TEXCHEM RESOURCES BHD. - Announcements - Bursa Malaysia

(ii) BENEFITS OF THE PROPOSED MANDATE
The details of benefits to be derived from the transactions are as follows:
(a) The sales and purchase of industrial chemicals, textile auxiliaries and
dyestuffs, industrial packaging, household insecticides, processed marine
products, Consumer Goods and Raw Materials reflects the synergy of the
Group as a manufacturer and trading house. In some instances the related
parties also acts as a marketing and distribution arm for the Group’s
products. These transactions are consistent with the Group’s corporate
objectives of brand-building, expanding the customer base for its products,
consolidating its market position and to provide business security.
(b) The management fee is for the procurement of management services. There
are costs savings and Group synergy in pooling and sharing of the Texchem
Group’s professional management resources and the availability of
professional specialist services on a shared basis.
(c) The rental is for the renting of office, hostel, factory premises, warehouses,
and facility usage. One of the premises rented serves as the regional head
office and warehousing centre of the TRB Group. The centralized location
of companies allows for better coordination and communication between the
companies. The warehousing centre facilitates prompt and better delivery
services. The rental of hostel and factory premise is for hostel and factory
building belonging to FMB and as the premises are readily available, the
Group can utilize the premises for its workers and production purposes to
optimise the utilisation of the Group’s resources. The rental expense of
public relations facility usage is the charge for the corporate use of Villa
Primavera for Group corporate events, public relations and business
development.
Such functions serve to foster closer relationship and rapport with investors,
bankers, business associates, government and statutory bodies, customers
and employees and also enhance the Group’s corporate image.
(d) The rental income is from the letting of the Group’s property and the subletting
of rented property. The letting of the property generates income for
the Group and higher utilisation of its assets.
(e) Provision of services is for the procurement of IT usage, insurance and
security services. This also includes income from the provision of
forwarding services. The centralised provision of IT mainframe hardware
and software services allows for a centralised sharing and sourcing of the
latest IT technology, standardisation of information processing system to
provide seamless information flow within the Group and costs savings.
Insurance coverage is taken up through an authorised insurance agent and
risk manager which can source for more competitive rates and
comprehensive cover and provides risk management consultation and
advisory services. Better security and protection of the Group properties,
assets and premises are ensured with the in-house security. Disruptions to
the Group’s businesses and operations are also minimised.
The forwarding and handling services is ancillary to the business of the
Group and services provided enables the Group to generate additional
revenue and to optimise the utilisation of its resources and personnel.
(f) The royalty payable is for the usage of intellectual property rights on
products such as mosquito coils, vape mats, vaporisers, flexo photopolymer
printing plates and plastic engineering precision parts. The intellectual
property rights are used in the manufacturing and marketing of the said
products within the licensed territory.
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