By Liz Lee

KUALA LUMPUR – Dyson supplier ATA IMS Bhd has stated that on Friday, it was taking serious allegations of forced labour and physical abuse in an audit report it received form the maker of home appliances.

ATA issued the following statement on Thursday after Reuters reported that Dyson had cut ties to Malaysian client Dyson. The report sent Dyson shares plummeting.

According to the manufacturer, as soon as Dyson was informed of its audit, they immediately hired a team of consultants to examine and validate their findings and take remedial steps if necessary. The manufacturer did not specify who they hired.

ATA also stated that it had appointed a Malaysian law firm to review the claims of physical abuse made by former workers. A detailed report will soon be completed and findings shared with the public.

According to it, “The preliminary findings from the independent legal firm suggest that the allegations may be unjustified.”

Dhan Kumar, a former ATA employee, said to Reuters that ATA officers took him to a local police station in June. Here he was questioned regarding sharing information on conditions at the factory. Then he was beaten and questioned by police. Malaysian police didn’t respond to our request for comment.

Limbu revealed to Reuters his story about being taken by Dyson to the police station.

ATA claimed that they are subject to periodic audits and inspections regarding the working and living conditions and health of their workers.

It stated that forced labor was not found within the company in any of its audits or inspections.

STOCK TUMBLES

Shares of ATA (which makes parts for Dyson vacuum cleaners/air purifiers) plunged another 36.6% Friday. They have also lost over half their value ever since Thursday’s publication by Reuters.

Analysts project years of losses for ATA, as well as challenges in securing customers after these revelations.

AmInvestment Bank noted that Dyson’s full effect is anticipated in the 2023 fiscal year. This would have a “severely adverse” impact on ATA earnings in that year as well.

Dyson is responsible for around 80% of ATA’s revenues.

AmInvestment said that ATA could have the time and resources to make up some lost orders by partnering with customers already in place.

An analyst that covers the company predicted losses for two-three more years. He also said that ATA might face “quite a few obstacles” in ramping up production for its customers, given the allegations.

The analyst stated that Dyson’s departure from ATA could be a benefit to SKP Resources, and VS Industry, rival electronics manufacturing service providers. He declined to name them due to confidentiality.

It is a lucrative business to be in the electronics manufacturing industry. With the rise of Internet of Things, there are many products they could look into. But, ATA could have trouble getting new customers,” said the analyst.