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SUSTAINABILITY JOURNEY HOW WE ARE GOVERNED FINANCIAL STATEMENTS ADDITIONAL INFORMATION 51

Increasing Average Selling Price and
Domestic Market Demand Rising Natural Gas Cost

Margins were also sustained through higher Average Selling Natural gas cost is a key component of MSM’s refining
Price (ASP) in the domestic market to compensate for cost. The domestic natural gas price is linked to the volatility
higher input cost of production. This was made possible of Brent Crude Oil futures. MSM is hedging this risk with
through equitable negotiation outcomes with customers Brent linked derivatives like options and futures contracts.
which are also considered based on volume offtakes
which contributed positively to the Group’s performance. Ensuring Environmental License to
FY2021’s higher operational profit for the year is generally Operate
from the improved ASP.
MSM enforces that being caring for the environment
gives countless benefits to the society and living habitats
Warehouse Space Constraints surrounding our operations. MSM has taken proactive
engagement efforts with the communities with the following
There was limited internal storage for higher levels of refined initiatives:
sugar reserves. The full warehouses led to a slowdown in
production and increased operating cost per unit.

MSM Johor is currently building an additional warehouse In FY2021, the DOE agreed and approved that
with a 10,000 MT capacity and MSM is also exploring to mudcakes generated as by-products by the
establish a Northern Distribution Centre. refineries are no longer termed as Scheduled
Waste.
Improving Yield and UF in MSM Johor
Operations

MSM Group intensified focus towards improving yield and A trial programme between MSM Johor and
utilisation factor (UF) of MSM Johor to lower refining and FGV Fertiliser to turn mudcake into fertilisers
production costs. Operations in MSM Johor is back on track was initiated in October 2021, and potential
with the completion of its second boiler rectification work. collaborations with third parties and the
MSM Johor has set strategic targets to improve its financial research community to supply and study
performance in FY2022 with plans to ramp up MSM Johor mudcakes are being explored.
production after debottlenecking of processes.

COVID-19 Causing Operational
Disruptions MSM Prai signed a Certificate of Collaboration
with Penang’s DOE enabling green initiatives
There was a requirement for a temporary plant shutdown in preserving and conserving the environment
at MSM Prai caused by rising number of COVID-19 cases on 13 October 2021. This was kicked off with
that led to a potential disruption of Domestic sugar supply. a successful Mangrove replanting programme
To ensure sustainability of sugar supply and food security, alongside the riverbank of Sungai Perai.
MSM decided to undertake a strategic stockpile level of
reserves that included importation of refined sugar.