KUALA LUMPUR (March 1): Loss-making ATA IMS Bhd said its wholly-owned subsidiary, ATA Industrial (M) Sdn Bhd (AIM), is being sued by a motor supplier over a US$4.44 million (RM19.85 million) claim.

The Johor-based electronic manufacturing services group said the amount claimed by Johnson Electric Industrial Manufactory Ltd from AIM consists of payment for finished goods, payment for raw materials, storage costs and testing fees.

In a bourse filing, ATA IMS said Johnson was appointed by AIM’s customer, and AIM had issued purchase orders for motors specified by the customer for use in the customer’s products.

“Between 2020 and 2021, AIM had been issuing purchase orders to Johnson and in accordance with the customer’s orders and forecasts. But by way of email on May 10, 2022, AIM sought to cancel undelivered purchase orders issued to Johnson due to fluctuations in demand from AIM’s customer [but] Johnson rejected the cancellation of the purchase orders via email,” the group said.

It said that between June and July, 2022, AIM and Johnson were in discussions to resolve the matter by requesting for delayed and staggered delivery which Johnson rejected.

Later in July, Johnson proceeded to invoice AIM for the goods and issued a debit note for the costs of raw materials.

However, the group said the goods had not been delivered as Johnson requested full payment before the goods were to be shipped to AIM.

Johnson, through its solicitors, issued a letter of demand to AIM in November demanding full payment, before proceeding to file the lawsuit last week.

ATA IMS said AIM is currently in discussion with the end customer to evaluate whether the lawsuit is expected to have a significant impact on the operations on AIM and ATA IMS.

ATA IMS's share price closed down one sen or 3.13% at 31 sen on Wednesday (March 1), bringing the group a market capitalisation of RM373 million.