Glomac to absorb rising cost for certain houses
Posted on | August 30, 2007
By THE EDGE
PETALING JAYA: Glomac Bhd will absorb the increased construction costs for properties priced at RM200,000 and below, which now constitute about a third of its total sales.
Its group managing director Datuk Fateh Iskandar Mohamed Mansor said: “Construction materials in general have gone up by 20%-30% including steel bars and cement but mechanical and electrical items have gone up more than 30%.”
He said the company could pass on the rising costs to buyers of higher-end properties, but not to those buying properties priced at RM200,000 and below.
On the impact of the rising cost on the company, Fateh Iskandar said: “At this moment in time, we are not that badly affected… because we are in a broad spectrum of properties.
“But if the price keeps on increasing, we will have to pass it (the extra cost) to the consumers.”
He said properties of RM200,000 and below constituted about a third of the group’s revenue at about RM100 million for the last financial year ended April 30, 2007. It is expected to account for about the same amount in FY08.
Glomac posted a net profit of RM32.19 million on the back of revenue totalling RM293.26 million in FY07.
On its overseas ventures, Fateh Iskandar said it was still undertaking a due diligence exercise on a proposed 12-hectare mixed development township in Pune, India, which is estimated to have a gross development value of RM750 million.
“Hopefully, it (the due diligence) will be finished in the next couple of months; if everything is okay, we hope to make announcement then,” he said, adding that Glomac was also looking into venturing into Vietnam.
“Hopefully, in five years, we will have a more significant contribution from our regional projects. Currently, it is quite insignificant,” Fateh Iskandar said.
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