RM18m failed taxi venture

by R. Nadeswaran and Terence Fernandez, The Sun

Within 18 months of its setting up, Pempena Sdn Bhd, the business arm of Tourism Malaysia “invested” RM18.3 million in a taxi management company. When the agreement was terminated last October, there were several bruised faces and unanswered questions.

Pempena had entered into an agreement with Dalamasa Sdn Bhd in 2007 after it accepted a proposal to manage taxis under its Pempena Executive Taxi Service. Dalamasa had forecast annual profits of RM17 million  – an average of about RM161,000 from each of the 105 taxis.

The RM18.3 million investment comprises:
> RM7 million to buy five cars;
> RM1 million placed in fixed deposit with Public Bank Berhad and pledged for the hire-purchase facility;
> RM8 million for eight million redeemable preference shares in the taxi management company;
> RM3 million for operating expenses.

According to minutes of a special Pempena board of directors meeting on Oct 29, last year, Dalamasa – despite having received large sums of money – claimed that Pempena owes it a further RM1.5 million.

According to recent company records, Dalamasa’s stakeholders are Ab. Malik Ab. Rahim and Haslina Ngahadi (50,000 shares each); Rosli Abu Zarim (375,000 shares) and PETS Sdn Bhd – a subsidiary of Pempena — the controlling shareholder with 6.5 million shares. Its directors are Raja Norsan Raja Nasron, Wan Bahador Wan Ismail, who doubles as company manager, and Khazai Abu Bakar.

The Pempena directors were also told that Public Bank had approved the liquidation of Pempena’s RM1 million fixed deposit due to failure to service the loans for 21 units of Hyundai Sonata.

In addition, AmBank repossessed 25 Naza Ria vehicles, and had taken steps to auction at least six of them before agreeing to reschedule the loan repayments. Notwithstanding this, the Pempena board approved the payment of arrears of the hire-purchase loans, in effect “investing” more money into the company.

Pempena, at the same meeting decided to manage 47 of the taxis, lease 40 to interested operators and dispose 18 taxis for RM1.72 million. Datuk Idros Mohd, who sits on the board representing Tourism Malaysia then tabled revenue projection as follows:
> Monthly revenue of RM358,000;
> Lease per month per car between RM3,000 and RM5,000;
> Operation costs of RM243,000; and
> Monthly gross profits at RM115,000.

However, Idros’ proposal to recoup RM1.72 million from the sale of eight Mercedes Vito and 10 Mercedes E211 raises questions since this would mean setting a price of RM212,000 to RM170,000 per car when second-hand dealerships are willing to pay at least RM190,000 for a 2005 Vito and RM255,000 for a 2008-registered Vito.

A new Mercedes E211 fetches around RM345,000, with a depreciation value of 8-10% a year.

In spite of the clearly undervalued assets, the management of Pempena was given the mandate to implement this proposal. It is learnt that details of these and several other short-comings are contained in a yet-to-published special audit carried out by an independent firms of auditors.

However, it is not immediately known if the recommndations made have been carried out.