Scomi
Encyclopedia
Scomi Group Berhad is a global service provider based in Malaysia mainly involved in oil and gas and transport engineering.
Scomi Group Bhd which is listed on the main board of Bursa Malaysia Securities Berhad, and its Group of companies are involved in three core businesses: Oilfield Services; Public Transportation; and Marine Services. The Group offers Drilling Fluids (DF) & related engineering services, Drilling Waste Management (DWM) solution
s, distribution of oilfield products and services, marine vessel services, machine shop services, transport engineering solution
s involving special purpose vehicles, rail wagons, monorail vehicles and buses, supply of industrial and production chemicals and carbon dioxide (CO2) separation. With presence at 68 locations in 33 countries, the Scomi Group has almost 50 years of experience in the industry servicing numerous local and multinational customers.
s and drilling waste management services. Scomi is also a leading supplier of monorail projects through its Scomi Rail
subsidiary. Other companies under Scomi Group listed on Bursa Malaysia
Securities Berhad are Scomi Marine Berhad and Scomi Engineering Berhad.
Other companies in the Scomi group include Scomi Oilfield Limited (Bermuda), Scomi Oiltools Limited (Bermuda), Scomi Capital Limited (Labuan), Scomi International Private Limited (Singapore), Scomi Ecosolve Limited (British Virgin Islands). Source: www.scomi.com.my Website]
Scomi’s ability to harness the synergies between its varied businesses has seen it transform itself into an integrated solution
s provider in niche markets. Scomi’s subsidiary and associate companies are involved in the following range of activities:
1. Oilfield Services, which comprises integrated drilling fluids and drilling waste management solution
s; OCTG machine shops and distribution of oilfield products and services.
2. Transport Solution
s - which comprise of rail, monorail and buses for the transportation sector and special purpose vehicles for the aviation, health, defense, commercial and rescue services.
3. Energy Logistics, which provides marine vessels for the coal and oil and gas industry.
4. Production Enhancement, which comprises industrial and production chemicals division; and gas business, which mainly provides gas processing equipment.
and Kamaluddin Abdullah.
When the founders of the company took over Subang Commercial Omnibus & Motor Industries, the main motivation for the acquisition was the coach building business.
But soon they realized that its true potential actually stemmed from a little side business: drilling fluids (which lubricate drill bits that dig through the earth in search of crude oil and gas).
Eventually, the drilling fluids business became a major growth driver for the group, which led to its listing on the then second board of Bursa Malaysia.
The timing of Scomi’s flotation in 2003 was fortuitous. Worldwide, oil and gas stocks were on the ascendent, owing to skyrocketing crude oil prices. Back home, Scomi and many of its peers rode on that wave.
Scomi’s appetite for acquisitions continued to grow. In 2004, it bought a 71% stake in Oiltools International Ltd to expand its oil and gas business.
Not long after that it took over jewellery company Habib Corp Bhd, which would later become Scomi Marine, and it entered into a RM1.3bil deal to buy vessels from Chuan Hup and stakes in CH Offshore Ltd and PT Rig Tenders Indonesia.
Its next big move was to inject its engineering division into the listed shell of Bell & Order Bhd which later became Scomi Engineering in 2006.
In 2007, Scomi Engineering bought Mtrans, a bus and monorail operator, for RM25mil and this business became the springboard from which the group would venture abroad in a big way.
But the aggressive expansion plans put a strain on the company. Disappointment set in for those who invested in the stock for its high growth potential. Believing that the market didn't understand their global ambitions, Scomi's founders pressed on.
Scomi’s major shareholder is Datuk Kamaluddin Abdullah, son of former prime minister Tun Abdullah Ahmad Badawi. Part of the hype surrounding the stock’s rally earlier was very much related to that – rightly or wrongly.
In the past, the company’s officials, more specifically Shah Hakim, have denied the company had been a beneficiary of such patronage, highlighting that the bulk, or 85%, of its revenue came from outside Malaysia.
The global financial crisis had badly hit the company, which had aggressively expanded abroad. The debts it took to fund the expansion weighed down the company and the cashflow from its existing businesses, especially its oil and gas division, fell short of earlier estimates.
