This article first appeared in The Edge Financial Daily on August 1, 2018 - August 7, 2018

KUALA LUMPUR: Handal Resources Bhd new group managing director (MD) is wasting no time in coming up with a plan to turn the struggling offshore crane services company around.

Sunildeep Singh Dhaliwal hopes to drive the company to profitable growth in two years.

On Monday, Handal announced a new leadership structure, which saw Sunildeep become group MD, replacing Mallek Rizal Mohsin, who remains on the group’s board as executive vice-chairman.

It also announced the redesignation of its founder and executive chairman Datuk Mohsin Abdul Halim as the group’s non-independent non-executive chairman and the replacement of three board members.

Sunildeep has already initiated a review of the company’s businesses that will run “not more than two months at the end of which we will have a clear business direction for Handal”, he said in an interview with The Edge Financial Daily.

“The first step now is to overhaul the approach and processes of the company, to make them more efficient, increase productivity and reduce costs,” he added.

Asked whether the changes would affect staffing, Sunildeep said it would depend on the outcome of the review. Handal currently employs about 300 people.

The 44-year-old, who is co-founder and executive director of Borneo Seaoffshore Sdn Bhd which recently emerged as a substantial shareholder of Handal with a 7.357% stake, can use his experience from Sabah Air Aviation Sdn Bhd, in which he turned around its helicopter services when he was executive director and chief operating officer in 2006, after about 10 years of losses.

Sunildeep conceded that Handal has operated “maybe less aggressively” in the past and is not in certain geographic areas.

“The focus now is on bringing in new businesses — that is the key for me,” he said.

“It was the same with Sabah Air. [It was loss-making then because it] wasn’t getting enough contracts. It was not a question of mismanagement,” he added.

Sunildeep has set his sights on Handal’s offshore pedestal crane business, which he sees potential for even bigger future growth. He hopes to leverage Borneo Seaoffshore Group’s connection, as well as partnership with the former as Handal expands its coverage in Sabah and Sarawak.

“Handal is technically sound in terms of building cranes and operating the offshore crane business,” Sunildeep said, noting that the group’s co-founder and deputy managing director Joel Emanuel Heaney has more than 20 years of experience in the offshore crane industry.

“The group has made its name in Peninsular Malaysia, but its presence is still largely absent in Sabah, Sarawak and overseas.

“Meanwhile, Borneo Seaoffshore’s beginnings are in Sabah and Sarawak. That is where we see the synergy between the two companies will be,” he added.

Sunildeep sees the maintenance and overhaul of offshore cranes and the offshore crane rental businesses offering good recurring income to the group.

It is keen to participate in an upcoming tender process for crane rental in Sabah and Sarawak worth about RM50 million to RM70 million from Petronas Carigali Sdn Bhd. The contract is believed to be for a term of two to three years.

“We also want to go overseas, to Vietnam, Myanmar and Saudi Arabia for starters. In Saudi Arabia, we have started talking to Saudi Aramco to look into the possibility of overhauling the state-owned oil company’s existing cranes,” he said.

Another area that Sunildeep sees potential for growth is the provision of rental cranes to support well intervention activities.

Meanwhile, some quarters view Monday’s restructuring at Handal as a prelude to Borneo Seaoffshore making a possible reverse takeover of the former in the future.

“At this point in time, I don’t see it happening. We will have to see what happens after the business review.

“In fact, Borneo Seaoffshore may be able to list on its own in two years’ time. I can go to the ACE Market of Bursa Malaysia first. I don’t have to list on the Main Market because I am not looking to cash out,” said Sunildeep, who owns a 45% stake in Borneo Seaoffshore.

Handal reported its second straight year of losses in the financial year ended Dec 31, 2017 (FY17) due to slower capital expenditure by its customers amid the challenging oil and gas sector. Its net loss narrowed to RM2.43 million in FY17 from RM13.57 million in FY16, while revenue fell 23.4% to RM63.64 million from RM83.11 million.

Investors gave a lukewarm response to the board changes, with Handal shares down 3.77% to 51 sen yesterday, with a market capitalisation of RM80.8 million.