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CHAIRMAN’S DELIVERING MSM MANAGEMENT DISCUSSION GROUP FINANCIAL
STATEMENT VALUE OVERVIEW & ANALYSIS REPORT

kEy RISkS &

MITIGATIONS

Risk Category Description Mitigation

Financial Risk A low capacity utilisation will result in a To restructure loan with bank
Poor generation decrease in price rate
flow from
operations

30
Financial Risk EOD under General Facility Agreement To seek letter of indulgence from the financier for
Non-compliance (GFA) will result in financier, accelerating the breach and deferment of the imposition of
MSM MALAYSIA HOLDINGS BERHAD Annual Report 2020
will trigger an Event repayment and may trigger cross-default financial covenants
of Default (EOD) on the other loans at MSM and FGV
(Letter of indulgence obtained from Financier dated
10 Dec 2020)

Operational Risk The performance of producing sugar Manage EPC contractor or supplier to provide
Inability to meet refinery unable to meet TAC as per performance guarantee
the Test After contract
Completion (TAC)
production per day

Operational Risk i. Aging machinery, computer software i. Comprehensive plant and machine upgrading
Failure of critical and hardware malfunctions, and replacement programme
equipment/ interruption of utility supplies, ii. Planned and scheduled maintenance and service
machinery production disruption and loss
iii. Ensure skilled and trained operators and
(Failure/tripping of ii. Malfunction of the weigher will technicians for maintenance work
steam boiler during result in error of weighing and
normal operation, wrong recording iv. Establish and update standard operating
Raw Sugar Weigher iii. Turbine generators tripping will procedures and hazard Identification, Risk
Malfunction, affect the plant production Assessment and Determining Control for all
Failure of turbine activities
generators, iv. Any breakdown or downtime will v. Establish a consistent schedule of maintenance
Failure of critical cause plant to shut down or melting and servicing of our refining machinery, and
equipment/ stop where identified have replaced aging machinery
machineries)
v. All these lead to higher operating with machine upgrades and replacements
cost, lower efficiency and loss of vi. Ensure maintenance plan are carried out
customer confidence
consistently