To pare down its debts, Scomi divested some of its assets, including Oiltools, while it undertook a massive housekeeping of its finances. As a result, the company had cut costs by US$25mil a year.
In April 2010, Scomi Marine completed the sale of a 29.07% stake in Singapore-listed CH Offshore Ltd for S$143.5mil, making a gain of RM161.9mil. In May, Scomi sold its machine shop business to Sumitomo Corp for RM327.7mil.
In July 2010, Scomi Marine announced its plan to sell a majority stake in PT Rig Tenders and other assets to an Indonesian fund for RM550mil.
Scomi Marine managed to cut debts from US$170mil to US$50mil and with the sale of CH Offshore and PT Rig Tenders, it will be able to emerge with a clean slate and RM600mil in cash.
At the group level, the company has debt papers of RM250mil and its oilfield division has debts of some US$100mil. The target is to bring down the debts of the group and the oilfield division to RM400mil.
Scomi is now in the midst of a three-year programme that runs till 2011. The target is for the businesses within the group to generate a return on capital employed (ROCE) of 25%. To this end, the company has scrutinised its profits, cashflow and balance sheet management.
Having done so, it has identified the companies or businesses within the stable that have no chance of meeting the ROCE target by 2011. It sold its machine shop which was facing margin pressures.
Similarly for the marine business the price of vessels at one point was so high that it was pointless to buy new vessels as it would not have met the internal rate of return of 15%.
While oil and gas, which is expected to contribute 40% to group revenue, continues to be its pillar, it’s the monorail business that’s getting the company really excited, given the enormous potential of urban transportation globally and more so, in three of its target markets – India, Brazil and Indonesia.
The group’s major breakthrough in the global monorail space came when Scomi Engineering won a RM1.84bil bid in 2008 to build a monorail project in Mumbai with its Indian partner Larsen & Toubro. Its share of that job is RM823mil and projected margins are between 10% and 20%.
The Mumbai project has since been its launch pad to compete on an international scale to grab more jobs. Once the job is completed some time mid next year, and apart from the KL Monorail, it’ll have the Mumbai monorail to further sweeten its track record.
India is a difficult market to crack for international companies but given its involvement in Mumbai, sources say the company has been approached for monorail projects in other Indian cities.
Currently Scomi is one of only two companies in the world providing integrated monorail solution
s, and this has led to it garnering business in India, in Mumbai and Bengaluru (Bangalore)
Scomi's bid in Karnataka state (for Bengaluru) in South India will undergo the Swiss Challenge system, when the components of the bid are made public, and anyone is free to challenge any component. This provides for greater transparency and technical excellence.
Here is a complete list of monorail projects involving Scomi:
Scomi projects have received positive media coverage, as they offer innovative solution
s to over-loaded cities like Mumbai and Bengaluru.
Scomi Engineering ploughs back some 20% of its revenue into research and development on trains to build more efficient monorails. The next-generation monorails it is building is called Gen 3.0 and would be the size of a LRT wagon.
It is also evaluating the prospect of going into trains, where it can build LRTs or EMU (electrical multiple units), which is the kind of trains KTM uses for commuter service.
Amongst the most recent awards is the prestigious GreenTech Environment Excellence Silver Award 2009, awarded by New Delhi's GreenTech Foundation. Scomi was declared the winner of the award under the engineering sector for raw materials consumption and products manufactured for buses and coaches which contributed to the protection of the environment and surrounding community.
Scomi won the Industry Excellence Award 2008 given by the Malaysian Ministry of International Trade and Industry for its performance in exports.
. These sanctions arose following allegations of Scomi being part of an international nuclear proliferation
programme masterminded by Pakistan's Dr A.Q. Khan
.
The Malaysian police announced that one of Scomi's main backers, B.S.A. Tahir, confessed to helping Dr Khan sell nuclear secrets and supplies to Iran and Libya. Tahir, a Sri Lankan national, is reported to have links with international crime boss Dawood Ibrahim
. Tahir was detained without trial from 2006 to 2008 for allegedly being a national security risk, having been accused of fraudulently convincing a Scomi subsidiary company to produce components for centrifuges to be used in a uranium enrichment program.
