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Malaysia World’s BIGGEST condom maker going IPO (Public List)

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PONTIAN, JOHOR: Karex Industries Sdn Bhd, the world’s biggest condom maker, is looking to float its shares on Bursa Malaysia and tighten its grip on the global market.

With factories in Pontian, Klang and Thailand, Karex Group churns out some three billion pieces of condoms a year. This works out to a 15 per cent share of the world’s condom market of 20 billion pieces a year.

“We want to further expand our factories, including the one in Thailand. All in, we are producing three billion pieces now. We want to double our capacity to six billion pieces by 2015,” said Karex executive director Goh Miah Kiat.

“We see this a timely move as the world gains better awareness of condoms in the prevention of sexually transmitted diseases and family planning,” he told Business Times during a recent factory visit here.

“We plan to fund our expansion from bank borrowings and the capital market. We are in discussion with a couple of merchant bankers on our company’s initial public offering (IPO).

“If everything goes as planned, we have scheduled for our IPO to materialise in 2013. But then again, it also depends on the market sentiment,” he added.

Unknown to many, Malaysia has been the world’s largest producer of condoms since 2009 and continues to lead with exports. According to the Malaysian Rubber Export Promotion Council, Malaysia exported 4.37 billion pieces of condoms valued at around RM285 million last year.

There are only 13 players in the condom industry because of very high barriers to entry. A lot of money needs to be invested to ensure that the condoms comply with stringent requirements under the ISO 4074:2002, World Health Organisation (WHO) and ASTM D3492-03 standards.

In order to meet the ISO 4074:2002 standard, each condom is subjected to 100 per cent electronic testing. There are also random sampling of the condoms to further test the quality and elasticity of the rubber.

In an electrolyte water test, condoms are filled with water before they are submerged in a water tank. If there are pinholes in the condom, the machines detects them automatically.

Then, there is the burst test where air is pumped into condoms like it is done for balloons. A condom of 52mm width must be able to hold a minimum 18 litres of air and record air pressure of at least one kPa before bursting.

The condom’s width uniformity is measured by laying it flat across a ruler. Condoms are sold at varying widths of between 49mm and 60mm, of which 52mm is the most popular.

The ISO 4074:2002 standard requires a minimum length of 160mm, but the WHO mandates longer condoms of a minimum of 180mm for their intended markets.

Indeed, one size does not fit all.
When packaging their products, condom makers like Karex take note of the way of life in different regions of the world. In Asia, condoms are sold in pharmacies and handed out at hospitals. In Europe, however, consumers categorise condoms as a household product.

“Europeans buy condoms at the grocery stores. With the eurozone debt crises, many households have started to buy the more competitively-priced house brands and we have benefited from this. In uncertain times, people are more vigilant about birth control,” he said. – Business Times