Proton to rationalise operations

JAKARTA: National carmaker Proton Holdings Bhd (5304) plans to undertake a study on operating with just one plant in Malaysia as it seeks to improve efficiency.

The company now has a plant in Shah Alam, Selangor, and a facility in Tanjung Malim, Perak.

"We will rationalise our operations. We will undertake a study to see if there is a need to operate two plants in Malaysia, or just one," chairman Datuk Nadzmi Mohd Salleh told Business Times in an interview.

He was in Jakarta, Indonesia, after launching Proton's multi-purpose vehicle, the Exora, at the country's 17th International Motor Show.
Proton wants to boost its growth by selling more cars abroad. It expects Indonesia to be its biggest market for the Exora.

It also has presence in 24 markets, including the UK, Iran, Australia, New Zealand, Indonesia, Singapore, Thailand, Egypt and China.

However, it sells less than 40,000 vehicles a year overseas, less than half of what it sells locally.

In Malaysia, Proton sells about 150,000 cars a year.

The carmaker aims to expand in India and countries in the Middle East, especially Iran and Saudi Arabia, and the African continents.

Proton also wants its suppliers to improve their quality of products.

"Because of their inefficiency, our sales and earnings are affected. Some 70 to 80 per cent of cost to make a car is from its components. We have to address this issue. We cannot continue to buy from incompetent vendors.

"Once we have addressed this, we will be on the right track to improve our performance (in the) long term. Proton will not make money by selling cars solely, but accessories as well," Nadzmi said.

Proton plans to turn around its financial performance for the year to March 31 2010 as it will not repeat impairment charges.

"We will improve Proton's performance year-on-year based on what is within our control," Nadzmi said.

For fiscal 2009, Proton, controlled by government investment arm Khazanah Nasional Bhd, suffered a net loss of RM320.34 million compared to a net profit of RM184.55 million a year earlier.

This was mainly because it had to write down the value of its property, plant and equipment and inventory for certain models hit by a fall in volume.

Group revenue, however, increased to RM6.49 billion for the year from RM5.62 billion previously.

To meet its growth objective, Nadzmi said, Proton has drafted a long-term strategic business plan to move forward in a challenging environment.