MARKET DEVELOPMENT
Kulim Options for NBPOL Open
Kulim Options for NBPOL Open
30/06/2014 (The Star) - Kulim (M) Bhd will keep its options open on Papua New Guinea (PNG)-based New Britain Palm Oil Ltd (NBPOL), a company in which it is a major shareholder but does not run the operations.
Managing director Ahamad Mohamad, commenting on market talk of Kulim’s divestment in 48.97%-held NBPOL, said that Kulim had always kept its option open to strategic opportunities to realise the value for its assets.
“NBPOL is a valued investment for us. It was a small plantation company with 18,000ha of oil palm when we first acquired in 1996,’’ he told StarBiz.
Ahamad said since then NBPOL had grown manifold with Kulim having played a role as a supportive major shareholder in many of the corporate exercises that NBPOL had undertaken over the years.
StarBiz recently reported that seven parties, including four Malaysian plantation giants, had expressed interest to acquire a major stake in NBPOL.
Ahamad said that NBPOL had a separate management team and was fully responsible for all funding needs be they for operational or expansion purposes.
Notably, NBPOL has also been paying steady dividends with the exception of one to two years following the acquisition of Kula Palm Oil Ltd due to high financing needs.
“NBPOL has unique strengths that complement Kulim’s in many ways – in terms of geographical diversification for location and market penetration. In addition, NBPOL also owns some 30,000ha of new potential areas for oil palm planting,’’ added Ahamad.
NBPOL owns 77,000ha of oil palm plantations in PNG and the Solomon Islands, 12 palm oil mills and one refinery each in PNG and Liverpool. The group is also the largest sugar and beef producer in PNG through its over 7,700ha of sugar cane plantations and 9,200ha of grazing pastures, as well as a seed production and palm breeding facility.
Meanwhile Kulim would be allocating RM600mil as capital expenditure (capex) for the development of its Indonesian oil palm plantation located in North Barito, central Kalimantan.
Ahamad said the financial allocation would be for new planting programme and infrastructure cost for the estate there. This capex includes budget for the first 500ha of land clearing and the setting up of an oil palm nursery covering over 80ha costing about RM5mil.
“Estimated development period for our Kalimantan estate spanning 40,645ha is expected to take between seven and 10 years,’’ said Ahamad.
To recap, in October last year, Kulim had signed a sales and purchase agreement (SPA) with PT Graha Sumber Berkah acquiring 74% of the equity in PT Wisesa Inspirasi Nusantara (PT WIN) for US$43mil. The exercise saw Kulim re-entering Indonesia’s plantation sector in central Kalimantan, expanding the company’s land bank by approximately 40,000ha.
Ahamad said the company was currently undergoing the Roundtable on Sustainable Palm Oil (RSPO) audit on a staggered basis. The RSPO endorsement for the first 500ha new planting is expected to be received in the third quarter.
Ahamad said as the company expanded its oil palm land bank, it remained focused on managing cost of production to maximise margins and profitability, while at the same time abiding by the principles of sustainability.
Currently, Kulim’s direct land bank in Malaysia exceeds 50,000ha of which 47,000ha is planted with oil palm.
All its estates are located in Johor except for one at the border of Pahang.
“For 2014, we have planned for about 1,600ha of replanting exercise for our Johor estates costing RM10mil to RM15mil,’’ he said.
Replanting, according to Ahamad, was a yearly exercise for Kulim’s Malaysian plantations to keep the palm age at the optimum level.
Managing director Ahamad Mohamad, commenting on market talk of Kulim’s divestment in 48.97%-held NBPOL, said that Kulim had always kept its option open to strategic opportunities to realise the value for its assets.
“NBPOL is a valued investment for us. It was a small plantation company with 18,000ha of oil palm when we first acquired in 1996,’’ he told StarBiz.
Ahamad said since then NBPOL had grown manifold with Kulim having played a role as a supportive major shareholder in many of the corporate exercises that NBPOL had undertaken over the years.
StarBiz recently reported that seven parties, including four Malaysian plantation giants, had expressed interest to acquire a major stake in NBPOL.
Ahamad said that NBPOL had a separate management team and was fully responsible for all funding needs be they for operational or expansion purposes.
Notably, NBPOL has also been paying steady dividends with the exception of one to two years following the acquisition of Kula Palm Oil Ltd due to high financing needs.
“NBPOL has unique strengths that complement Kulim’s in many ways – in terms of geographical diversification for location and market penetration. In addition, NBPOL also owns some 30,000ha of new potential areas for oil palm planting,’’ added Ahamad.
NBPOL owns 77,000ha of oil palm plantations in PNG and the Solomon Islands, 12 palm oil mills and one refinery each in PNG and Liverpool. The group is also the largest sugar and beef producer in PNG through its over 7,700ha of sugar cane plantations and 9,200ha of grazing pastures, as well as a seed production and palm breeding facility.
Meanwhile Kulim would be allocating RM600mil as capital expenditure (capex) for the development of its Indonesian oil palm plantation located in North Barito, central Kalimantan.
Ahamad said the financial allocation would be for new planting programme and infrastructure cost for the estate there. This capex includes budget for the first 500ha of land clearing and the setting up of an oil palm nursery covering over 80ha costing about RM5mil.
“Estimated development period for our Kalimantan estate spanning 40,645ha is expected to take between seven and 10 years,’’ said Ahamad.
To recap, in October last year, Kulim had signed a sales and purchase agreement (SPA) with PT Graha Sumber Berkah acquiring 74% of the equity in PT Wisesa Inspirasi Nusantara (PT WIN) for US$43mil. The exercise saw Kulim re-entering Indonesia’s plantation sector in central Kalimantan, expanding the company’s land bank by approximately 40,000ha.
Ahamad said the company was currently undergoing the Roundtable on Sustainable Palm Oil (RSPO) audit on a staggered basis. The RSPO endorsement for the first 500ha new planting is expected to be received in the third quarter.
Ahamad said as the company expanded its oil palm land bank, it remained focused on managing cost of production to maximise margins and profitability, while at the same time abiding by the principles of sustainability.
Currently, Kulim’s direct land bank in Malaysia exceeds 50,000ha of which 47,000ha is planted with oil palm.
All its estates are located in Johor except for one at the border of Pahang.
“For 2014, we have planned for about 1,600ha of replanting exercise for our Johor estates costing RM10mil to RM15mil,’’ he said.
Replanting, according to Ahamad, was a yearly exercise for Kulim’s Malaysian plantations to keep the palm age at the optimum level.