NEW DISEASES FUEL GROWTH IN GLOVES INDUSTRY

KUALA LUMPUR, Sept 3 (Bernama) -- The gloves industry is expected to grow
about 12 to 13 per cent per annum in the next two to three years on the back of
rising hygiene awareness.

The growth figure was very substantial, influenced by the emergence of new
diseases that prompted all glove players to optimise and running in full
capacity, said Hartalega Holdings Bhd executive chairman and managing director
Kuan Kam Hon.

"Even before H1N1 (a subtype of influenza virus A), we are already running
at full capacity and unable to deliver additional demand for customers.

"As such, we have actually embarked on an initiative to increase
productivity by speeding up our production lines by three per cent," he told
reporters after the company's annual general meeting here Thursday.

Previously, the industry grew at eight to 10 per cent.

Hartalega, Malaysia's largest nitrile gloves producer, currently operates 33
production lines producing 6.2 billion pieces of nitrile and natural rubber
gloves annually.

"Our inventory level is not healthy. We do not have excess inventory which
can serve urgent needs. We want to increase our inventory to an acceptable
level, which is around 30 days of sales," Kuan said.

Last year, the company's inventory level was 20 days of sale.

The paradigm shift in terms of usage from natural gloves to nitrile gloves
globally also boosted the demand, he said.

Hartalega currently holds around 25 to 30 per cent market of nitrile gloves
in the US health industry.

To cater to the escalating demand, the company is constructing Plant 5 which
will house 12 new advanced high capacity lines, and replacing ten lines at Plant
1 with six high capacity production lines.

Upon completion of Plant 5 by the second half of 2011, the company's
production capacity would increase to 10.5 billion pieces per annum, Kuan said.

"Plant 5 will still cater for developed markets but we are shifting our
focus to the European market to reduce our dependency on the US market;
exports to the country command a major portion of our production," he said.

For the financial year ending March 31, 2010, the company has allocated
RM130 million for capital expenditure including to finance the construction of
Plant 5 and upgrading of Plant 1.

In terms of borrowing, about RM10 million to RM20 million would be needed,
Kuan said.

Asked whether the company was looking at raising its prices, he said: "Yes,
we have started to increase prices since this month and we will do it in stages,
spread over September to November".

Nitrile material prices had gradually increased from March to September
around eight per cent due to tight supply in the market but the situation was
expected to ease in the coming months, he said.

He said the company was far better off in terms of managing its costs
because 80 per cent of its sales was nitrile gloves compared to natural rubber
gloves whose raw material prices had gone up by 39 per cent over the past nine
months. (US$1=RM3.54)
-- BERNAMA