Further to Ire-Tex Corporation Berhad’s (the “Company” or “ITCB”) announcement on 5 May 2015, Bursa Malaysia Securities Berhad’s (“Bursa Securities”) query on 7 May 2015 and ITCB’s reply on 11 May 2015 and Bursa Securities’ query on 13 May 2015, the Company wishes to reply as follows:
1) The proposal by AMS to the Board of Directors rationalised that with the upgrading of the plant and equipment, the factory would be able to benefit from:
a) Better quality control with lower rejection rate
b) Up to 300% improvement in overall equipment effectiveness, and
c) Lower operating cost with less human intervention thus reducing headcount on the plant floor.
2) Based on a search carried out at the Companies Commission of Malaysia, AMS was incorporated in Malaysia on 8 May 2013 under the Companies Act, 1965. The authorized share capital of AMS is currently RM400,000.00 divided into 400,000 ordinary shares of RM1.00 each of which RM2.00 consisting of 2 ordinary shares of RM1.00 each have been issued and fully paid-up.
The Directors and shareholders of AMS are as follows: -
Directors
1. Lee Seik Fun
2. Chan Hong Wai
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Shareholders
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No. of shares held in AMS
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Percentage (%)
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Chua Chian Lee
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1
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50
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Lee Seik Fun
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1
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50
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Total
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2
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100
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Based on the profile provided by AMS to the Company, the principal activity of AMS is providing turnkey solution for industrial automation, providing upgrade for legacy/brownfield project and providing maintenance solution and repair services.
Based on the profile provided by AMS to the Company, the key stakeholders of AMS have between 15-20 years of experience in industrial automation specializing in programmable logic control, drive and Scada solutions and they have experience in providing services and turnkey solution to both local and multi-national companies.
3) AMS has confirmed via its letter dated 21 April 2015 to ITCB that it will proceed with the execution of the project with immediate effect.
AMS has confirmed that it should complete the upgrading works within 4 months subject to timely approval of drawings or documents from ITCB.
4) The machinery was to be used by ITCB Group and was to be built by Zoomic Automation (M) Sdn Bhd (“ZASB”). Although ZASB has the technical expertise to produce the machinery and equipment, ZASB’s management was busy with their expansion into the LED market and did not have the resources to design and build the machinery and equipment at that time. Hence, ZASB decided to outsource the project to FR.
Former Directors had represented to the Board that the machinery outsourced to FR would automate certain labour intensive work in pallet making and corrugator and carton manufacturing operations thereby enabling ITCB Group to save on labour cost, improve efficiency by saving time as well as cut down on space utilization at the factory.
However, due to the failure of ZASB and its supplier FR to deliver the project, a former director of the Company had decided to terminate the agreement with FR and appoint AMS to upgrade the Company’s plant and machinery instead.
As noted in paragraph 1, the proposal by AMS to the Board of Directors rationalised that the upgrading of the plant and equipment would enable the factory to benefit from better quality control, improvement in overall equipment effectiveness and lower operating cost with less human intervention thus reducing headcount on the plant floor although it would be in a different area of ITCB’s operation i.e. in corrugator manufacturing operations.
5) The machinery to be purchased from FR were unrelated to the plant and equipment to be upgraded by AMS.
The machinery to be purchased from FR were as follows:
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Description of machinery
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Purpose
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a)
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Fully automated wooden pallet nailing system
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Automate a manual-based pallet making system in order to reduce labor cost
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Wooden pallet vision inspection scanning system
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Computerised vision system to improve early detection of pallet rejects and reduce finished good rejects.
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Automated stacker system
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Automate manual-based pallet stacker system to reduce labor cost and improve efficiency
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b)
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Automated conveyor system
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Computerised conveyor for pallet to reduce labor cost and improve efficiency
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c)
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Laminating and folding machine
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Automated lamination and folding of cartons to reduce labor cost and improve efficiency
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d)
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Flat-bed corrugated carton sheet cutting system
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Automated sheet cutting of corrugator paper to cater for more orders received from customers and to increase capacity
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The plant and equipment to be upgraded by AMS, all of which relates to corrugator manufacturing, are as follows:
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Description of machinery
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Purpose
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a)
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Gluing machine replacement
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Upgrading to increase efficiency/throughput of gluing process
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b)
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Printing machine line
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Computerised printing to increase efficiency/throughput
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c)
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Line forming machine
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Automating forming machine to increase efficiency/throughput
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d)
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Die cutting machine reconditioning
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Computerised cutting process to reduce labor costs
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6) Due to the failure of ZASB and its supplier FR to deliver the new machinery and equipment, a former director of the Company had decided to terminate FR and appoint AMS to upgrade the Company’s plant and machinery instead.
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