KUALA LUMPUR (May 26): A month after one of its units were hit with a RM2.57 million suit from Intag Industrial Supplies Sdn Bhd, ATA IMS Bhd announced that another subsidiary has been hit with a suit from the industrial tapes and adhesives supplier, this time involving a RM27.55 million claim.

In a filing on Thursday (May 25), the Johor-based electronic manufacturing services (EMS) company said Intag filed the suit against ATA IMS’ wholly owned subsidiary Jabco Filter System Sdn Bhd, claiming the aforesaid amount for payment of goods.

ATA IMS said Intag supplies goods to Jabco based on a major customer’s order forecasts. ATA IMS noted that on Dec 23, 2022, the major customer terminated its business contract with effect from March 31 this year.

“Intag claims that when this announcement was made, they had a stockholding of RM39.35 million, which Jabco had yet to instruct the supplier to deliver the goods,” ATA IMS noted. However, the company said the supplier sent ATA IMS’ subsidiary notices on Jan 9, of delivery and payment for the stockholding. 

After Jabco paid for the delivered goods, and channelled stock to its customer’s other contract manufacturer, the balance of stockholding was reduced to RM27.55 million ― which Intag is demanding payment of.

“Jabco continues to engage with the customer and Intag, and there are plans and arrangements to further deplete a significant portion of stockholding balance in the coming two- to three months,” ATA IMS added.

ATA IMS said the suit is currently not expected to have significant impact on the operations of the group, but noted that if the claim is allowed, the financial impact will be the RM27.55 million in damages, as well as any costs or interest granted.

“The group is seeking legal advice before deciding its next course of action,” the company said, adding that it will make necessary announcements to the bourse as and when there are further developments on the matter.

Last month, another ATA IMS wholly owned subsidiary, ATA Industrial (M) Sdn Bhd (AIM), was sued by Intag for RM2.57 million over payment of goods. 

Similarly, Intag supplies AIM based on a customer’s order forecast ― which terminated its business contract with AIM with effect from June 1, 2022. As at end-December 2022, Intag said it had a stockholding of RM2.57 million, which it is demanding payment for.

At 4.11pm on Friday (May 26), shares in ATA IMS gained half a sen or 1.96% to 26 sen, giving the company a market capitalisation of RM307.34 million.

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ATA IMS unit sued by industrial products supplier over RM2.57 mil claim