KJSB moving on
A KEEN investor would not miss the fact that Lityan Holdings Bhd has been
in the news of late. Call it investor relations on its part, as it is
evident that this information technology group is keen to portray that
things are indeed moving in the right direction.
In its heyday, Lityan was a favourite pick whose share price was chased
up to over RM20 pre-1997 crisis. Not any more. Now a penny stock, it is
almost out of investors’ radar due to its three consecutive years of
operational losses beginning FY1999.
In that year, the group saw a net loss of RM27.2 million from a net
profit of RM2.3 million in FY1998. The losses shot up to RM33.3 million in
FY2000 and a whopping RM110.4 million in FY2001. At the time of writing,
the FY2002 results are yet to be announced.
However, a new beginning may just be around the corner. Its executive
chairman Rahmat Harun, in an interview last November, pointed out that
Lityan had learnt from its past mistakes and that this could well be the
turning point for its business. `We are at the point of making a U- turn, a
return to profitability, a return to the black,’ he said.
For this to materialise, however, the ingredients have to be in place
and all three key business segments of the group, ie, network
infrastructure, system integration (SI) and e-business, have to deliver
their share of the bargain. In this aspect, there have been promising
developments in its network infrastructure and SI activities thus far.
Interestingly, Lityan started the year on a good note. Its wholly owned
SI subsidiary Konsortium Jaya Sdn Bhd (KJSB) executed an agreement on Jan
8, 2003 with the Malaysian Government for a RM48.5m SPEKS Roll- out Project
to provide a standardised accounting system for nine state governments.
KJSB general manager Ahmad Zaki Datuk Ahmad Maher says this followed the
successful implementation of the Sistem Perakaunan Berkomputer Standard
Untuk Kerajaan Negeri or SPEKS in the pilot states of Kedah and Perlis at
a cost of RM10.5 million.
Delivery of the project has commenced simultaneously in some of the
states and the whole project is scheduled for completion by 2004. The
states involved are Selangor, Melaka, Negri Sembilan, Pahang, Terengganu,
Johor, Perak, Penang and Kelantan.
`The project will last for two years, of which 75% will be implemented
and booked in this year,’ says Zaki.
In essence, it is primarily to supply, deliver, install, integrate,
test, train, commission and maintain the hardware, computer software and
the Standard Computerised Accounting System Application covering the
respective state treasuries and over a thousand Responsibility Cost
Centres or branches.
Although project-based, an important aspect of SPEKS is the potential
spin-off in terms of maintenance after the completion of the roll out
which will form recurring revenue flows to KJSB and the group as a whole.
KJSB is already generating some RM700,000 in maintenance revenue from
the pilot states and the potential for recurring income from the whole
SPEKS project is conservatively estimated at RM3 million to RM4 million a
In fact, this was the main reason why Lityan had expanded into the
network infrastructure business in 1998. Back then, it had envisaged to
generate sustainable income apart from merely banking on project- based
The group poured a lot of time and money into this area of business, but
the efforts have yet to bear tangible results although there has been much
progress. Among the main ones are the automatic meter reading (AMR)
project for Tenaga Nasional Bhd and installation of payphones in the
Lityan, in a pilot project, had provided Tenaga with 2,000 units of
wireless automatic meter readers to enable the utility company to control
power theft among large consumers. Tenaga is now aggressively looking to
curb power pilferage and reportedly would be allocating as much as RM2
billion over five years for this purpose.
In the meantime, KPSJ has been a main contributor to the group’s revenue
for the past two to three years. According to Zaki, KJSB accounted for
over 50% of the group’s revenue in FY2001, and as much percentage- wise in
FY2002. The target is to maintain the company’s contribution to the
group’s revenue for this year.
Zaki believes that KJSB will be able to achieve at least RM40 million in
revenue this year, of which a huge chunk would come from the SPEKS roll
out project and the SAGA accounting system.
Unlike SPEKS, which was designed for state treasuries, SAGA is for
government agencies. SPEKS is based on the cash accounting system, and
SAGA on the accrual accounting system. KJSB secured two new customers for
SAGA Version 3 last year, namely Lembaga Kemajuan Wilayah Kedah and
Lembaga Lebuhraya Malaysia.
Zaki is anticipating new customers to sign up this year, which will
bring in a minimum of RM10 million to be spread over one to two years. `We
will be making a presentation to our customers at the end of this month,’
What’s certain is that KJSB has not been taking it easy since the
economic crisis, as the company, according to Zaki, is quite well known
among government circles, especially in Putrajaya.
There, KJSB is involved in the Multimedia Gateway (MMG) system for
Perbadanan Putrajaya. The MMG enables the city control centre to centrally
monitor, control and manage the activities of the city.
Another is the ERMIS project or Enterprise Resource Management
Information System, which enables Perbadanan Putrajaya to standardise its
operation and procedures in areas of finance, accounting and human
resource. Both MMG and ERMIS currently bring in recurring revenues of
between RM1.8 million and RM1.9 million a year.
KJSB is well aware of the importance of `relationship building’ to keep
its existing customers happy. This would not only keep its rivals at bay,
but also open up cross selling opportunities.
Zaki foresees that KJSB’s current challenge is to increase margins by
controlling costs. To achieve this, KJSB is taking steps to enhance the
project methodology, educate customers through impact analysis and be ISO
The company believes that its technical strength of 50 people, in
addition to about five key strategic partners, is currently adequate to
meet its business requirements.
Going forward, Zaki envisions KJSB as being synonymous with quality and
timely delivery. Towards this end, KJSB prides itself that it has not once
failed to deliver all its projects so far.
It appears that until the network infrastructure segment of the group’s
business takes off to its full potential, KJSB would continue to be the
bread and butter of Lityan and not relegated to the back seat as yet.
Provided by ProQuest Information and Learning Company. All rights Reserved.