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How MSM Sugar of Malaysia became the Flavour of the Day

How MSM Sugar of Malaysia became the Flavour of the Day

MSM Malaysia Holdings Berhad (MSM), incorporated on 10 March 2011, is Malaysia’s leading sugar producer. Principally, MSM operates the sugar business of Felda Global Ventures Holdings Berhad (FGV). It produces, markets and sells refined sugar products.

The company conducts its business through two operating subsidiaries, MSM Prai Berhad and MSM Perlis Sdn. Bhd. which were established in 1959 and 1971, respectively. Additionally, MSM also operates its own logistics company – MSM Logistics Sdn. Bhd.

MSM has an impressive combined annual production capacity of 1.1 million tonnes of refined sugar. Being an undisputed market leader in refined sugar, MSM accounts for approximately 64% of the domestic market share. On top of that, 20% are produced to cater for the export market.

Being one of only four sugar companies currently operating in Malaysia, it maintains a strong workforce of over 1,100 people. Skilled and experienced at their respective areas, is the reason why MSM marks its solid presence in 20 countries worldwide – a number which is set to grow considerably in the coming years.

To increase its competetiveness, MSM continues to retain raw sugar supplies from countries such as Brazil, Australia and Thailand too name a few. After undegoing a strict refining process, these sugar products are marketed in a variety of grain sizes and packaging options. Its vast customer include major companies ranging from food and beverages, confectionaries, hotels and restaurants and the loyal household consumers.

Today, MSM stands proud of its 50 year-old home-grown flagship product – “Gula Prai”. Being a common household name, it certainly lives up to its slogan as; “The No.1 Best Selling Brand in Malaysia”.

Output Quality

MSM’s clients include major corporations, industrial users, small businesses and retail. The products are sold under the MSM brand which guarantees premium quality sugar. Generally, retail outlet distribution is carried out via traditional 1kg and 2kg bags, although business-to-business (B2B) distribution is usually delivered in larger trucks straight to the customers doorstep. Even then, quality and timeliness is a priority.
Indeed, what becomes apparent from reading the company’s 2014 Annual Report is a strong emphasis on the output quality. As a member of the MSM management team recently told us, ‘you name the certification, and the chances are, we’ve got it!’ Among the certifications in place are ISO:9001, Food Safety 22000, HACCP, HALAL, and Kosher compliance, just too name a few.

MSM believes that their quality management system is easily the best in Malaysia and quite probably the best in all of Asia. In order to maintain and build on this, it demands similarly high standards of partners and suppliers. These include the Malaysia Trade and Trasnsport Company and Persha Shipping Agencies.

Socially Responsible

MSM’s work in the CSR arena merits special attention – in fact, the company is something of a stalwart in this area. Over 40 years ago, in 1973, MSM established an endowment fund known as the MSM Research Fund, to support scientific research at one of the local universities. In 2014, the endowment fund, which had reached an outstanding RM5 million, was re-allocated from scientific research to the direct financial support of students studying science at the university.

Many of its thoughtful and significant contribution, strategically focuses on priority areas and aims to carry a long-term measurable impact, for the community and natural environment where it serves. A fine example is the aftermath of the devastating East Coast flood. Without delays, MSM rallied in setting up a donation drive to assist the victims and Felda settler areas which were affected by the floods. Cash were collected and used towards rebuilding basic infrastructure, utilities and schools.

Finally, in a country where the female workforce particpation rate has been challenging in the past, MSM has raised the bar for Malaysian companies. It has developed an equal opportunities charter which sets out to treat all employees equally, regardless of ethnicity, religion, gender or disability. In 2014, it has successfully passed the Intertek Audit on meeting the International Labor Organization (ILO)’s Foreign Workers Rights and Employment Laws Requirements.

Growth and Diversification

Four years later since its listing on the Kuala Lumpur stock exchange, MSM is looking for attractive investment opportunities, particularly abroad. Financially strong with negative-gearing and sound cash balance coupled with a record breaking financial performance in 2014, the company has favorable financing conditions to fund its ambition.

Its management is identifying opportunities within the Asean region, which could mark an exciting period in the company’s history. In achieving this target, the next plan is to setup a trading outfit in Dubai and begin construction for the Johor refinery. Under its long-term growth strategy, it hopes to achieve a high rate of operational efficiency, drive down production costs and provide a strong competitive edge to penetrate sugar-hungry regional markets.

Diversification is a further priority now. Potential avenues for this include investment that incorporates synergy, particularly in countries such as Myanmar, Indonesia and Brazil where part of the strategy is to source for upstream business with excellent yields and returns. This will allow MSM to provide better value to our shareholders.

The Future

MSM has always focused on high-end segment, big multinationals, pharmaceuticals and premium retail market such as New Zealand and Australia. With USD strengthening, export return is bigger despite weakening sugar price but MSM has taken proactive measures on procuring raw sugar at the right time and hedging strategically by 25% higher on mark to market basis.

On the other hand, the industrial segment have increased their demand by 2% and this is considered a healthy growth domestically. Whereas, retail sector demand faces volatility as smuggling activities remains the biggest threat and the abuse of “transhipment license” still actively operates at major ports. These activities needs to end with imperative enforcement by the relevant and cooperating authorities.

However so, MSM is confident of winning more market share once our new third refinery in Tanjung Langsat, Johor is ready. The investment will see an integrated logistics complex coupled with a vessel terminal which serves as a continuing catalyst for profit growth. For Malaysians and Malaysia’s MSM, the future indeed looks sweet.

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