LUBRI OIL CORPORATION (M) SDN BHD
(Co. Reg. No: 892942-D)
1. OUR GROUP OVERVIEW
Our Company was incorporated in Malaysia under the Companies Act, 1965 on 31 May 2003 as a private limited company under the name of Lubri Oil Manufacturing Sdn Bhd. On 12 March 2010, Lubri Oil Corporation (M) Sdn Bhd was established for the purpose of acquiring the entire shares of Lubri Oil Manufacturing Sdn Bhd (“LOMSB” or “Subsidiary”).
In addition, LOCSB also functions as the marketing and trading arm of the Lubri Oil Group which activities are, amongst others, dealing with and manufacturing of lubricating oils, petroleum and petrochemical products.
Currently, LOMSB holds a license under Section 6 of the Petroleum Development Act, 1974 (“PDA-6 License”), which allows the company to produce the products specified as “Lubricating Oil”.
LOMSB is also registered with the Ministry of Finance Malaysia (“MoF”) as a contractor to supply lubricant and its related products.
Principal Activities
The details of our subsidiaries are as follows:
| Name Of Company/ (Registration No.) | Date And Country Of Incorporation | Effective Equity Interest | Issued and Paid-up Share Capital | Principal Activities |
| | | (%) | (RM) | |
| | | | | |
| Lubri Oil Corporation (M) Sdn Bhd | 12.03.2010 Malaysia | 100 | 584,000 | Marketing and trading |
| | | | | |
| Lubri Oil Manufacturing (617004-U) | 31.05.2003 Malaysia | 100 | 600,000 | Sales, manufacturing, distribution and dealing of lubricant oils. |
| | | | | |
Further elaborations on the Group’s profiles are set out in section 3 (brief backround).
The process flow of Lubri Oil Group activities is simplified as follows:
Products Manufactured
Lubricants for Automotive, Industrial, Construction, Marine and Specialty, packed in bottle/drum of between 0.5 litre (bottle) – 209 litres (drum) and bulk supply in Indicated Base Compound (IBC) or tanker.
Products:-
Principal products are depicted as follows:-
Business Development
LubriOil Group is currently in the process of procuring some projects with Institutional clients as well as other private companies and Government Agencies.
LOCSB was appointed as the PETRONAS Lubricant dealer on 25 March 2010. This signifies the commencement of LubriOil Group’s working relationship with PETRONAS.
LOCSB produces various types of own lubricant products with the brand name “Lubrioil”. In addition, the Company also undertakes the Original Equipment Manufacturing (“OEM”) assignments from third parties. The Company’s forte is in the production of customised lubricants for Marine, Agriculture Machinery and Industrial.
As at to-date, LOCSB is in the advance stage of negotiation to secure several jobs with private companies and Government Agencies.
It is estimated that the volume of orders for LOCSB own brand name products from the aforementioned companies and agencies will be in the range of 1.0 million litres to 1.5 million litres per annum.
Production Capacity
With LOCSB’s new and bigger facilities located at Sunway Damansara Technology Park, the Company is able to produce up to 1.7 million litres of lubricants per annum.
Plans And Strategies
Aside from becoming the dealer and trading of PETRONAS Lubricant products, based on its 5-year plan, the Group has underlined the following strategies:
| Implementation Charter | |||
| | Bottling/Packaging Operation | Blending Operation | Export Operation |
| Stage 1: 1st year – 2nd year | · Commence Bottling & packaging operation for - MCO (0.5 – 1 litre); - PCMO (3 & 4 litres); - HDEO (pail 18 litres, drum 209 litres & bottle 5 litres) - Collapsible IBC (for export) | · Commence blending operation for Own Brand (LubriOil) · Blending operation for OEM project will commence in 2nd year of operation | Yet to commence |
| Stage 2: 3rd year to 5th Year | · Bottling & packaging operation for MCO, PCMO, HDEO & Collapsible IBC (for export) | · Blending operation for Own Brand and OEM | · Infrastructure preparation · Prepare documentation for Joint Venture (JV) |
| Stage 3: After 5th year | · Bottling & packaging operation for MCO, PCMO, HDEO & Collapsible IBC (for export) · Establish bottling plant overseas (3rd World Countries) | · Blending operation for Own Brand and OEM | · Commence Manufacturing/ Blending activities and to JV with other corporate companies for export market segment |
Notes:
MCO - Motorcycle Oil
PCMO - Passenger Commercial Motor Oil
HDEO - Heavy-Duty Engine Oil
IBC - Indicated Base Compound
Competitive Strengths of LOCSB
LubrilOil Group, despite being home-grown, has proven that it has a sound and feasible business plan.
