KUALA LUMPUR (Oct 22): Luster Industries Bhd has outlined a series of steps to be taken in ensuring the success of its rubber glove business considering that the company does not have any track record in the new venture.
In a bourse filing on Oct 19, 2020, it said it had proposed to team up with Fortune Tac Sdn Bhd (FTSB) in setting up a 56:44 joint venture company, Glovmaster Sdn Bhd (GSB), to jointly undertake the business of manufacturing, sales and distribution of gloves.
In a reply to Bursa Malaysia’s query today, Luster said the execution of the joint venture agreement (JVA) is to set out the parties' mutual understanding in respect of the rights and obligations of Luster and FTSB for the purpose of carrying out the glove business.
Through the JVA, it said Luster is able to leverage on the technical skillsets, business knowhow and the experience in/ of FTSB/ Yee Voon Hon in the glove industry to undertake the glove business.
“In addition, Luster's management will recruit personnel who have the specific skillsets and knowledge in glove products to support the glove business.
“This will safeguard Luster's interest in the glove business and as part of the succession plan to mitigate any dependency of key personnel,” it said.
Based on the equity participation ratio, Luster said it will have controlling interest, which allows them to manage the overall operational management and financial management of GSB.
“With the manufacturing experience, we are able to monitor the manufacturing performance such as the costs and operational structure, and will work together with FTSB towards achieving operational efficiency,” it said.
It added that as GSB is a subsidiary of Luster, any material decision and/ or activities will be tabled to the Luster board and/ or shareholders for approval.
“Therefore, any business decision will be deliberated not only by GSB board, but also Luster board, who will give advice to the management team of GSB.
“This will ensure proper monitoring and prudent decision making for any material transactions that may adversely impact GSB,” it said.