29/9/2005 (Business Times)- Catotech Bhd, a 51 per cent-owned unit ofHovid Bhd, plans to spend at least RM100 million to boost the capacity ofits biodiesel plant to meet rising global demand for "green" oil and palmoil-based health products.

Carotech managing director David Ho said the company is in talks withbankers on how much money it plans to raise.

It is also considering whether to boost the capacity at its existing plantin Ipoh, Perak, or build a new one.

"We also intend to talk to the Government to find out whether there areincentives for biofuel plants," Ho told reporters in Selangor yesterdayafter the launch of a new palm oil-based supplement called tocotrienolunder the brand name Tocomin.

The product was launched in conjunction with the ongoing InternationalPalm Oil Congress, or PIPOC 2005.

"We are still planning our expansion growth, whether to double, triple orgrow our capacity by eight times. We may want to set up a new plant closerto the sea," said Ho.

He also said that Hovid is planning to make its first foray overseas toIndia and China to set up drug-manufacturing facilities, either on its ownor in joint ventures.

"We are studying many cities in India, such as Mumbai, Hyderabad, NewDelhi or Bangalore. In some cases, the Indian Government offers betterincentives," said Ho.

Carotech, listed on the Malaysian Exchange of Securities Dealing andAutomated Quotation Bhd market, makes pharmaceutical products such asherbs, vitamins, drugs and anti-oxidants, and has about 300 products.

The company can produce 45 tonnes of crude palm oil a day, which can beprocessed into either vitamin E or biodiesel. These will be sold locallyor exported to about 30 countries.

Biodiesel is a mixture of a vegetable oil (palm oil, rapeseed oil) andpetroleum diesel. It can be used to power up either generators or dieselcar engines.

Carotech, set up in 1992, is the first and only integrated company in theworld to commercially extract vitamin E, mixed carotene complex andphytosterols from oil palm fruits.

Although vitamin E is found in barley and rice bran oil, palm oil has thehighest concentration among all known natural plant extracts.

Carotech's clients include the Health Ministry, medical practitioners,hospitals, clinics, institutional healthcare centres, pharmacies,traditional drug stores and supermarkets.

For the year ended June 2005, the company made a net profit of RM7.1million on the back of RM53.3 million revenue.

The company allocates 3 per cent of its annual revenue for research anddevelopment and launches up to 20 new health products every year.

Carotech's share price rose sharply recently on news reports that it isexpected to be a main beneficiary of the Government's emphasis on biofueland the rising global demand.

"Carotech and Hovid have registered double-digit growth for the pastseveral years, and both companies are expected to maintain thatperformance in the future," Ho said.

Carotech supplies 70 per cent of the world's tocotrienol output worth upto US$15 million (US$1 = RM3.77) a year, of which US$10 million isconsumed in the US.