i) Led by a strong key management team
- Sharp discerning of business trends and opportunities, together with clear, concerted and strategic plans to achieve the Group’s vision and mission statements
The Group is led by Ms Nurul Ashiqin Shamsuri, Chief Executive Officer. Ms Nurul Ashiqin is supported by a team of senior management with a balanced mix of business and technical knowledge from various fields; manufacturing and trading, legal background, global trade negotiation, investment banking, finance and human resource. This workforce of team-oriented individuals has a unified goal of exceeding the expectations of customers and driving the Group towards achieving its objectives.
ii) Focus on market share and target markets
Leveraging on our products, to established our brand name in the Lubricants market, the Group has continued to enhance its presence in Malaysia.
iii) Emphasis on continuous R&D
Recognizing the importance of technological advancement in the Lubricants industry and the varied specific requirements of different users, Our Group has emphasized on continuous development and enhancement of its products.
iv) Value added sales and services
• Lubes Management System
- A system that automates control and accountability of lubes usage. e.g recticulation system, lubes chart, SOS
• Total Fleet Management
- An integrated system that manages the fleets.
• Equipment Investment
- Skid Tank, Dispenser Pumps, Industrial Bulk Container
v) Strategies going forward
To propel LubriOil Group into a bigger league, the Group has set to undertake the following interlinked strategies this include to develop a continuous product development and enhancement
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We confident that our strategies will be develop to a bigger league based on the following:-
vi) Promising prospects
* Commendable Consolidated Financial Projection
| FYE | 2010 | 2011 | 2012 | 2013 | 2014 | |
| | | | | | | |
| | | | | | | |
| Revenue (RM’000) | | 2,781 | 3,337 | 4,172 | 5,424 | 7,322 |
| | | | | | | |
| Net profit (RM’000) | | 526 | 2,555 | 3,194 | 4,152 | 5,605 |
| | | | | | | |
Note:-
- Consolidated between the financial results of own brand blending activities and OEM filling activities.
- Annual increase in revenue is expected to be at rate of 5% per annum from 2011 onwards and an increase of 20% in 2011
* Commendable Consolidated Financial Projection (Cash Flow)
| FYE | 2010 | 2011 | 2012 | 2013 | 2014 | |
| | | | | | | |
| | | | | | | |
| Cash Inflow (RM’000) | | 3,493 | 3,303 | 4,130 | 5,370 | 7,247 |
| Cash Outflow (RM’000) | | 2,653 | 2,630 | 3,550 | 4,971 | 7,210 |
| | | | | | | |
| Net Cash Flow C/F | | 840 | 674 | 578 | 397 | 39 |
| Balance B/F | | - | 1,014 | 1,687 | 2,266 | 2,664 |
| Cash at hand | | 840 | 1,688 | 2,266 | 2,664 | 2,703 |
Note:-
- Annual increase is expected to be at rate of 5% per annum from 2011 onwards and an increase of 20% in 2011
- Own brand sales collection is at 70% of sales for the month, while the balance 30% will be collected in the following month.
- COGS will be paid at 90% of amount payable for the month, while the balance 10% will be paid in the following month.
* Main Assumptions:
| Indicative Annual Volume | 2010 | 2011 | 2012 | 2013 | 2014 | |
| | | | | | | |
| Blending of Own Brand Activity (MT) | 144 | | 300 | 900 | 1,125 | 1,462 |
| | | | | | | |
| Filling Activity for OEM (MT) | 6,000 | | 7,200 | 9,000 | 11,700 | 15,795 |
| | | | | | | |
Note:-
- Annual increase in blending of own brand activity and OEM is expected at 5% per annum starting 2011 onwards and an increase of 20% in 2011
We believes that the Group’s commendable projected revenue and profit track record amidst a challenging market environment is a testament to the Group’s strength and capabilities as well as the commercial viability of the Group’s technology.
