30/8/06 (The Star) - KUALA LUMPUR: Kumpulan Fima Bhd (K-Fima) is banking on its venture into the palm oil-based biodiesel business to boost earnings from next year onwards.

Group managing director Ahmad Riza Basir said the group expected to start its biodiesel operations in the second quarter of 2007, when the plant being built by Malaysian Palm Oil Board (MPOB) became operational.

The plant, which will be leased to K-Fima for RM1.15mil a year over the next 20 years, would have an annual capacity of 60,000 tons.

“We have had potential customers visiting the site over the past months. 

“No contract has been signed yet but as anybody in the biodiesel industry would tell you, the prospects are good,'' Ahmad Riza told reporters at the group's AGM yesterday.

K-Fima is one of three companies selected to lease MPOB-built biodiesel plants under the tie-up announced in December last year. It also has the option the buy the plant from MPOB after five years.

Ahmad Riza said the group's capital outlay for the project would be around RM5mil, which would be spent to connect pipes from its adjacent bulking facilities to the plant.

K-Fima would also be manning the facility and operating it, including finding buyers for the product.

On the group's prospects for the year ending March 31, 2007, Ahmad Riza said the target was to achieve 5% to 10% growth in revenue.

K-Fima recorded net profit of RM34.5mil on revenue of RM300.3mil for the year ended March 31, with the bulk of its income contributed by 60%-owned listed unit Fima Corp Bhd.

The company, which is engaged in printing of security documents, also expects to perform better this year on new contracts and improving efficiency.

The group's other core businesses of food processing, bulking and trading are all expected to remain profitable this year.