JOHOR BARU: Proton has been mandated to raise its annual production to 500,000 units in five years by its parent DRB-Hicom Bhd.

“Moving forward, it is going to be challenging, and it will be difficult. Competition is going to get harder and tougher, cost will be higher and this also applies to Proton,” said DRB-Hicom managing director Datuk Seri Mohd Khamil Jamil.

Currently, Proton manufactures about 150,000 units of cars annually, and is placed second based on annual car sales.

He said the company was looking to build that volume from the export market, and deemed it fundamental to the survival and growth of Proton.

Proton's main plant in Tanjung Malim.
According to him, there must be a concerted plan for the export of vehicles, as the numbers currently were disappointing, with Proton distributing cars to 55 countries but just with a volume of 20,000.

“To make 500,000 cars is one thing, to sell 500,000 is another. Everyone has been asking me about plans for Proton, but a company with 27 years of history cannot be changed within six months or one year,” he said.

He said the first export market that Proton was focusing on was Australia, due to the positive prospects of selling Proton cars there.

“The positioning of the cars is important. At present, Proton is sold overseas as a cheap car, but to me, we can look into the markets where we can actually sell them based on quality, safety and branding. The second market we are penetrating is Thailand with the Exora, and the third market is Indonesia. With a population of 280 million, the multi-purpose vehicle market is great. Our priorities need to be on the right course from now on,” he said.

“We cannot share in detail our plans but we can give glimpses of what we are going to do, and there will be a couple of models that we are going to introduce into the market over the next five years,” he said.

On the local front, he said Proton would also look into opportunities to seek representation in all the car segments that were available in Malaysia.

“The main market we are missing out on is the A and compact segment, and moving forward, we will be in the entire range of the car segment,” he said.

In a surprising statement, Khamil also revealed that the Lotus five-year five-car plan was actually scrapped even before DRB-Hicom acquired the national carmaker. It was assumed all along that DRB-Hicom was the one putting a stop to the original plan.

On Lotus, he said Proton was currently talking to the consortium of bankers to release the remainder of the £270mil syndicated loan given to the UK-based carmaker.

“We have come up with a financing plan for Proton, and we have presented our plan for Lotus. This is the interim until such time that we can turn around Lotus. I'm not saying profitable but to be sustainable,” he said.

Todate, he said Proton had invested about £100mil in Lotus, and the showroom launched last week was just the beginning of more activities to increase the presence of the Lotus brand in Malaysia.

He said there would be a few more models to excite the market and there would not be any capacity expansion for now as the Norfolk plant was capable of producing 8,000 units while the company was just churning out 2,000 units currently.

The new Lotus flagship showroom that was opened in Kuala Lumpur last week. The blue car is 
the RM332,000 Lotus Elise, one of two new models launched at the same time as the showroom 
opening. The other new model is the Exige S, priced from

JOHOR BARU: DRB-Hicom Bhd wants Proton to become a leader in the development and production of cars for South-East Asia.

Group managing director Datuk Seri Mohd Khamil Jamil said Proton needs to take that chance because to date there is no car maker in the region that develops specific vehicles for the market.

He said as the only original equipment manufacturer in the region, Proton has the ability and capacity to do so and capitalise on the region's strong market growth.

"So far the vehicles sold in Asean are from different countries but no car manufacturer in the region produces cars specifically for this market. Therefore, it is my dream to see Proton becoming the leader in producing cars specifically for this market," he told reporters in a briefing here recently.

To achieve this ambition, he said Proton needs to collaborate with industry players in Asean countries such as Thailand and Indonesia to develop the Asean vehicle.

He said by producing the Asean-specific vehicle, it is not possible to sell it to other markets.

Mohd Khamil, who is also executive chairman of Proton, said the national carmaker is currently focusing on improving the quality of its vehicles to be on par with global standards.

He said Proton must produce products with global specifications to ensure its strong future growth and to be competitive in an increasingly challenging environment.

Proton has set a target to produce 500,000 units of vehicles in the next five years, of which more than 20 per cent are for the export markets.

The five-fold increase in production during this period would strengthen its position in the local and global markets, Mohd Khamil said.

Additionally, he said Proton should focus on the export markets for its future growth as the small local automotive market has almost reached its saturation point.

Mohd Khamil said Proton has bright prospects in China, which has a vehicle market of almost 19 million a year, compared with Malaysia's total production of 600,000 units annually.
 -Bernama

PETALING JAYA: Reports about DRB-Hicom Bhd to be potentially privatised which caught the industry off guard have been brushed off as only rumours by group managing director Datuk Seri Mohd Khamil Jamil.

The market was set abuzz by the possibility of tycoon Tan Sri Syed Mokhtar Al-Bukhary taking the conglomerate private on a stand-alone bid of between RM3.50 and RM4 per share.

At the launch of the new Suzuki Swift, Khamil told the media: “These are only rumours. I would like to clarify that we at DRB-Hicom are also unaware and caught by surprise. There has not been any proposal on the privatisation as alleged in the papers.

Khamil
“I believe that DRB-Hicom is in no position to be privatised. We are still in the state of rationalising Proton and some of our businesses as well.”

Responding to a question on the shares being undervalued, Khamil said that DRB-Hicom shares were good based on the company's fundamentals like its balance sheet and net asset value.

DRB-Hicom shares rose seven sen, or 2.66%, to RM2.70 yesterday following the news. The reports also noted that DRB-Hicom was looking to list the merged Proton Edar and EON Bhd, the distributors of Proton cars, as part of its plans to create an “Asian car” that would make Malaysia the Volkswagen vehicle production hub.