In light of the potential of the Lubricants market, coupled with the Group’s unique modular feature, the execution of its strategies and the Group’s R&D activities, expansion plans and operations, and the gradual stabilisation of the global economy, we believes that the Group is able to achieve an upward trend in its financial performance.
vii) Utilisation Of The Proceeds
The proceeds of the development packages are proposed to be utilised as follows:-
| | Amount (RM) | Expected utilisation |
| | | |
| Capital expenditure | 1,000,000 | Within one (2) year |
| Working capital | 1,000,000 | Within one (2) year |
| | 2,000,000 | |
| | | |
Outlook of the global and local Lubricants markets are positive
In Malaysia, supply and trading of lubricants products are monopolized by the oil majors namely Petronas(12%), Shell (30%), ExxonMobil (21%), Caltex (7%), BP (11%), Castrol (16%) and Other’s (3%) of the total supplies.
Supply and trading of lubricants products are monopolized by the oil majors namely Petronas(12%), Shell (30%), ExxonMobil (21%), Caltex (7%), BP (11%), Castrol (16%) and Othes (3%) of the total supplies.
Currently the scenario of the lubricants products trading remains uncertain as market is experiencing a tremendous increase in crude oil price and government pulling out the subsidy.
Below is a summary sourced from CIMBResearch; June 2010:-
Economic recovery in motion. The Malaysian economy powered ahead in 1Q10, with 10.1% yoy growth (4.4% in 4Q09), the strongest pace of quarterly annual growth since 2Q00. The main drivers of 1Q GDP growth were fairly broad-based, with exports, consumer spending and investment posting gains. Given the stronger-than-expected 1Q growth, we recently tweaked our 2010 GDP growth estimate from 6.5% to 7.0% while keeping 2011’s growth forecast at 5.5%. We believe that growth peaked in 1Q and will moderate to 7.8% in 2Q and 5.0% in 2H10 as the effects of stimulus measures and inventory restocking fade in 2H10.
Correction phase may be behind us. The market has more to run after successfully negotiating and anticipated correction phase in earlier part of 3Q09. More importantly, macro fundamentals are now pointing towards start of growth cycle moving into 1Q10. There isles doubt over a global economic recovery. Inflation expectations are muted, implying that the interest rate cycle is not going to rise anytime soon. CPI index edging higher to 1.5% yoy in April which still points to tame price pressure.
Budget 2010: Infrastructure spending to accelerate. Pump priming for growth has traditionally been achieved by fiscal spending on large infrastructure projects, with associated multiplier effect on other sectors of the economy. Malaysia’s infrastructure spending will continue to be the cornerstone for near term growth under the Najib administration accelerated infrastructure spending via timely execution of its pump-priming initiatives may be critical to ensure continuity of rule under the coalition Government under the ruling Barisan Nasional. Infrastructure spending has significant effects on the underlying economy via links to other sectors.
10MP focuses on private sector-led growth. The Tenth Malaysia Plan, 2011-15 was presented on 11 June. A sum of RM230bn is allocated for development expenditure, with the economic sector receiving 55% of total development allocation, followed by social sector. The plan is setting a real GDP growth target of 6.0% pa, which is the country’s long-term average growth of 5.8% pa.
Risk Analysis
The following risks are pertinent to LubriOil Group’s operations and financial performance:-
· The Lubricants sector is competitive
Competition in the global Lubricants market is intense this is inevitable in view of the potential of the sector.
Inherently, competitive factors will continue to affect the Group’s pricing and profitability. The emphasis on continuous R&D to develop new and enhanced products, customized to meet the specific requirements of different end-users, is envisaged to increase the competitiveness of the products. We also actively focus on developing more cost-efficient products to address the challenge of price competition amongst Lubricants providers.
· Our Group’s financial performance and future prospects is dependent on its ability to maintain and enhance the technological competitiveness of the products
Lubricants market has continued to evolve, and end-users needs have continued to grow more diverse and varied. Any delay in developing and releasing new products and enhancements could adversely affect the Group’s continued profitability. Recognising the importance of staying current in respect of Lubricants technology, the Group places utmost importance on R&D.
2. KEY MANAGEMENT
(i) Y.BHG. DATO’ HAJJAH ROSNI BINTI HAJI ZAHARI
Y.Bhg. Dato’ is the Chairman of LOCSB. She is a lawyer by profession and graduated with LL.B (Hons) from UiTM.
