KUALA LUMPUR (June 14): A subsidiary of Kawan Food Bhd has temporarily closed operations due to the spread of Covid-19.

In a bourse filing today, the group said that 78 Covid-19 cases were confirmed last Friday at its wholly-owned subsidiary Kawan Food Manufacturing Sdn Bhd.

It added that the Klang District Health Office and the Ministry of International Trade and Industry were immediately notified of the number of Covid-19 cases discovered at the subsidiary. Following the Nasional Security Council's standard operating procedures, Kawan Food Manufacturing stopped its operations to perform deep sanitisation of its factory and hostels.

It has been ordered to suspend operations by the Ministry of Health (MoH) from June 14 to June 21. Subject to further directives from MoH, the factory is expected to resume operations in stages starting from June 22. Its production facility in China remains unaffected and is fully operational.

"The group has adopted all possible and necessary standard operating procedures in its operations, premises as well as hostels which include social distancing measures, temperature checks, proper hygiene, personal protection equipment usage, regular sanitisation, restricting visits by outsiders etc," it said.

Kawan Food added that the temporary cessation of business is expected to result in the delay of deliveries for several orders to its customers, with its management in discussions with them for the rescheduling of the delivery dates. As such it does not expect any adverse impact on the group.

It expects to increase production with extended shifts upon recommencement of manufacturing activities. At the same time, it does not expect any material impact on its financial performance other than the costs incurred for the Covid-19 tests and disinfection costs.

"Barring any prolonged interruptions or closure of operations of the factory, the board does not expect any material adverse impact on the revenue or the earnings of the group for the financial year ending 2021 as Kawan Food Manufacturing has sufficient finished goods and China factory as part of the group's business continuity plan for production output to fulfil customer orders," it concluded.

A total of 131,100 Kawan Food shares changed hands as the counter closed 0.51% or a sen higher at RM1.97, valuing the group at RM708.25 million.