KNM bids for RM20b of projects

The value of the contracts the engineering group is bidding for can go as high as RM50 million or less than RM1 million per project, says its group MD

KNM Group Bhd, a world-class process equipment fabricator, is bidding for RM20 billion worth of projects overseas, namely in Saudi Arabia, Kuwait and Qatar.

Group managing director Lee Swee Eng said that traditionally, the company's success rate in securing projects is between 20 per cent and 25 per cent.

"We are continuously bidding for projects irrespective of their size and value of the contracts. It can go as high as RM50 million or less than RM1 million per project," he told reporters after KNM's annual general meeting in Seri Kembangan, Selangor, yesterday.

"At any one time, we will bid for an average of 100 projects," he said.



KNM's order book stands at RM4.2 billion, with 95 per cent of the projects overseas and the rest domestic.

"Our order book is quite diversified and evenly spread around the world. We have projects in the Middle East, Southeast Asia, China, North and South America, Canada and Europe," Lee said.

He added that organic expansion will continue to be its main growth driver this year.

"The group continues to strive to improve its global market share for process equipment by expanding its current manufacturing plants and establishing new facilities in global oil and gas hotspots."

For instance, it approved capital expenditure last year to set up manufacturing facilities in Alberta, Canada; Espirito, Brazil; and Al-Jubail, Saudi Arabia.

"Once completed, the manufacturing facilities will significantly improve the group's ability to secure more contracts for projects in Canada, Brazil and the Middle East," Lee said.

The plant in Alberta is expected to be operational by the third quarter.

The company also announced plans this year to acquire two process equipment manufacturers, namely Belgium's Ellimetal and Germany's Borsig, for €20 million (RM101 million) and €350 million (RM1.8 billion) respectively.

"Such acquisitions are intended to elevate the group up the process equipment value chain," Lee said.

He added that Borsig had already started contributing to the group's revenue, while Ellimetal was expected to generate revenue by next month.

"Borsig's acquisition was completed on June 6, and its revenue consolidated in KNM's account this month, while we are close to concluding the purchase of Ellimetal this month."

Lee also said that the company does not actually reap benefits from the high oil price, but more from the demand for such fossil fuel.

"When there is demand for fuel, there will definitely be more jobs for us, the service providers.

"But it will not be good if the price of oil rises too high as that will adversely affect the economy, which will result in less demand for fuel," he said.