Dato’ Rosni is the Ketua Pergerakan Wanita UMNO, Bahagian Maran, Ketua Pergerakan Wanita UMNO for the state of Pahang, Ketua Wanita Barisan Nasional Negeri Pahang and EXCO Pergerakan Wanita UMNO Malaysia. She also holds the position of Chairman of Economic Development Secretariat Wanita UMNO Malaysia. Her other portfolios include the Ahli Majlis Daerah Maran, Pengerusi Persatuan Bolasepak Negeri Pahang, Sukarelawati Pusat Bantuan Guaman, Committee Members of GABEM Pahang, Naib Pengerusi Belia 4B Daerah Maran, Ahli Dewan Perniagaan Melayu Malaysia Cawangan Negeri Pahang.
(ii) NURUL ASHIQIN BINTI HAJI SHAMSURI
Nurul Ashiqin has more than 4 years experience in international business. She graduated with Bachelor of Legal Studies (Hons) from UiTM in 2006 and later joined NCL Solutions Sdn Bhd as Sales Manager. While with NCL Solutions Sdn Bhd, she gained her international business experience by working in few countries like Greece, China, South East Asia and United Arab Emirates.
In 2008, she decided to pursue her Masters Degree at Vrije Universiteit, Amsterdam and graduted in 2009 with Masters of International Business Law (LL.M). Right after graduation, she joined an exclusive Summer School in Geneva which was sponsored by World Intellectual Property Organization.
In 2010, she came back to Kuala Lumpur to give her full commitment to LOCSB as Chief Executive Officer.
Nurul Ashiqin is the eldest daughter of Y.Bhg. Dato’ Hajjah Rosni.
(iii) ISHAK BIN HAMZAH
Ishak has more than 33 years experience in lubricant and marine engineering industry. He graduated in 1975 and holds a Bachelor of Science in Marine Engineering. Subsequently, he obtained a Marine Engineer Certificate of Competency and is registered with the Board of Engineers and The Institution of Engineers Malaysia, in the field of marine.
His first job was with the Malaysia International Shipping Corporation, as a marine engineer. He joined Caltex as an operation manager in 1977. He moved on to Tractors Malaysia Berhad as Sales/Service Manager in 1980. In 1985, he joined Petroliam Nasional Berhad (PETRONAS) and served for 18 years in various sectors i.e. technical, marketing and operations before opted to resign from PETRONAS to be involved on full-time basis in the petro-chemical business. He is currently Technical Director of LOCSB and also a Lecturer Specialist at Universiti Kuala Lumpur.
(iv) JURAINI BIN ABD FATAH
Juraini has 19 years of experience in Sales, Finance and Administration. He started his career with Arab Malaysian Merchant Bank in the area of Sales Advisory in 1991 and later was promoted to Senior Sales Executive. In 1995, He moved on to Asia Unit Trust Berhad as the Branch Manager for Kuala Lumpur. He later joined ADV Petroleum Berhad as Finance and Administration Executive in 1997. In 2001, he joined Amanah Raya Berhad as Assistant Manager. Juraini is currently the General Manager of Sales and Marketing of LOCSB.
He holds a Diploma in Business Studies from UiTM.
(v) NOOR MOHD RIDZUAN BIN ISHAK
Noor Mohd Ridzuan holds a Diploma in Business Management, Certificate in Computer and Hardware Maintenance, and Certificate in Hospitality Management.
He has approximately 10 years of working experience in various industries, amongst others, trading, hotel and lubricant. He started his career as a Junior Consultant with a construction and trading company, Ira Jati Sdn. Bhd. In 2002 he joined LOMSB Manufacturing Sdn Bhd (LOMSB) as Logistic Manager and served for 5 years before being promoted as the Head, Sales and Marketing of Lubrioil Trading Resources (LOMSB marketing arm) where he served for 3 years before joining Sukimi Lube (M) Sdn Bhd, in the area of Sales and Marketing in 2009. Noor Mohd Ridzuan joined LOCSB in April 2010 as the General Manager of Operations.
Noor Mohd Ridzuan is the eldest son of Encik Ishak bin Hamzah.
(vi) TUAN HAJI AMIRUDDIN BIN HAJI ABDUL SHUKOR
Amiruddin has more than 15 years of working experience in the corporate finance and investment industry. He was the Vice President of Corporate Finance of MIDF Amanah Investment Bank Berhad and has served the Securities Commission Malaysia (SC) for more than 6 years, specifically handling the securities issues matters as well as lending hands in the formulation of policies for the securities industry. He was involved in various corporate proposals comprising fund raising, mergers and acquisitions (including reverse take-overs and back door listing), corporate and debt restructuring exercises, initial public offerings and waivers from complying with the SC’s Guidelines on the Offering of Equity and Equity-Linked Securities. His last designation in SC was Senior Manager in the Securities Issues Department.
