SHIPPING AS THE CORE BUSINESS OF SINDORA THROUGH EA TECHNIQUE (M) SDN BHD
The Group’s involvement in the shipping industry is spearheaded by EA Technique (M) Sdn Bhd (EA Technique) which was established in 1993 and acquired in 2006. It has expanded by leaps and bounds into a corporate entity with current paid-up capital of RM44 million. The completion of 51% equity acquisition of Orkim Sdn Bhd (Orkim) by Sindora and EA Technique on 31 January 2011 has enabled the Group to emerge as the second biggest shipping company in Malaysia under the clean petroleum product tanker category after Malaysian International Shipping Corporation (MISC) owned by Petronas.
Year 2010 witnessed reputable shipping companies consolidating their activities to strengthen their business performance by scaling down operations, disposing old vessels and cancelling orders for newly built ships. Even though the world’s crude oil price had remained firm throughout the year, the international shipping market continued to suffer from an oversupply of tanker capacity which had led to depressed charter rates.
In a calculated move to strengthen its position and ensure favourable long term prospect, the company continued its expansion strategy through organic growth, and merger and acquisition (M&A). Acquisition of 51% majority stake in Orkim on staggered basis is carried out through 20% direct interest by Sindora and the remaining 31% by EA Technique. The final 1% equity acquisition was completed in January 2011, thus, Orkim became a subsidiary of Sindora Berhad beginning February 2011. The company was also awarded four (4) long term contracts of 10 years with an option of three annual renewals to provide harbour tug boats and utility boats for Sg Udang Port Sdn Bhd by end 2011, with total investment of RM63.5 million. These new contracts are expected to generate revenues of RM13.9 million per year. This project will be financed via Internally Generated Funds (IGF) and external borrowings. Upon completion in late 2011, EA Technique will own 13 support vessels with projected annual revenue of more than RM40 million.
In tandem with the expanded capacity, the Group’s revenue is projected to increase substantially from RM63.3 million recorded in 2007 to more than RM200 million in 2011. This will allow the Group’s shipping business to expand its operations and emerge as one of the major players in Malaysia.