The group filed an announcement with Bursa Malaysia reiterating that it had not been approached or notified by Syed Mokhtar of any privatisation plan of DRB-Hicom.

While it had announced the rationalisation exercise of the Proton business between Proton Edar and EON Bhd, it said the listing of the Proton distribution business to unlock the values of the merged entity was only one of the possible scenario.

“However, it was not part of the plan to de-list DRB-Hicom.”

DRB-Hicom added that the proposal was still at very preliminary stage and that the company would make the relevant announcements in time.

Analysts who responded to the newsflow cited the privatisation, if it came true, was positive for DRB-Hicom. CIMB Research analyst Lucius Chong said in his report that the privatisation would make sense because DRB-Hicom was trading below its net tangible assets (NTA).

“Any such move would facilitate its current restructuring programme to sell non-core assets and re-list individual automotive businesses, first the distribution and manufacturing arms (with the only Volkswagen joint venture in Asean) separately and then Proton (potentially with a foreign partner),” he said.

Syed Mokhtar
Although the news remained a rumour, he believed that there could be “something brewing.” At RM4 per share, DRB-Hicom would be valued at RM7.73bil.

Wong said that if the privatisation were to materialise at the indicative range, investors should accept the offer since it was close to CIMB Research's realisable net asset value (RNAV) of RM4.06 per share.

The group has taken several major measures to tidy up its national car manufacturing business, unlocking the value in its assets along the way. Among them are improving its production facilities in Tanjung Malim to make way for other developments like residential or a potential RM500mil sale of its 250-acre real estate in Shah Alam.

The group plans to invest RM1bil in the next five years and make Tanjung Malim the main Proton car manufacturing centre, although the Shah Alam plant will still be in operations. Its Tanjung Malim plant is running at around 40% capacity producing 150,000 cars per annum. It can be expanded to produce up to one million cars per year.

DRB-Hicom's property development arm is also collaborating with Pos Malaysia to work on some of the latter's land. Pos Malaysia has land in Brickfields, Kelana Jaya and Batu Pahat.

To spearhead its plans, DRB-Hicom has also hired market-familiar corporate figures such as Datuk Seri Che Khalib Mohamad Noh as its chief operating officer (COO) of finance, strategy and planning in July. Che Khalib was the CEO of local energy giant Tenaga Nasional Bhd.

The other corporate captain at DRB-Hicom is former Malaysian Resources Corp Bhd CEO Datuk Mohamed Razeek Md Hussain Maricar, who assumed position as COO in September.
PETALING JAYA: DRB-Hicom Bhd might consider moving some of Proton Holdings Bhd’s manufacturing operations to the latter’s Tanjung Malim plant in a bid to optimise its capacity utilisation.

“Future Proton models will be considered to be manufactured at the Tanjung Malim plant,” said Proton Holdings technical operations (Shah Alam and Tanjung Malim) sector head Abdul Rashid Musa in an e-mail reply to StarBiz.

The Shah Alam plant currently produces the Saga, Satria Neo R3, Exora and Inspira, while the Gen 2 (for export), Persona and Preve are manufactured at the Tanjung Malim plant.”

An aerial view of Proton’s plant in Tanjung Malim. The siteplant is five 
times bigger compared with the carmaker’s facility in Shah Alam.

He said the Proton cars that were currently produced in Shah Alam would continue to be produced there.

Abdul Rashid said the move would optimise the utilisation of the capacity at the state-of-the-art Tanjung Malim plant in order to achieve economies of scale, which is currently at less than half of its capacity.

“In addition, this will further enhance Proton’s operational effectiveness and efficiency.

“Compared to the Shah Alam plant, which sits on 250 acres of land and with no room for further expansion, the Tanjung Malim plant is five times bigger with 1,280 acres of land,” he said.

On Monday, Perak Chief Minister Datuk Seri Dr Zambry Abdul Kadir Zambry said Proton would move its manufacturing operations in stages from Shah Alam to the Tanjung Malim plant.

This sparked speculation that DRB-Hicom would move the entire operations including Proton’s headquarters to Tanjung Malim.
TANJUNG MALIM: Five years from now, Proton City is expected to become an international standard automotive hub.

Deputy Prime Minister Tan Sri Muhyiddin Yassin said with the rapid development and increasing population here, the aim to turn the place into an auto city was on track.

Muhyiddin stressed on the need to ensure proper facilities and infrastructure at Proton City and the surrounding areas of Tanjung Malim and Behrang to facilitate the auto city ambition.

Muhyiddin taking a closer look at the assembling of a Proton Pesona 
during his visit to Proton’s Tanjung Malim plant.

He added that a RM40mil secondary school would be constructed in Proton City as well.

“Construction is expected to start next year, and it will be completed in two years. The school can take 1,200 students,” he told a press conference after his first visit to Proton's plant at Proton City here yesterday.

He added that the management of DRB-Hicom and Proton had requested the Education Ministry to construct a secondary school at Proton City to enable the children of the staff to study there.

“I was told that they now travel about 10km to go to school,” said Muhyiddin.

Present at the function were Mentri Besar Datuk Seri Dr Zambry Abdul Kadir and Proton executive chairman Datuk Seri Mohd Khamil Jamil.

Muhyiddin also said a RM2.5mil religious school would be set up in Proton City.

“With the schools built here, and other facilities and infrastructure planned, I don't see why this southern part of Perak cannot expand,” he added.

Earlier in his speech, he also announced a new minimum wage scheme for Proton staff earning less than RM900 a month which would be implemented by DRB-Hicom and Proton beginning this month.
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