MSM Malaysia Holdings Berhad Annual Report 2019

Risk Category Description & Impact Mitigation Measures Market Risk: Increase in tariff rate for energy & utilities Description We project from past trend that the energy and utilities producers will inevitably impose higher tariffs. Impact Higher cost of operation in the future. i. Minimise the unit energy cost of production by operating our factories at maximum production rate. ii. Apply alternative energy efficiency such as biomass as new criteria in the selection of new equipment and processes when replacing machinery or adding new capacity. Operational Risk: Competency of production staff Description Staff competency refers to staff ability to operate new plant, meet production target and reduce major equipment breakdown that lead to plant disruption, etc. Impact Lack of competent staff or poorly trained staff will affect quality, reliability and productivity levels. i. Provide basic sugar process training. ii. Create Training Needs Analysis (TNA) iii. To engage well experienced staff in the similar industry. Market Risk: Unfavourable raw sugar price movement Description Being fully dependent on imported raw sugar, exposes MSM to volatile price movements. Impact Financial implication on MSM business. i. Continuous monitoring of the world sugar price. ii. Purchase at desirable price and profit target. iii. Maintain good rapport and communication with the government. 27 MANAGEMENT DISCUSSION & ANALYSIS 03