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5. Sapura Industrial Berhad Business Report FY ended Jan. 2016

Sapura Industrial Berhad Business Report FY ended Jan. 2016

Recent Years

Factors
1) Net Sales
-The Company’s sales in the fiscal year ended January 31, 2016 decreased 3.6% from the previous fiscal year to MYR 224.3 million. The decrease in sales was caused by slightly lower overall vehicle sales within the country.

Recent Developments in Malaysia

-In 2014, the Company was appointed by Go Automobile Manufacturing Sdn Bhd., as one of the assemblers for energy efficient vehicles at the Garun Industrial Estate in Kedah, Malaysia. Go Automobile received Malaysia's first energy efficient vehicle manufacturing license and is working with Great Wall Motor Co. Ltd. on the vehicle manufacturing project. The partners will invest approximately MYR 2 billion into the project. The Company is among six local suppliers which will produce components and assemble these components into sub-systems for the vehicles. (From a press release on April 14, 2014)

-In the fiscal year ended January 31, 2012, the Company's capabilities were further enhanced with the addition of cold forming process capabilities, enabling the Company to produce the value added suspension components. Using this technology, the Company is already supplying coil springs to customers in the global OEM markets.

-As of 2012, the Company is producing components catering to the Energy Efficient Vehicle (EEV) market. With the Malaysian government's intention to increase the number of EEVs to 10% of total domestic sales volume by 2020, this represents an opportunity that the Company can exploit further to generate a future revenue stream.

Recent Developments outside Malaysia

-As of 2012, the Company has gradually increased its presence in overseas markets. The Company started by first penetrating its regional markets, where the Company has established a solid foothold in Thailand, Singapore and the Philippines. Since then, the Company has expanded its horizons as a growing international player to establish a presence in new markets such as Ecuador, India and Indonesia.

Contracts

-By securing new contracts with Honda for its "City" and "HRV" models in the fiscal year ended January 31, 2016, Honda’s contribution towards the Company’s revenue has more than doubled compared to the previous fiscal year.

-In the fiscal year ended January 31, 2013, the Company awarded agreements to supply side-load springs for Proton's "Preve", and Volkswagen's "Polo" and "Jetta".

Major Awards

-During the fiscal year ended January 31, 2016, the Company received the Excellent Quality Vendor 2015 award from Perodua and the Quality Appreciation Award 2015 from Honda.

-In the fiscal year ended January 31, 2015, the Company won the award for "Excellent Cost Reduction Contribution Vendor 2014" from Perodua.

-In the fiscal year ended January 31, 2014, the Company received the following awards:

• Honda: Continuous Effort Award 2012
• Proton: Best Quality Performance 2013
• Perodua: Overall Excellent Performance 2013

R&D Facilities

-The Company has an R&D facility located in Bandar Baru Bangi, Selangor, Malaysia.

-The Company has formed a partnership with Universiti Malaysia Pahang (UMP) to collaborate in the areas of research and development, industrial training and capacity building. The collaboration has led to improvements in product design and manufacturing procedures.

-During the fiscal year ended January 31, 2016, the Company focused on a cautious capital investment strategy due to struggles in the Malaysian economy. As such, the Company reduced its capital expenditure significantly to meet its cost-reduction targets.