Boustead Heavy Industries Informations

Boustead Heavy Industries Corporation Berhad, (MYX: 8133) known for its subsidiary Boustead Naval Shipyard and often abbreviated as BHIC and BNS is a Malaysian industrial group specialised in naval and commercial shipbuilding as well as ship-related services. Its primary focus is shipbuilding, fabrication of offshore structures, as well as repair and maintenance of vessels and equipment. The company is a public limited company and the largest shareholder is Lembaga Tabung Angkatan Tentera, a government statutory body which provides retirement benefits and a savings scheme for officers of the Malaysian Armed Forces, with a 58.69% stake. The second largest shareholder is Kumpulan Wang Persaraan, a company created by the Malaysian Government as an investment company, with a stake of 7.17%. The parent company is Boustead Holdings.

Boustead Heavy Industries was created in 2005 after a government enforced merger between Boustead Holdings Berhads commercial shipbuilding shipyards and the troubled PSC-Naval Dockyard. Since then it has acquired and formed many companies and expanded into many fields of business.

Penang Shipbuilding and Construction - Naval Dockyard Sdn Bhd (PSC-ND), was a division of the Penang Shipbuilding and Construction Industries Bhd (PCSI), a Malaysian Government-Linked Company (GLC), based in the Lumut, Perak, Malaysia. The companys primary role was to maintain the Royal Malaysian Navy (RMN) fleet and the Lumut Naval Dockyard.

PSC - Naval Dockyard was born out of the Royal Malaysian Navys dockyard facilities which was built to provide ship repairs and maintenance services. Under the corporatisation program advocated by the Malaysian Government, the dockyard was corporatised as Limbungan TLDM, a wholly owned government company. It had modern facilities to meet the total maintenance requirements of the Royal Malaysian Navy fleet, from hull repairs to major overhauls and from radar refitting to weapon systems refurbishment.

The company was taken over by the public listed Penang Shipbuilding Corporation Berhad, a company in the stable of the now bankrupt Amin Shah Omar Shah, and renamed PSC - Naval Dockyard Sdn Bhd to reflect the corporate relationship with Penang Shipbuilding Corporation.

In 2005, Public Accounts Committee (PAC) unveiled serious corruption in the PSC-ND and caused solemn concern from the public. Under pressure of the public, Malaysian government enforced a reorganization resulting in the forming of Boustead Heavy Industries.

PSC - Naval Dockyard Sdn Bhd was made the major contractor for the building and delivery of the New Generation Patrol Vessels (NGPV) programme for the Royal Malaysian Navy. An international tender for bids was announced, with Germany, the United States, Australia and United Kingdom amongst others submitting their bids. PSC-ND was set to joint venture with the winner to complete the program.

The German Naval Group (GNG) with their proposed model, based on the Blohm + Voss MEKO 100 design, won the bid. A contract was signed on 13 October 1998 for an initial six units, with the GNG as the major sub-contractor. A member of the GNG, the Hamburg-based Blohm + Voss was to build the first two ships, while PSC-ND was to complete the final fitting out and trials. The remaining ships were to be built at the PSC-Naval Dockyard from ship modules supplied by the GNG, with a gradual increase of local content.

The contract also involved technology transfer to PSC-ND from GNG as well as a specified a local content of not less than 30 percent, and an offset programme of not less than 30% of the contract value. The German Naval Group was also to make a counter purchase obligation amounting to 11% of the contract value.The class of ship is now been classified as the Kedah Class Offshore Patrol Vessel. As of 2010, all 6 ships have been commissioned into the Royal Malaysian Navy.

In 2005, the Public Accounts Committee (PAC) brought up the public attention after they unveiled serious corruption in the PSC-ND management and also the failure to meet the delivery date of the first NGPV vessel. Local media revealed that the construction of the remaining vessels was also delayed due to financial difficulties in the PSC-Naval Dockyard. Reports of nonpayment to some 40 sub contractors who were owed RM180 million was met by shock from the public. PSC-ND also failed to pay some RM4 million in contributions to the Employees Provident Fund (EPF), the Inland Revenue Board and the National Co-operative Organisation despite having made salary deductions from its 1,500 staff. PSC-ND has also reportedly sought another grant of RM1.8 billion from the government to complete the vessels.

