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BHIC has ‘huge potential for growth’

Article - October 5, 2011
One of the major players in Malaysia’s defence sector, Boustead Heavy Industries Corporation (BHIC) is looking to double its order book
Vice Admiral Tan Sri Dato’ Seri Ahmad Ramli Mohd Nor, executive deputy chairman and managing director of BHIC, believes the outlook for the defence industry is very positive. “We feel that our business has a huge potential for growth,” says Mr Ramli. “Having said that, we do not just rely on the Government to use our services – we also tap into the commercial markets.”

Employing more than 2,000 people, BHIC has extensive experience in the maintenance, repair and overhaul of naval and land-based electronics defence systems. It is a leader in naval system maintenance in Southeast Asia, servicing and repairing defence and marine electronic systems for the Royal Malaysian Navy.

Mr Ramli says BHIC expects to at least double its order book thanks mainly to defence projects worth about £250 million secured from the Government last year. More recently, the company has been finalising a contract to build a second group of six second-generation patrol vessels for the Royal Malaysian Navy. BHIC associate Boustead Naval Shipyard delivered a first set of six vessels, each worth around £208 million, last year.

At the same time, BHIC is seeking to expand its commercial shipbuilding business. As one of seven Petronas-licensed fabricators, the company hopes to benefit from the substantial capital expenditure programme planned by the state oil producer, and also from the International Maritime Organisation requirement of double-hulled tankers for oil transport. Vessel repair and maintenance is another area of activity in which the company sees significant profit potential.

BHIC is involved in a number of joint ventures with multinational companies; including the European Aeronautic Defence and Space Company (EADS), for example, and DCNS of France.

“We hope to have more partnerships of this nature,” says Mr Ramli. “In the course of all these collaborations, we hope to grow our market and expand our reach. To achieve our full growth potential, we cannot limit ourselves to the domestic market; we need to widen our scope to the external markets, as well. Through this, we can acquire knowledge and technologies that we need.”

One of the company’s most recent joint venture deals is Pyrotechnical Ordnance Malaysia, a partnership between Boustead Defence Technologies and Prokhas Manager to produce and sell propellants for the defence sector. Some £12 million has been invested in the plant at Bentong, Pahang, where production is expected to start by the end of next year. Initially it will produce propellants for local use, but they will eventually be marketed throughout the region.

BHIC is part of Boustead Holdings, a large conglomerate with interests in plantations, heavy industries, property, finance and investment, trading, and manufacturing and services.

Recently, the group expanded into the local aviation industry through its £20.8 million acquisition of MHS Aviation, which provides helicopter services for oil and gas companies in Malaysia.

Tan Sri Dato’ Lodin Wok Kamaruddin, deputy chairman and group managing director, believes that the acquisition strengthened the group’s existing involvement in the oil and gas sector via BHIC.

He says: “We are optimistic that this latest acquisition will provide a positive contribution to the group’s bottom line on a long-term basis, more so as MHS’s reputation is a strong one. They are the pioneer helicopter service provider for the offshore oil and gas sector in Malaysia.”