Kossan ventures into cleanroom gloves

Written by Melody Song
Friday, 25 March 2011 14:58

KUALA LUMPUR: Kossan Rubber Industries Bhd has proposed an acquisition of a 51% stake in Cleanera HK Ltd from Inout Enterprise and Soode Optik Pte Ltd for US$3.06 million (RM9.27 million) in order to venture into clean-room gloves.

In a reply to a query by Bursa Malaysia yesterday, Kossan said Inout held 1.46 million Cleanera shares while Soode Optik had 158,300 shares respectively.

According to Kossan, cleanroom gloves yielded higher value-added gloves that would complement its core business of manufacturing and selling examination and medical gloves.

“The current facilities of Cleanera provide immediate services to the above cleanroom gloves,” it said.

On Wednesday, Kossan said it expected the acquisition to contribute positively towards its future earnings.

It added that the purchase consideration had not been paid yet, and based on the prevailing rate, the total sum would be RM9.29 million. “The latest time frame for full settlement is June 30, 2011,” it said, adding that the purchase would be financed by internally generated funds.

Cleanera is a private limited company based in Hong Kong principally involved in manufacturing clean-room products such as masks, wipes and gloves, while Inout Enterprise and Soode Optik are private companies based in Singapore.

“The unaudited management accounts of Cleanera for the year ended Dec 31, 2010 has a net worth of US$3 million,” said Kossan, adding that Cleanera was entitled to five trademarks in China, Japan, Malaysia and Singapore.

A glove analyst said it represented a good move for Kossan as a foray into clean-room gloves was a move up the value chain.

“Cleanroom gloves are high-end than the regular natural rubber gloves,” said the analyst, adding that at RM9.3 million, Kossan would be able to afford the acquisition.

Based on its balance sheet as at Dec 31, 2010, Kossan has a gearing of about 0.15 times as its borrowings stand at RM159.16 million while cash and bank balances are RM89.89 million.

For FY10 ended Dec 31, Kossan posted earnings of RM118.59 million on revenue of RM1.05 billion, which represented an improved year-on-year performance from net profit of RM67.34 million on revenue of RM842.14 million previously.

At present, Top Glove Corp Bhd also produces cleanroom gloves, which are used in laboratories and server rooms.

According to Top Glove’s website, cleanroom gloves provide contamination protection for the semiconductor, electronic, aerospace and biotech industries.