FRENCKEN GROUP LIMITED
ANNUAL REPORT 2014
14
BUSINESS REVIEW
(CONT’D)
Operational Initiatives
In line with its long term growth strategy, the IMS Division
continues to sharpen its focus on the automotive business
which has nowbecome the division’s dominant revenue driver.
From an operational perspective, FY2014 was a difficult year
for the automotive business due to unfavourable exchange
rate movements, increased operating costs, pressure on selling
prices and operational challenges experienced at the Penang
plant.
On a brighter note, NTZ, which is headquartered in The
Netherlands, has been making encouraging progress. Already,
the IMS Division has secured orders from a major European
customer for NTZ’s proprietary high-quality oil filtration
products that are used in automotive transmission applications.
To build its capabilities in this niche oil filtration product for the
China market, the division has invested in a new clean room at
its plant in Zhuhai during FY2014.
To expand the scale of its automotive business, the IMS Division
is in the process of progressively building a higher level of
integrated capabilities at its factories in the region. The division
also intends to focus on resolving the operational challenges
at the Penang plant, while investing in new production and
automation equipment at certain manufacturing sites to raise
productivity and support future growth in sales volume. In
addition, it is looking to develop the automotive business in
the Thailand market to lower its dependence on consumer
electronics products. The production facility in Johor Bahru
was also awarded ISO/TS16949 certification during FY2014
which enables it to tap the automotive business.
