MSM Malaysia Holdings Berhad Annual Report 2020

GROUP CHIEF EXECUTIVE OFFICER REVIEW DIGITAL ENGAGEMENT To help curb the COVID-19 impact and catalyse our digitalisation journey, in 2020 MSM adopted digital engagement in our work practices by increasing online and teleconference meetings to avoid frequent interstate and inter-district travel. Previously, MSM frequently travel to operation sites and for other business meetings by flight. In relations to the digital adaptation in our business approach, we managed to reduce our carbon footprint by 86% for Greenhouse Gas (GHG) emissions related to air travel. OUTLOOK The year 2021 began as an outright challenging year amidst the third wave of COVID-19 infections in Malaysia with the government imposing a fresh Movement Conditional Order (MCO) that caused further declines in market demand coupled with increased challenges for the SME industries. Having expanded our refining capacity with MSM Johor on stream, an immediate priority moving forward is to ensure the maximisation of Group capacity that is well supported by the growth in the core business units namely Domestic (Wholesale and Industry) and Export (refined sugar and value added products). This is towards achieving low refining cost in MSM Johor. Being an asset-based sugar player, MSM’s competitive edge lies on the ability to maximise assets utilisation through high process reliability. Our refined sugar cost structure is broken down into three major components namely raw sugar usage, sugar refining cost and other overheads (sales, distribution and administration cost). While raw sugar usage cost is uncontrollable and market driven, and other overheads are mostly fixed in nature, the refining cost varies with production volume. In this respect, we aspire to lower MSM Johor’s refining cost (RC) to match what is achieved at MSM Prai. Efforts that will be taken to bring down the RC towards MSM Prai level in the future involve maximisation of production volume, efficient energy consumption and robust supply chain management. Further, Management shall also undertake the ramp up plans of MSM Johor as part of planned optimisation. M ore on Business units’ performance and plans moving forward are captured in the Business Review on page 36. Another immediate concern is to ensure our employees’ welfare as a healthy and able workforce is vital to continue business and refinery operations. We began the year with further enforcement of a robust and strong adherence to standard operating procedures (SOPs) coupled with a continuous education programme and stringent enforcement to ensure a healthy and capable workforce. Moving forward into the future, the Group is embarking on an aggressive growth in business units. Towards this end, strengthening human resources and digitalisation are our priorities in providing adequate resources and support that commensurate with the expansion of the business units. ENHANCING HUMAN RESOURCES Recognising human capital as our most important asset in achieving organisational success, MSM’s Human Capital/People Partner Division has laid out five strategic priorities for the next few years. These entail efficient manpower planning to attain the right people size with the right people fit; build and retain human resource capabilities in ensuring business and organisation sustainability; drive a robust performance driven and teamwork culture orientation; support of a HR Digitalisation plan to promote accurate decision making; and cultivation of an entrepreneurial and innovative mindset amongst our people. Manpower planning is the turning key for improving internal controls, better management and operations of the Group. Hence, there shall be continuous efforts to have optimum departmental headcounts to reinforce the operational effectiveness. To date, 14 positions at the Head Office and Sg Buloh Warehouse have been identified to support the initiative towards the turnaround plan. DIGITALTRANSFORMATION The fourth industrial revolution 4.0 (IR 4.0) has been catalysed by the pandemic as the power of digitalisation and automation is increasingly required to sustain business continuity today. MSM has outlined a robust plan towards implementation of advanced ERP system, IR 4.0 operating plants, Artificial Intelligence (AI) driven assessment and decision making as well as a green based operating environment at the workplace. MSM MALAYSIA HOLDINGS BERHAD Annual Repor t 2020 26 CHAIRMAN’S STATEMENT DELIVERING VALUE MSM OVERVIEW MANAGEMENT DISCUSSION & ANALYSIS GROUP FINANCIAL REPORT