit should also more than double boosted by the group’s existing and new contracts, efficiency drive, improved productivity and economies of scale. 

According to him, based on market information, there could be RM6bil worth of local fabrication projects alone next year. 

In addition to the oil and gas fabrication business, Ramunia is looking at diversifying its portfolio to include businesses which will provide a recurring income.  

“We want to focus on the manufacturing business. We are talking to a few parties on how we can develop this business further. 

“One new revenue stream we are looking at is pipe rolling – rolling steel plates into pipes for fabrication works. We are now talking to a foreign party to form a joint-venture company for this purpose,” Arshad said. 

“The pipes can be used by Ramunia or any other companies for fabrication works. This will make us more competitive by lowering our cost structure and ensuring faster delivery. We will also be able to support other fabrication yards in the region,” Arshad said. 

Another area to focus on is the manufacture of offshore pedestal cranes undertaken by the group’s 51% owned subsidiary MS Herkules Sdn Bhd.  

Arshad sees vast potential for the business, which started about a year ago. 

“We have delivered two cranes and are now manufacturing one for our projects. There are good prospects for the business, as fabrication work will normally need cranes, which we can manufacture. 

“Although MS Herkules is still a very small revenue contributor, we are working to grow the business,” he said. 

Ramunia, which is currently more geared towards structures and small platforms, is also setting its sights on more deepwater projects. 

“Deepwater is the way to go. The whole idea is to upgrade the yard so that we can manufacture larger and more sophisticated topsides for deepwater platforms and floating, production, storage and offloading units. 

“If we are able to produce complicated structures, it will take up a smaller space but involve higher contract values,” Arshad said. 

Ramunia recorded a net profit of RM17.7mil for the year ended Oct 31, 2006, versus a net loss of RM27.1mil in FY2005 while revenue surged 92% to RM351.7mil from RM183.2mil for the period.