CHINA – Kuantan Flour Mills, Malaysia based flour company has unveiled plans to expand its starch and premix flour business into China through a memorandum of understanding (MoU) with Shou Guang Tai Economic and Trade Coo Ltd (SGCT).
The MoU stated that the two parties will either collaborate in running the business through a partnership or enter an agreement where Kuantan Flour Mill will obtain a direct acquisition of a majority equity interest in SGCT.
According to the company, the MoU was subject to termination upon execution of the definitive agreement or within a period of six months in case either of the parties becomes unable to execute the agreement.
SGCT will join hands with KFM to produce consistent and good quality flour from by utilizing various raw materials to satisfy customer needs in the China market.
SGCT, a trader and retailer of corn, tapioca and food related products will add a great deal to KFM’s focus on achieving 100% customer satisfaction and loyalty though quality wheat flour and premix products.
“The MoU is pertaining to a proposed collaboration through either a business collaboration arrangement between both parties and a direct acquisition of a majority equity interest in SGCT by KFM,” said KFM.
KFM further noted that SGCT has established a stable import and export business with trading partners within China and Southeast Asian countries.
In the financial year ending September 2016, a report from the audit firm, McMillan Woods Thomas showed that KFM group and the company both incurred net losses.
According to the report, the group and the company were not in a position to remain in business since it was unable to realise its assets and discharge its liabilities in the normal course of business.
The group recorded a net loss of US$3.07 million while the company showed a net loss of US$519,404.40.
Although the China expansion compounds KFM’s efforts to revive the business, the company remains cash strapped and it is trapped in big business debts.