Gadang beefs up ops

Gadang's managing director and chief executive officer says the company is bidding for contracts worth about RM1.5 billion.

Kuala Lumpur: Gadang Holdings Bhd is beefing up its construction activities and eyeing several contracts under the Economic Transformation Programme (ETP) including hospital projects to improve earnings.

Managing director and chief executive officer Tan Sri Kok Onn said the company is bidding for contracts worth about RM1.5 billion.

"We are interested in working on hospital projects. We want to build on our expertise and hopefully, do similar projects overseas," he told Business Times in an interview recently.

In 2008, Gadang's unit, Gadang Engineering (M) Sdn Bhd (GESB), won a RM341.9 million turnkey contract for the Rehabilitation Hospital (formerly, Lady Templer) in Cheras, Kuala Lumpur.

Just this week, GESB won a RM411 million contract from the Public Works Department to complete the abandoned 300-bed Shah Alam Hospital.

The Shah Alam hospital project was mooted some 12 years ago at a cost of RM300 million to ease overcrowding in the nearest government hospital for Shah Alam residents, the Tengku Ampuan Rahimah Hospital in Klang.

The project was sub-contracted to GM Healthcare Sdn Bhd by its then main contractor, Sunshine Fleet Sdn Bhd in 2007, when its first sub-contractor, Isyoda Corp Bhd, withdrew from the project.

Sunshine Fleet is owned by Selangor princess Tengku Putri Arafiah Sultan Abd Aziz Shah and it won the contract via direct negotiations in 2007 for RM482 million.

The project, expected to be completed in 2009, was stalled after GM Healthcare filed a lawsuit against Sunshine Fleet for failing to pay the company.

The works ministry revoked Sunshine Fleet's contract and called for a new tender exercise in July last year to identify a "white knight" for the job.

Six companies were shortlisted, including Gadang, IJM Corp Bhd, Fajar Baru Capital Bhd, Limbungan Setia, Ahmad Zaki Resources Bhd and Gamuda Bhd.

Meanwhile, among the contracts Gadang is bidding for is the Sungai Buloh-Kajang line of the Mass Rapid Transit project.

Kok Onn said GESB had been pre-qualified in all of the three open categories for the MRT.

He said Gadang will tender for several works, including elevated civil works and elevated stations with five packages each, and construction of a depot.

For the year ended May 31 2011, Gadang posted revenues of RM348 million and a net loss of RM4.2 million. The loss was mainly due to non-recurring write-off of bad debt, amounting to RM9.45 million in the engineering division.

Gadang's profitability was also stifled by costlier building materials.

By Business Times