Scomi has insisted that B.S.A. Tahir had misled it to believe that the parts were for the oil and gas industry. However, B.S.A. Tahir is reported to have said that Scomi's CEO, Shah Hakim Zain, and Scomi's main backer, Kamaluddin Abdullah (son of then Prime Minister Abdullah Ahmad Badawi
), both knew the final destination of the products. He has accused Scomi of making fraudulent declarations and in 2009 he sued Shah Hakim and Kamaluddin for MYR75 million.
The Inspector General of Police in Malaysia investigated these allegations in depth, and concluded that in his report that:
"The management of SCOPE were unaware that the exported components were part of certain centrifuge unit for LIBYA. The management of SCOPE considered it a legitimate business deal. To untrained eyes, such components would not raise any concern, as the components are similar to components that could be used by the 'petrol -chemical industry' and 'water treatment' and various other industries."
Investigators also found that "SCOPE obtained the semi-finished product to produce the said components from a German company Bikar Metal and this gives the impression that these items are not controlled items. In view of the foregoing, the work that was carried out on the semi-finished product is legitimate and does not give rise to suspicion." (Quotes are from Police report)
Thus Shah Hakim Zain stands cleared of any wrongdoing.
Scomi Group Bhd which is listed on the main board of Bursa Malaysia Securities Berhad, and its Group of companies are involved in three core businesses: Oilfield Services; Public Transportation; and Marine Services. The Group offers Drilling Fluids (DF) & related engineering services, Drilling Waste Management (DWM) solution
Solution
In chemistry, a solution is a homogeneous mixture composed of only one phase. In such a mixture, a solute is dissolved in another substance, known as a solvent. The solvent does the dissolving.- Types of solutions :...
s, distribution of oilfield products and services, marine vessel services, machine shop services, transport engineering solution
Solution
In chemistry, a solution is a homogeneous mixture composed of only one phase. In such a mixture, a solute is dissolved in another substance, known as a solvent. The solvent does the dissolving.- Types of solutions :...
s involving special purpose vehicles, rail wagons, monorail vehicles and buses, supply of industrial and production chemicals and carbon dioxide (CO2) separation. With presence at 68 locations in 33 countries, the Scomi Group has almost 50 years of experience in the industry servicing numerous local and multinational customers.
Activities
Scomi is one of the world’s leading providers of oilfield drilling fluids solutionSolution
In chemistry, a solution is a homogeneous mixture composed of only one phase. In such a mixture, a solute is dissolved in another substance, known as a solvent. The solvent does the dissolving.- Types of solutions :...
s and drilling waste management services. Scomi is also a leading supplier of monorail projects through its Scomi Rail
Scomi Rail
Scomi Rail, formerly MTrans and Monorail Malaysia, is a subsidiary of Scomi Group of Malaysia.-Under construction:* Jakarta Monorail * Putrajaya Monorail * Mumbai Monorail...
subsidiary. Other companies under Scomi Group listed on Bursa Malaysia
Bursa Malaysia
Bursa Malaysia is an exchange holding company approved under Section 15 of the Capital Markets and Services Act 2007. It operates a fully integrated exchange, offering the complete range of exchange-related services including trading, clearing, settlement and depository services.- History :Bursa...
Securities Berhad are Scomi Marine Berhad and Scomi Engineering Berhad.
Other companies in the Scomi group include Scomi Oilfield Limited (Bermuda), Scomi Oiltools Limited (Bermuda), Scomi Capital Limited (Labuan), Scomi International Private Limited (Singapore), Scomi Ecosolve Limited (British Virgin Islands). Source: www.scomi.com.my Website]
Scomi’s ability to harness the synergies between its varied businesses has seen it transform itself into an integrated solution
Solution
In chemistry, a solution is a homogeneous mixture composed of only one phase. In such a mixture, a solute is dissolved in another substance, known as a solvent. The solvent does the dissolving.- Types of solutions :...
s provider in niche markets. Scomi’s subsidiary and associate companies are involved in the following range of activities:
1. Oilfield Services, which comprises integrated drilling fluids and drilling waste management solution
Solution
In chemistry, a solution is a homogeneous mixture composed of only one phase. In such a mixture, a solute is dissolved in another substance, known as a solvent. The solvent does the dissolving.- Types of solutions :...
s; OCTG machine shops and distribution of oilfield products and services.
