Future prospects of Salwan Group

In the Malaysian market, the Salwan Group has established good relationship with its principal customers, namely Proton, Perodua and NAM. The Group is committed to maintain their commendable performance and aspires to be one of the leading manufacturers in Malaysia and globally. Hence, to maintain its competitive edge and to sustain growth in the future, ace has formulated the following strategies which will be implemented over the next 5 years.

• Concentrate on manufacturing more auto parts for PROTON, PERODUA and NAM;
• Diversification of activities into non-automotive sectors;
• Reduction of operational expenditure to optimum level; and
• Increase productivity and efficiency through implementation of Toyota Production System.

The Group believes that the implementation of AFTA will provide more opportunities in the future rather than threats. PROTON and PERODUA, being the major automobile manufacturers in Malaysia will expand its operation and increase the sales volume, particularly in the overseas market, namely to the Asean region. Previously, there were certain restrictions imposed on PROTON and PERODUA to export to certain countries. However, due to the on-going negotiation and discussion between PROTON and PERODUA and other major car manufacturers, it is expected that the other major car manufacturers will assist PROTON and PERODUA to penetrate into overseas market, namely, the Asean region.

The above will provide Salwan Group an opportunity to secure additional contracts from PROTON and PERODUA as there is presently an established business relationship between the Salwan Group and PROTON and PERODUA as Ace Polymers and Ace Polymers Industries are tier-one manufacturers for certain auto-parts for PROTON and PERODUA respectively.

The Group is aiming to manufacture more parts and components for both PROTON and PERODUA by fulfilling and meeting the needs of these two major customers. Apart from that, the Group also believes that NAM will be another regional automotive player in partnership with Kia Motors of Korea. The Salwan Group has been playing a major role in assisting NAM for its National MPV project. As such, the Group believes that there will be more opportunities arising from its partnership with NAM.

Although the Salwan Group is optimistic of the motor industry in Malaysia, the Salwan Group has undertaken the necessary steps to diversify into other industry to enhance its earnings.The diversification plans include the manufacturing of plastic containers for the agriculture sector and the supply of safety gears for oil & gas sector. Apart from that, the Group is also planning to strengthen its capability in the technology area. While R.a.T has been the main technology arm, the Group feel that it needs to expand into other technology area such as Information and Communication Technology (ICT).

Cost reduction is one of the critical factors that ensure the long term profitability and survival of the company. The Group believes that cost reductions can be effectively achieved through not only controlling the operational expenditures, but also by increasing the productivity and efficiency of the operation. The utilization of robots and other automation system in the manufacturing process will be increased in the future. Information Technology will also be extensively utilised to increase the operational efficiency and to allow for quick and accurate decision making. As a wholly-owned bumiputra tier-one producer, the Ace Group is also committed to assist the growth and development of smaller sub-vendors in the automotive sector.

The Salwan Group's current business concentration in the automotive sector has enabled the wholly-owned bumiputra Group to participate and capitalise on the nation's rapid industrialization wave. Nonetheless, the ability of the Group to diversify and expand will broaden its earning base in light of the present economic circumstances and the impending liberalisation of the economy. The confidence and loyalty shown by its long term customers, potential customers and new partnerships bears testimony to the Group's achievements and capabilities. The Salwan Group aspires to be recognised as one of the more successful bumiputra companies in the country, in line with the government's aspirations and policy on the creation and expansion of the true middle class bumiputra entrepreneurs.

Competitive Advantage

Ace Polymers has been appointed as the tier-one vendor for PROTON, PERODUA and NAM. In this respect, competition from other local manufacturers is minimized, since the car manufacturers usually appoint a single vendor for each module or component for their various models. In Ace’s case, it is the main producer and supplier of several plastic-based modules for PROTON models (i.e. Arena, Wira (facelift), Iswara (facelift), Gen-2), PERODUA models (kancil and kelisa) and the Naza Ria.

“End-to-End” Capability

In its efforts to differentiate itself from its competitors, Ace established RAT in 1996 to provide the Group “end-to-end” (i.e. product design, development and manufacturing) capability. RAT is among the first local companies in Malaysia to adopt CATIA, the advanced Computer Aided Design (CAD) system, for its product design and development activities. Currently, CATIA has become the standard CAD system used by PROTON, PERODUA and most of the major vendors. Among the jobs that the Group had performed were: