08/02/2012 (The Star) - Green Ocean Corp Bhd expects to start commercial production of its NoveLin cooking oil in April, said president and managing director McKin Lee Byoung Jin.

The company has been working on the palm oil-based product that could withstand cold weather since 2009.

Lee, a South Korean national who bought into Green Ocean three years ago, also said that the company was finalising a deal with two conglomerates for the exclusive supply of NoveLin.

“Production will be ramped up to 100,000 tonnes by the end of next year,” he told StarBiz.

New market: With the NoveLin technology, palm-based cooking oil will remain in liquid form
even in sub-zero temperatures. — Reuters

Under Lee's stewardship, Green Ocean had secured the exclusive licence to produce NoveLin edible oil from Malaysian Palm Oil Board (MPOB) in 2009.

Lee is a veteran in the Malaysian palm industry, having been in the sector over the last decade. In 2006, using MPOB's technology to produce biodiesel, Lee was instrumental in commercialising the production of biodiesel in South Korea.

NoveLin edible oil is a registered trademark technology developed by MPOB. Invented by Dr Siew Wai Lin of MPOB, NoveLin could change the landscape of the crude palm oil market by making it possible to export cooking oil to Europe.

Presently, palm-based cooking oil in its natural form cannot be exported to cold countries as it crystalises in temperatures below 15 degrees. With the NoveLin technology, palm-based cooking oil will remain in liquid form even in sub-zero temperatures.

Green Ocean subsidiary Ace Edible Oil Industries Sdn Bhd entered into the technology transfer and licensing agreement with MPOB for the production of NoveLin edible oil in 2008. Back then, it was still in the research and experimental phase.

“MPOB has exclusively given the NoveLin licence to Green Ocean for the commercialisation of the oil for 20 years, since 2009. Green Ocean will pay 1% royalties to MPOB for the sale of NoveLin oil throughout this period.

“We will start the commercialisation of NoveLin in April this year. Thus, this will be our new core business apart from our present activity of kernel crushing,” Lee said.

Green Ocean plans to start the construction of its second factory in September for the production of the 100,000 tonnes NoveLin oil. The facility will be completed in eight months and the first 10,000 tonnes will be exported to South Korea.

“The appreciation of palm oil is very much discounted globally simply because it is not stable in cold countries. Right now, Malaysia does export palm-based cooking oil but in extremely diluted form. It is mixed with other softer oils to ensure it remains in liquid form,” Lee said.

He added that Green Ocean had been researching and developing NoveLin over the last two years before finally getting the processes right.

“The tie-up with the conglomerates will be for an exclusive supply of NoveLin oil. There is a guaranteed quantity to be supplied and an indirect profit guarantee to ensure that Green Ocean does not bear risk,” he said.

Green Ocean was previously an information and communication technology (ICT) company known as Online One Sdn Bhd. Its business changed when Lee bought over and renamed it Green Ocean. He changed the business model to palm kernel crushing.

Nonetheless, Green Ocean had to write down the previous management's legacy bad debts, and recognise the depreciation charges from the previous business model. After three years of kitchen sinking, the balance sheet has now been cleaned up as the company enters a new phase of growth.

Lee said kernel crushing was a low-margin business and he planned the change the company's direction by value adding the kernels to also produce cocoa butter substitute.

He said as there were no more writedowns now, he was confident that Green Ocean would turn around this year.

For the second quarter to Sept 30, 2011, Green Ocean revenue was up 72.77% to RM44.43mil but it continued to be in the red with a net loss of RM271,000 from a loss of RM33,000 previously.

For its full year to March 31, 2011, it recorded revenue of RM152.6mil and net loss of RM2.9mil.

The company has cash of close to RM1mil and long and short-term borrowings of RM6.76mil.