2. Transport Solution
Solution
In chemistry, a solution is a homogeneous mixture composed of only one phase. In such a mixture, a solute is dissolved in another substance, known as a solvent. The solvent does the dissolving.- Types of solutions :...
s - which comprise of rail, monorail and buses for the transportation sector and special purpose vehicles for the aviation, health, defense, commercial and rescue services.
3. Energy Logistics, which provides marine vessels for the coal and oil and gas industry.
4. Production Enhancement, which comprises industrial and production chemicals division; and gas business, which mainly provides gas processing equipment.
History
The Scomi Group has its roots in Subang Commercial Omnibus & Motor Industries (S.C.O.M.I.) incorporated in 1990. In 2000, Scomi was acquired by Kaspadu Sdn Bhd a company controlled by Shah Hakim ZainShah Hakim Zain
Shah Hakim @ Shahzanim bin Zain is Chief Executive Officer and controlling shareholder of the Malaysian public company Scomi Group Bhd.-Background, early corporate years:...
and Kamaluddin Abdullah.
When the founders of the company took over Subang Commercial Omnibus & Motor Industries, the main motivation for the acquisition was the coach building business.
But soon they realized that its true potential actually stemmed from a little side business: drilling fluids (which lubricate drill bits that dig through the earth in search of crude oil and gas).
Eventually, the drilling fluids business became a major growth driver for the group, which led to its listing on the then second board of Bursa Malaysia.
The timing of Scomi’s flotation in 2003 was fortuitous. Worldwide, oil and gas stocks were on the ascendent, owing to skyrocketing crude oil prices. Back home, Scomi and many of its peers rode on that wave.
Scomi’s appetite for acquisitions continued to grow. In 2004, it bought a 71% stake in Oiltools International Ltd to expand its oil and gas business.
Not long after that it took over jewellery company Habib Corp Bhd, which would later become Scomi Marine, and it entered into a RM1.3bil deal to buy vessels from Chuan Hup and stakes in CH Offshore Ltd and PT Rig Tenders Indonesia.
Its next big move was to inject its engineering division into the listed shell of Bell & Order Bhd which later became Scomi Engineering in 2006.
In 2007, Scomi Engineering bought Mtrans, a bus and monorail operator, for RM25mil and this business became the springboard from which the group would venture abroad in a big way.
But the aggressive expansion plans put a strain on the company. Disappointment set in for those who invested in the stock for its high growth potential. Believing that the market didn't understand their global ambitions, Scomi's founders pressed on.
Scomi’s major shareholder is Datuk Kamaluddin Abdullah, son of former prime minister Tun Abdullah Ahmad Badawi. Part of the hype surrounding the stock’s rally earlier was very much related to that – rightly or wrongly.
In the past, the company’s officials, more specifically Shah Hakim, have denied the company had been a beneficiary of such patronage, highlighting that the bulk, or 85%, of its revenue came from outside Malaysia.
The global financial crisis had badly hit the company, which had aggressively expanded abroad. The debts it took to fund the expansion weighed down the company and the cashflow from its existing businesses, especially its oil and gas division, fell short of earlier estimates.
To pare down its debts, Scomi divested some of its assets, including Oiltools, while it undertook a massive housekeeping of its finances. As a result, the company had cut costs by US$25mil a year.
In April 2010, Scomi Marine completed the sale of a 29.07% stake in Singapore-listed CH Offshore Ltd for S$143.5mil, making a gain of RM161.9mil. In May, Scomi sold its machine shop business to Sumitomo Corp for RM327.7mil.
In July 2010, Scomi Marine announced its plan to sell a majority stake in PT Rig Tenders and other assets to an Indonesian fund for RM550mil.
Scomi Marine managed to cut debts from US$170mil to US$50mil and with the sale of CH Offshore and PT Rig Tenders, it will be able to emerge with a clean slate and RM600mil in cash.
At the group level, the company has debt papers of RM250mil and its oilfield division has debts of some US$100mil. The target is to bring down the debts of the group and the oilfield division to RM400mil.