Prior to that, he was attached with Permodalan Terengganu Berhad (PTB) in the Business Development and Corporate Planning division overseeing amongst others, the corporate finance and funding activities of the PTB Group. Before joining PTB, he was attached with the Corporate Services Department of Permodalan Nasional Berhad (PNB).
Amiruddin currently advises LOCSB on the Company’s financial matters.
He holds an MBA in Applied Finance and Investment and Degree in Accounting from Universiti Kebangsaan Malaysia (UKM). While with PNB, he received his Executive Diploma in Investment Analysis from Universiti Teknologi Mara (UiTM).
He is a Chartered Accountant and a member of the Malaysia Institute of Accountants.
3. BRIEF BACKGROUND
A. LOCSB (As At July 2010)
| Company Name | : | Lubri Oil Corporation (M) Sdn Bhd |
| Date / Place of Incorporation | : | 12 March 2010 / Malaysia |
| Authorised Share Capital | : | RM1,000,000.00 |
| Issued & Paid-Up Share Capital | : | RM584,000.00 |
| No. of Ordinary Share/Par Value | : | 45,000 shares / RM1.00 per share |
| No. of Preference Share/Par Value | : | 389,000 shares / RM1.00 per share |
| Shareholders | : | Nurul Ashiqin binti Hj Shamsuri Ishak bin Hamzah |
| Board of Directors | : | Y.Bhg. Dato’ Hajjah Rosni binti Haji Zahari Nurul Ashiqin binti Haji Shamsuri Ishak bin Hamzah Noor Mohd Ridzuan bin Ishak (Alternate to Ishak bin Hamzah) |
| Company Secretary | : | Zambran & Associates |
| Auditors | : | To be appointed |
| Financial Institution | : | Maybank Islamic Berhad (Kota Damansara) |
B. LOMSB (As at 24 May 2010)
| Company Name | : | Lubri Oil Manufacturing Sdn Bhd (617004-U) |
| Date / Place of Incorporation | : | 31 May 2003 / Malaysia |
| Authorised Share Capital | : | RM1,000,000.00 |
| Issued & Paid-Up Share Capital | : | RM600,000.00 |
| Par Value of Ordinary Share | : | RM1.00 per share |
| Shareholders | : | Noor Hayati Binti Yahya Noor Mohd Ridzuan Bin Ishak Dayana Binti Ab Manan Nurul Ashiqin Binti Haji Shamsuri |
| Board of Directors | : | Ishak bin Hamzah Noor Hayati Binti Yahya Nurul Ashiqin Binti Haji Shamsuri |
| Company Secretary | : | Maltics Corporate Consultancy Sdn Bhd |
| Auditors | : | Kamal Zahari & Co |
| Financial Institution | : | CIMB Bank Berhad (Kelana Jaya) |
4. FINANCIAL SUMMARY
(i) LOCSB has yet to have its financial result as the company was newly incorporated on 12 March 2010.
(ii) LOMSB’s Past 5-Year Financial Summary Ended 30 April 2008
| Audited | 2004 | 2005 | 2006 | 2007 | 2008 |
| | | | | | |
| Revenue (RM’000) | 75 | 107 | - | - | - |
| Gross Profit (RM’000) | 8 | 37 | - | - | - |
| Profit Before Tax (RM’000) | (19) | 14 | - | - | - |
| Profit/(Loss) After Tax (RM’000) | (19) | 14 | - | - | - |
| | | | | | |
| Paid Up Capital (‘000) | 100 | 100 | 100 | 600 | 600 |
| Shareholders' Funds (RM’000) | 81 | 95 | | | |
| Net Assets (RM’000) | 81 | 129 | | | |
| Total Assets (RM’000) | 85 | 136 | | | |
| Total Borrowings (Interest bearing) (RM’000) | - | - | | | |
| | | | | | |
| Ratios | | | | | |
| Gross profit margin (%) | 11 | 35 | | | |
| Earnings/(Loss) per share (sen) | (19) | 14 | | | |
| NA per share (RM) | 0.81 | 1.29 | | | |
| Return on Assets (ROA) (%) | (22.35) | 10.29 | | | |
| Return on Equity (ROE) (%) | (23.46) | 14.74 | | | |
| Gearing (Times) | - | - | | | |
