July 19 (Renewables Now) - Investment holding company Tek Seng Holdings Bhd (KLSE:TEKSENG) announced on Wednesday that its majority-owned Malaysian solar products subsidiary has decided to temporarily stop its entire production activities.
TS Solartech Sdn Bhd (TSST), in which Tek Seng holds a 50.69% stake, anticipates to cease photovoltaics (PV) production in the third quarter of the year. The move will affect a total of 118 production workers who will be made redundant, the company said.
TSST was profitable in each of the past three years, but started 2018 with an after-tax net loss of MYR 11.1 million (USD 2.7m/EUR 2.4m) on a revenue of MYR 4.1 million. The company explained its decision with the “very tough and challenging operating environment” that is the result of continuing tense competition in the sector, coupled with eroded solar cell prices due to excess inventory in the supply chain. Moreover, safeguard tariffs in the US and India have affected export sales of TSST products.
The board of the company is of the view that the situation will not improve in the near future, TSST said in a statement.
Ceasing production is expected to result in a one-off redundancy cost and impairment loss on assets, but the company is unable to estimate the exact amount at this point.
TSST noted that the provision of activities regarding a 1.1766-MW feed-in tariff (FiT) solar system will continue to be in operation.
(MYR 1.0 = USD 0.246/EUR 0.212)