Kossan Rubber Industries Bhd
October 16, 2020
Tan Sri Dato’ Lim Kuang Sia, 68, founder of Kossan Rubber Industries Bhd (Kossan), has a Master’s degree in chemical engineering from Imperial College London, UK. His first degree was a Bachelor of Science (Chemistry) from Nanyang University, Singapore. An entrepreneur at heart, Tan Sri Lim started Kossan in 1979 to manufacture high technical-input rubber products known as Technical Rubber Products (TRPs), which are used in a wide array of industries, including infrastructure, automotive and industrial applications. When the HIV/Aids epidemic created a spike in world demand for gloves, the enterprising Tan Sri responded by venturing into the production of high quality latex rubber gloves. That was in August 1988 and it was a strategy that turned out to be a real boon for Kossan which has been consistently profitable since its listing on Bursa Malaysia on 16 March 1996. The company’s vision is to be the most respected global leader in the latex glove manufacturing industry.
For the financial year ended 31 December 2019 Kossan reported its highest revenue for all time of RM2.2 billion and its highest profit before tax of RM276.4 million. Revenue has been above the RM2 billion mark since FY2018. Kossan’s two business segments are Rubber and Nitrile Gloves and Cleanroom Products, and Technical Rubber Products (“TRPs”). The Group has twenty-two (22) plants: seventeen (17) for the production of gloves, four (4) for TRPs and one (1) for cleanroom products. All the plants are located in Malaysia except for the plant for cleanroom products which is located in Dongguan, China. The Dongguan plant is not involved in glove manufacturing but undertakes secondary and value-added processes for the gloves produced in Malaysia and produces face-masks and wipes mainly for the electrical and electronic industries.
The Gloves division is the largest contributor to revenue and profitability. The revenue derived from the Gloves division for FY2019 was up 4.7% to RM1.96 billion from RM1.87 billion in 2018. The Group’s glove products are mainly exported to the developed markets of the US, Eurozone, and Asia Pacific. With the completion of the Group’s latest Plant 18 in November 2019 which has the capacity to produce 2.5 billion nitrile gloves, KOSSAN’s current installed capacity stands at 29 billion pieces per annum. To meet the continued growth in demand for glove products, the Group has embarked on the construction for Plant 19 which will have an installed capacity of 3 billion pieces. With the progressive commissioning of Plant 19 and expected full completion by the 1st half of 2020, the Group’s total installed capacity will then rise to 32 billion pieces of gloves per annum.
The TRPs division is involved in the manufacturing and distribution of high technical-input rubber products, which are used in a wide array of industries, including infrastructure, automotive and industrial applications. The majority of the division’s products are exported to the US, Eurozone and ASEAN countries.
Kossan is managed by the Lim family. Tan Sri Dato’ Lim Kuang Sia is the Managing Director and CEO and his brother, Lim Leng Bung, 57, is in charge of the TRPs division. His son, Lim Ooi Chow (OC Lim), 37, joined the business in 2007. He graduated with a Bachelor of Computer Science degree and a Master of International Business from Monash University, Australia. Tan Sri Lim’s two nephews, Lim Siau Tian (ST Lim), 47, and Lim Siau Hing (SH Lim), 47, are both on the Board of Kossan. ST Lim holds a Bachelor of Marketing degree from the University of Central Oklahoma, USA and he is the Senior General Manager of the Gloves Division. SH Lim graduated with a Bachelor of Business Administration degree from the University of Central Oklahoma, USA, and he oversees the TRPs division with his uncle, Lim Leng Bung. All the Lim family members are Executive Directors of Kossan. Kossan’s Chief Financial Controller is Puan Sri Datin Chow Cheng Moey, 67, the wife of Tan Sri Dato’ Lim Kuang Sia. She has been with Kossan since 1980 and holds a Bachelor of Science (Engineering) degree. She is however not a member of the Board of Kossan.
As at 15 May 2020 the controlling shareholder of Kossan Rubber Industries Bhd is Tan Sri Lim Kuang Sia and family via their beneficial interest vested in Kossan Holdings (M) Sdn Bhd which holds a stake of 49.59% in Kossan (Annual Report 2019). The other substantial shareholder is the Employees Provident Fund Board with a stake of 5.34%. Based on filings made to Bursa Malaysia (TheEdge), the Lim family disposed of more than 55 million shares in Kossan during the price hike of glove related shares in the market recently. The controlling stake now stands at 46.91% (September 2020).
The Pandemic’s impact
Tan Sri Dato’ Lim said: “The COVID-19 pandemic which is expected to have a significant impact on the world economy including markets where the Group operates, will have to be actively monitored and managed to minimise any potential impact to our operations. Under such circumstances, however, the demand for protective gloves is expected to remain robust, with the Malaysian Rubber Glove Manufacturers Association (“MARGMA”) projecting global glove demand to grow to 345 billion pieces in 2020 of which 65% is expected to come from Malaysia, with Thailand and China at 18% and 9% respectively. Malaysia is expected to export 225 billion pieces of gloves valued at RM 20 billion in 2020 compared with 170 billion pieces worth RM17.4 billion in the previous year.”
- Kossan Rubber Industries Bhd. Financial Highlights. Annual Report 2019. Substantial Shareholders as at 15 May 2020. https://www.kossan.com.my/investors/reports.html
- The Edge Markets. 2 September 2020. Muhammed Ahmad Hamdan. Kossan's controlling shareholder trims stake further, disposes of 8.4 million shares. https://www.theedgemarkets.com/article/kossan-directors-trim-stake-dispose-838-million-shares
- Bloomberg. 8 May 2020. Yoojung Lee. Glove Maker that got its start with aids surges on covid demand. https://www.bloomberg.com/news/articles/2020-05-07/glove-maker-that-got-its-start-with-aids-surges-on-covid-demand
- MSN News. Bloomberg. 19 August 2020. RD Minion. This Local Businessman Is Now Malaysia's Fifth Billionaire, Thanks To The COVID-19 Pandemic. https://www.msn.com/en-my/news/national/this-local-businessman-is-now-malaysias-fifth-billionaire-thanks-to-the-covid-19-pandemic/ar-BB188dnn
- The Malaysian Reserve. 24 May 2019. Alifah Zainuddin & Azalea Azuar. Kossan to build glove city in Perak by 2022. https://themalaysianreserve.com/2019/05/24/kossan-to-build-glove-city-in-perak-by-2022/