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GSS Energy to acquire Batam land, build factory for S$8m

OIL and precision engineering group GSS Energy is planning to acquire land in Batam and to build a factory there for S$8.04 million.

The firm on April 25 entered into a sales and purchase agreement with PT Lindung Alam Batam for the piece of land, measuring 50,000 sq m, at Horizon Industrial Park in Kecamatan Sagulung.

It plans to build a two-storey building of about 13,124 sq m that will house the manufacturing and production operations of its precision engineering business.

The group currently rents its factory at Citra Buana Industrial Park II in Batam which is a major expense for the group, said chief executive Sydney Yeung.

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The acquisition will result in cost savings and boost its margins in the long run, according to GSS Energy.

"After paying down the purchase price for approximately five years, we will own the piece of land and the factory with zero rental costs to pay," said Mr Yeung in a press release.

The new facility, when fully utilised, will also raise capacity by about 60 per cent as the group is expecting more order inflows from both existing and new customers.

The consideration comprises S$4.5 million for the land, payable over 60 months, and S$3.54 million for construction of the building, payable over 48 months.

This will be funded by the group's internal resources.

"Barring any unforeseen circumstances, we are cautiously optimistic about maintaining our level of profitability with our existing customer base while expanding our manufacturing and service capabilities to secure more contracts and add more new customers," said Mr Yeung.