Tuesday May 4, 2004 - PAN-Century Group, the investment arm of Indianconglomerate Aditya Birla Group, plans to increase its investments inMalaysia by up to RM400mil over the next five years, said newly appointedcountry head Ravi Kastia.

He said the group would in the near term be focusing on its basic,downstream oleochemicals business such as production of fatty acids andsoap noodles as the refining business continued to show negative returns.

In fact, investments to the tune of RM100mil are currently being made toincrease our capacity in the oleochemicals business, Kastia told StarBizin an interview in Kuala Lumpur.

Pan-Century Group started its manufacturing operations in Pasir Gudang,Johor, in 1978 under the name of Pan-Century Edible Oils Sdn Bhd (PCEO).

The success of its edible oils operations encouraged the group to setPan-Century Oleochemicals Sdn Bhd (PCOC) in 1990 to cater to the growingdemand for fine vegetable-based biodegradable oleochemicals. Now, PCOC isthe third largest oleochemicals company in Malaysia.

In fact, the group's edible oils plant in Johor is believed to be thelargest single-location integrated palm oil refinery in the world,according to Kastia, who is also Pan-Century's senior president.

The total capacity of the PCEO refinery is 1.12 million tonnes per yearwhile that of PCOC is about 125,000 tonnes, he said.

Kastia said that with the edible oils industry continuing to face a marginsqueeze, Pan-Century planned to raise the efficiency of its plant withhigher yields and by optimising utilities consumption and overheads.

We will also be working to tie up crude palm oil (CPO) supplies on along-term basis with plantation companies, he said, explaining that as astand-alone refinery without plantation backing, the facility faceddisadvantages in terms of regular supplies at reasonable prices.

In the area of oleochemicals, Kastia said: Due to the availability ofin-house raw materials, Pan-Century has a distinct advantage in terms ofconsistent quality which enables us to be ahead of the competition in themarketplace.

He said the group was shifting its focus to being a solutions providerrather than just a generic producer of oleochemicals. We are currentlyworking with long-term customers to provide them with custom-madeproducts, he added.

PCEO is primarily involved in the production of refined, bleached anddeodorised (RBD) palm olein, RBD palm oil, RBD stearin, split anddistilled fatty acids, soap blends, stearic acid, soap noodles andglcycerine, while PCOC makes capric-caprillic acids, lauric acids,myristic acid, stearic acid and glycerine. And these products are exportedto more than 400 customers in some 60 countries.

Over the past five years, Pan-Century's annual turnover has been in therange of RM1bil to RM1.5bil.

Turnover in this industry is dependant on the CPO prices which fluctuatewidely, Kastia said.

According to Kastia, Pan-Century expects this year to be a good one forthe refinery business, especially if demand from big consuming nationslike China and India comes as expected. But it only expects modest returnsfrom oleochemicals and soap noodles in view of the high raw materialprices.

The Aditya Birla Group is one of India's largest conglomerates withrevenues of more than US$5.6bil, net earnings of US$500mil and a US$6bilasset base. Apart from Malaysia, it has operations in Thailand, Indonesia,the Philippines, Canada and Egypt.