Scomi is now in the midst of a three-year programme that runs till 2011. The target is for the businesses within the group to generate a return on capital employed (ROCE) of 25%. To this end, the company has scrutinised its profits, cashflow and balance sheet management.
Having done so, it has identified the companies or businesses within the stable that have no chance of meeting the ROCE target by 2011. It sold its machine shop which was facing margin pressures.
Similarly for the marine business the price of vessels at one point was so high that it was pointless to buy new vessels as it would not have met the internal rate of return of 15%.
Monorail Projects
Monorails form an area of increased focus for Scomi, as the company seeks to diversify its business lines.While oil and gas, which is expected to contribute 40% to group revenue, continues to be its pillar, it’s the monorail business that’s getting the company really excited, given the enormous potential of urban transportation globally and more so, in three of its target markets – India, Brazil and Indonesia.
The group’s major breakthrough in the global monorail space came when Scomi Engineering won a RM1.84bil bid in 2008 to build a monorail project in Mumbai with its Indian partner Larsen & Toubro. Its share of that job is RM823mil and projected margins are between 10% and 20%.
The Mumbai project has since been its launch pad to compete on an international scale to grab more jobs. Once the job is completed some time mid next year, and apart from the KL Monorail, it’ll have the Mumbai monorail to further sweeten its track record.
India is a difficult market to crack for international companies but given its involvement in Mumbai, sources say the company has been approached for monorail projects in other Indian cities.
Currently Scomi is one of only two companies in the world providing integrated monorail solution
Solution
In chemistry, a solution is a homogeneous mixture composed of only one phase. In such a mixture, a solute is dissolved in another substance, known as a solvent. The solvent does the dissolving.- Types of solutions :...
s, and this has led to it garnering business in India, in Mumbai and Bengaluru (Bangalore)
Scomi's bid in Karnataka state (for Bengaluru) in South India will undergo the Swiss Challenge system, when the components of the bid are made public, and anyone is free to challenge any component. This provides for greater transparency and technical excellence.
Here is a complete list of monorail projects involving Scomi:
- KL Monorail Developed by Scomi Transport Systems
- Jakarta MonorailJakarta MonorailThe Jakarta Monorail was a planned monorail system in Jakarta, Indonesia. While construction of pylons started in 2004, financial problems and legal disputes soon stalled the project, and in March 2008 developers PT Jakarta Monorail officially abandoned the project.In September 2011, the Jakarta...
(work suspended) - Putrajaya MonorailPutrajaya MonorailThe Putrajaya Monorail is an incomplete monorail system in Putrajaya. Putrajaya was originally to have a light rail system, and construction of tunnels for said system was ongoing, when plans were changed, and a monorail plan was selected...
(work suspended) - Mumbai MonorailMumbai MonorailThe Mumbai Monorail is a monorail system currently under construction for the city of Mumbai, India. Once completed it will be world’s second longest Monorail corridor. It is being contracted by the Mumbai Metropolitan Region Development Authority and will be the first monorail in India...
(work began in January 2009) - São Paulo Metro Line 17 GoldLine 17 (São Paulo Metro)Line 17 - Gold is a future project of the São Paulo Metro.This new line will have 14 stations, beginning at the São Paulo-Morumbi station and ending at the São Judas Station. In contrast to the other metro lines, Line 17 will be a monorail...
, in Brazil, connecting busy inner city Congonhas airport to several conventional rail metro lines and the affluent district of Morumbi - Manaus Monorail, in Brazil
- Proposal accepted by Karnataka Govt for Bengaluru monorail, currently headed for Swiss Challenge system
Scomi projects have received positive media coverage, as they offer innovative solution
Solution
In chemistry, a solution is a homogeneous mixture composed of only one phase. In such a mixture, a solute is dissolved in another substance, known as a solvent. The solvent does the dissolving.- Types of solutions :...
s to over-loaded cities like Mumbai and Bengaluru.
Innovation and Research
Typically, monorails carry fewer passengers than a LRT or MRT. After extensive research and development, Scomi came up with the newest-generation monorail with an eight-car configuration, versus the current four-car configuration for the monorail in Mumbai. This monorail can carry 1,000 passengers, the same as a six-car LRT. These trains are also very silent and energy efficient.Scomi Engineering ploughs back some 20% of its revenue into research and development on trains to build more efficient monorails. The next-generation monorails it is building is called Gen 3.0 and would be the size of a LRT wagon.