The PAC claimed that RM120 million would be needed to salvage the first two vessels, and that the Government also needed to pump in at least RM80 million to pay off unpaid local vendors, suppliers and contractors. This led the NGPV program into a crisis.

The Malaysian government then put in a new management team and the project was revived. Boustead Holdings Bhd, also a Government linked company, took up 37% of stake and became the single largest shareholder of Penang Shipbuilding and Construction Industries (PSCI). As a division of PSCI, PSC-ND was renamed Boustead Naval Shipyard Sdn Bhd and merged with Bousteads commercial shipbuilding companies to become Boustead Heavy Industries.

The first two vessels were eventually delivered and accepted by the Royal Malaysian Navy in 2006, after a delay of some 18 months.

In 2009, Boustead Heavy Industries Corporation Bhd reached an agreement with Yonca-Onuk JV of Turkey, a well known interceptor craft manufacturer to set up a joint venture. Through this joint venture, BYO Marine was formed, named using the names of both companies involved. BYO Marine designs, builds, commissions and supplies high speed advanced composite boats to South East Asia and is supported by a team from Yonca-Onuk JV. BYO Marine supplies interceptor craft to the Malaysia Maritime Enforcement Agency and offers missile equipped fast attack craft designed by Yonca-Onuk JV.

In July 2010, Rheinmetall Defence of Düsseldorf, Germany, and Boustead Heavy Industries Corporation Bhd of Kuala Lumpur, Malaysia, entered a strategic agreement for the joint ownership of Contraves Advanced Devices Sdn Bhd located in Malacca. Under the joint agreement, Boustead Heavy Industries Corporation took up a 51% stake in the Rheinmetall subsidiary Contraves Advanced Devices effective 1 July 2010. Rheinmetall retained a 49% share in Contraves Advanced Devices and control of the operational management. Rheinmetall Defence and Boustead intended a further collaboration to serve new markets as well as enabling a technology transfer that would substantially benefit both Malaysian industry and the Malaysian military. The partnership sought to foster the growth of high-tech production in Malaysia to strengthen the countrys defence technology industrial base and open additional opportunities for exports.

In May 2011, Boustead Heavy Industries expanded into the munitions industry when it signed a joint-venture deal with Prokhas Managers Sdn Bhd (PMSB), a Ministry of Finance (Malaysia) company to supply artillery propellants to the Malaysian Armed Forces. Under the joint venture, the new company, Pyrotechnical Ordnance Malaysia Sdn Bhd, would produce double base artillery propellants at a plant located on a 21-acre site in Bentong, Pahang. BHIC has invested RM58 million into the plant and the plant was expected to produce munitions by Q3 2012. BHIC owns a 49% stake in the company.

In June 2011, Boustead Heavy Industries expanded into the aviation industry by completing the acquisition of a 51% stake in MHS Aviation, Malaysias largest helicopter service company, with 70% of the market value. The acquisition cost Boustead Heavy Industries RM100 million. MHS Aviations principal activity is the provision of helicopter services to oil and gas companies such as Sarawak Shell Berhad, Esso Production Malaysia Inc. and Petronas Carigali Sdn Bhd. It is also the leading civilian supplier of aircraft charter, search and rescue, emergency medical services and providing training, engineering and technical services.

In 2011, Boustead Naval Shipyard was awarded a RM9 billion (US$2.8 billion) contract for the construction of 6 Second Generation Patrol Vessels also known as Maharaja Lela-class frigate for the Royal Malaysian Navy. Boustead Heavy Industries will design the ship with DCNS acting as the design authority and build all 6 ships entirely in Lumut, Malaysia. This represented the largest contract for the company since formation. The contract for the ships included intellectual property rights and technology transfer. The shipyard will undergo a major upgrade to accommodate the construction of the ships.

At DSA 2014, the program manager Mr Anuar replied to an interview saying that "The program is progressing rather well, with some parts already in critical design review" and "We expect the first ship to be finished by 2017 or early 2018". He also commented that the ships are "full fledged frigates and in my opinion, will be a huge deterrent for the Royal Malaysian Navy."

Various subcontracts like the Thales CAPTAS-2 Towed array sonar, the Bofors 57 mm gun, torpedo launching systems have already been awarded and the first ship is expected to be completed in 2018.

Complete article available at this page.