72 FGV HOLDINGS BERHAD ABOUT FGV MANAGEMENT DISCUSSION & ANALYSIS VALUE CREATION Group Business Review Sugar 2022 STRATEGIES DIGITAL TRANSFORMATION TOWARDS INDUSTRY 4.0 • Digital system is to enhance productivity and accelerate business processes • Improve data visualisation and analytics for better decision making • Implement IR4.0 smart systems on manufacturing, sales and logistics, among others SALES & DISTRIBUTION COST SAVINGS • Optimisation of internal assets of MSM Logistics Sdn Bhd (MSM Logistics) within Klang Valley • Utilising third-party logistics capabilities within the Group for outside regions • Strategic warehouse locations to optimise demand and supply planning • Smart Fleet Management to improve route planning and productivity GROWING A SUSTAINABLE OPERATION WITH BETTER ENERGY PLANNING AND GREEN ENERGY • Improve energy management and reduce carbon emissions via solar and biomass exploration • Energy auditing, planning and optimisation to reduce carbon footprint and energy cost • Explore selling by-products such as mudcake and calcium carbonate as fertilisers IMPROVING SALES PERFORMANCE • Focus on growing the VAP segment with higher selling price and premium • Grow merchandising unit, with smaller packing to expand retail presence • Continuous brand reinforcement programme SUSTAINABLE MANUFACTURING PERFORMANCE • Target to optimise production reducing refining cost per MT • Operational improvements with external advisory • Improve process reliability and production availability EXPAND EXPORT VIA STRATEGIC PARTNERSHIP • Explore strategic partnership to strengthen export segment and further unlock synergistic value STRATEGIC CAPITAL MANAGEMENT • Strategic financing with optimum mix of short-term and long-term borrowings • Increase USD borrowings for natural hedge in line with growing USD receivables from export The nation’s domestic regulations for the industry are one of the factors to be considered in the coming year. As the raw material and cost are bullish, we continue to engage with the Ministry of Domestic Trade and Consumer Affairs on reviewing ceiling price to ensure our margins are preserved as costs escalate. We aim to enhance engagement and understanding with our customers and competitors on this issue to lend their voice in our negotiations. The introduction of the Sugar Tax in 2019 and Cukai Makmur (Prosperity Tax) on profitable companies are other regulations that we are monitoring vigilantly to ensure our bottomline is not significantly impacted. Threats of new COVID-19 variants and further lockdowns which could lead to operational disruptions is also looming, and could potentially impact production performance. On this front, we are actively making good progress in ensuring high vaccination rates among MSM’s employees, stringent compliance to SOPs at our workplaces, and effective containment measures of new potential breakouts in order to ensure business continuity.
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