It is also evaluating the prospect of going into trains, where it can build LRTs or EMU (electrical multiple units), which is the kind of trains KTM uses for commuter service.
Awards
Scomi has been awarded several times for its work in the field of green technology.Amongst the most recent awards is the prestigious GreenTech Environment Excellence Silver Award 2009, awarded by New Delhi's GreenTech Foundation. Scomi was declared the winner of the award under the engineering sector for raw materials consumption and products manufactured for buses and coaches which contributed to the protection of the environment and surrounding community.
Scomi won the Industry Excellence Award 2008 given by the Malaysian Ministry of International Trade and Industry for its performance in exports.
Controversies
In the past, Scomi has faced US sanctions imposed on CEO Shah Hakim ZainShah Hakim Zain
Shah Hakim @ Shahzanim bin Zain is Chief Executive Officer and controlling shareholder of the Malaysian public company Scomi Group Bhd.-Background, early corporate years:...
. These sanctions arose following allegations of Scomi being part of an international nuclear proliferation
Nuclear proliferation
Nuclear proliferation is a term now used to describe the spread of nuclear weapons, fissile material, and weapons-applicable nuclear technology and information, to nations which are not recognized as "Nuclear Weapon States" by the Treaty on the Nonproliferation of Nuclear Weapons, also known as the...
programme masterminded by Pakistan's Dr A.Q. Khan
Abdul Qadeer Khan
Abdul Qadeer Khan , also known in Pakistan as Mohsin-e-Pakistan , D.Eng, Sc.D, HI, NI , FPAS; more widely known as Dr. A. Q...
.
The Malaysian police announced that one of Scomi's main backers, B.S.A. Tahir, confessed to helping Dr Khan sell nuclear secrets and supplies to Iran and Libya. Tahir, a Sri Lankan national, is reported to have links with international crime boss Dawood Ibrahim
Dawood Ibrahim
Dawood Ibrahim , also known as Dawood Ebrahim, and Sheikh Dawood Hassan, is the head of the organized crime syndicate [[D-Company]] in Mumbai. He is currently on the wanted list of Interpol for organised crime and counterfeiting. He was No. 4 on the Forbes' World's Top 10 most dreaded criminals...
. Tahir was detained without trial from 2006 to 2008 for allegedly being a national security risk, having been accused of fraudulently convincing a Scomi subsidiary company to produce components for centrifuges to be used in a uranium enrichment program.
Scomi has insisted that B.S.A. Tahir had misled it to believe that the parts were for the oil and gas industry. However, B.S.A. Tahir is reported to have said that Scomi's CEO, Shah Hakim Zain, and Scomi's main backer, Kamaluddin Abdullah (son of then Prime Minister Abdullah Ahmad Badawi
Abdullah Ahmad Badawi
Tun Abdullah bin Haji Ahmad Badawi is a Malaysian politician who served as Prime Minister from 2003 to 2009. He was also the President of the United Malays National Organisation , the largest political party in Malaysia, and led the governing Barisan Nasional parliamentary coalition...
), both knew the final destination of the products. He has accused Scomi of making fraudulent declarations and in 2009 he sued Shah Hakim and Kamaluddin for MYR75 million.
The Inspector General of Police in Malaysia investigated these allegations in depth, and concluded that in his report that:
"The management of SCOPE were unaware that the exported components were part of certain centrifuge unit for LIBYA. The management of SCOPE considered it a legitimate business deal. To untrained eyes, such components would not raise any concern, as the components are similar to components that could be used by the 'petrol -chemical industry' and 'water treatment' and various other industries."
Investigators also found that "SCOPE obtained the semi-finished product to produce the said components from a German company Bikar Metal and this gives the impression that these items are not controlled items. In view of the foregoing, the work that was carried out on the semi-finished product is legitimate and does not give rise to suspicion." (Quotes are from Police report)
Thus Shah Hakim Zain stands cleared of any wrongdoing.