World's biggest condom maker Karex looks to float shares

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).

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"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.

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