KUALA LUMPUR (Oct 30): Notion VTec Bhd, which ventured into the production of personal protective equipment (PPE) in June, will be investing some RM90 million to set up nine nitrile glove production lines.
It said the first phase comprises an estimated capital expenditure (capex) of RM30 million for three lines with an output of 60 million pieces of gloves per month.
“Initial equipment has been ordered and the company is in the midst of securing the raw material in particular nitrile butadiene rubber latex. Fabrication is expected to commence soon whilst the production of the new business is expected to be in operation in May 2021,” said Notion VTec in a filing with the bourse.
Meanwhile, the group has set a capex of RM60 million for the remaining six production lines, which are expected to commence operations before November 2021, adding another 120 million pieces of gloves to its monthly capacity.
The capex for the setting up of these production lines includes construction of the lines, renovation work to the ground, installation of the gas supply, wastewater treatment, water recycling system, electrical works and any other related ancillary works.
This will be funded via internally-generated funds and a new 10% share placement exercise, likely to strategic investors.
“The new business allows the group to take advantage of the growing demand for gloves, as the expected sales per ringgit of capital expenditure from the glove industry is higher than that of the metals business.
“Besides, the new business will also reduce the group’s reliance on its core business and mitigate potential downside risk of the group arising from the effects of the COVID-19 pandemic to the local and global economies,” said the group.
Meanwhile, it will still continue to focus on its core business of supplying high quality and precision-machined components as well as the production of face masks.
Notion VTec’s share price fell two sen or 1.79% to RM1.10, giving it a market capitalisation of RM566.18 million.