[Masked Listed Companies] Sehwa IMC Aims for a New Leap with New Business

[Asia Economy Reporter Jang Hyowon] Tire mold manufacturer Sehwa IMC entered the mask business last year. As its main business stagnated and it was considering new ventures, the company seized an opportunity in the mask business amid the spread of COVID-19. Equipped with mask production facilities capable of producing over 560 million masks annually, Sehwa IMC has recently signed supply contracts with international organizations, marking the beginning of substantial sales growth.

Sehwa IMC's mask production factory. There are 24 dental mask machines and 5 KF94 machines.
Photo by Jang Hyowon

Aiming for Reliable Clients and Large-Scale Long-Term Contracts

The Sehwa IMC headquarters consists of a total of 12 buildings, two of which are mask factories. The facility spans 18,996㎡ (approximately 1,500 pyeong). Existing factory equipment was relocated to other buildings to secure the site.

Entering the mask factory was not easy. First, workers had to wear dustproof suits and shoes and cleanse their bodies for 10 seconds in an air shower before entry. This was because a cleanroom similar to those in semiconductor production plants was installed to ensure mask quality control.

Inside the factory, a HEPA filter circulation system and humidity and temperature controllers were installed for strict management. It is said that when the Ministry of Food and Drug Safety inspected the mask factory, it referred to it as a quasi-GMP level facility. GMP stands for Good Manufacturing Practice for pharmaceutical manufacturing facilities.

Sehwa IMC invested 8 billion KRW in July last year to start the mask business. Approximately 5.6 billion KRW was spent on purchasing 24 dental mask production machines and 5 KF94 mask production machines, with the remainder used for cleanroom construction and material procurement. All production equipment is domestically manufactured. This factory can produce 500 million dental masks and 60 million KF94 masks annually. All masks have received certification from the U.S. Food and Drug Administration (FDA) and the European CE mark.

An employee manufacturing KF94 masks.
Photo by Jang Hyowon

In October 2019, Woosung Corporation became the largest shareholder of Sehwa IMC. Judging that the growth potential of the existing core tire mold market was stagnating, Woosung Corporation continued to explore new business opportunities. Amid the rising demand for quarantine products due to COVID-19, masks were selected as one of the new business ventures.

Inside the factory, employees appeared busy. On this day, an order from the United Nations (UN) was being fulfilled, producing masks to be sent to the Korea International Cooperation Agency (KOICA). Employees operating mask machines, sorting and packaging products, placing them in boxes, and wrapping them were all busy performing their respective tasks.

A company official stated, “Although this contract is not large in scale, it is meaningful in that we have started transactions with international organizations,” adding, “We will continue to strive to secure large-scale export contracts with overseas buyers.”

Currently, Sehwa IMC is pursuing the mask business with the goal of securing large-scale long-term contracts. The largest shareholder, Woosung Corporation, also owns about 100 production machines at its Eumseong factory and plans to jointly pursue large orders.

However, supply contracts are being carefully reviewed. There have been cases where orders were placed but contracts were later canceled. Recently, a listed company caused controversy after a large-scale supply contract was terminated. Therefore, Sehwa IMC is conducting more thorough verification of contract partners.

In fact, in January, the company disclosed a supply contract worth 1.3 billion KRW for KF94 masks to correctional institutions under the Ministry of Justice. This transaction with a government agency ensures a reliable primary order source, and contract details were disclosed in detail.

Masks to be supplied to the Korea International Cooperation Agency (KOICA).
Photo by Jang Hyowon

Business Expansion + Financial Structure Improvement... Fully Committed to Restoring ‘Trust’

The reason for conducting the mask business transparently is to build a trustworthy corporate image. Previously, Sehwa IMC lost its position as the number one tire mold company in Korea due to mismanagement by the founding family in 2018 and entered a creditor-led voluntary management process.

Since then, the new largest shareholder Woosung Corporation has worked hard to revive the company, reaching agreements with creditors for debt extensions last year. In November last year, a capital increase of 39.4 billion KRW was carried out to repay borrowings and reduce the debt ratio to below 100%.

Currently, Sehwa IMC is continuously exploring new businesses in materials and electronic components in addition to the mask business. As part of this, in December last year, the company acquired shares and goodwill of ‘Ventex,’ which develops new materials such as antiviral substances.

The company is also striving to secure competitiveness in its core business. Recently, as electric vehicles have become a trend in the automotive market, tires dedicated to electric vehicles are gaining attention. Accordingly, Sehwa IMC is conducting joint research and development of manufacturing equipment for electric vehicle tires with tire manufacturers.

A company official said, “The creditors believed in Sehwa IMC’s competitiveness, enabling its revival,” adding, “With 1,000 employees united, we will restore the lost trust in the market and regain our former status.”