Monday March 28, 2005 - Kulim (M) Bhd is giving itself two years toachieve a balance between its downstream and upstream activities. Itsmanaging director Ahamad Mohamad spoke to StarBiz on the steps taken bythe company to achieve the target.

STARBIZ: Why is it important for the company to have equal contributionfrom upstream and downstream activities?

Ahamad: Currently, 65% of our operations come from upstream activities and35% from downstream.By having equal contribution from both activities, the company will be ina better position to stabilise its income stream in the long run. It isimportant for the company to be strong in both divisions if Kulim wants toemerge as one of the leading plantation companies in the region.

StarBiz: What is your main focus now?

Ahamad: Our main focus is to expand the downstream activities, especiallyin the manufacture of oleochemicals and related by-products. The demandfor fatty acids, glycerine and esters is growing worldwide. For now, thecompany is focusing on its subsidiaries in Malaysia producingoleochemicals and related by-products used by companies in China, Europeand the US. Upon strengthening the local operations, we will focus ondeveloping our downstream activities in Indonesia and Papua New Guinea.The two countries offer good opportunities for the company as ourdownstream operations there are not fully developed and exploited.

StarBiz: Do you have any plans to expand your land bank for oil palmcultivation activities?

Ahamad: The company is always looking to expand its land bank for plantingpurposes, either by buying new land areas or acquiring existing oil palmestates. However, getting vacant land designated for large-scaleplantation in Malaysia is tougher and the asking prices are ridiculous.The only option for Kulim is to look elsewhere, apart from Indonesia andPNG. We see opportunities to expand our presence in the South PacificIslands. At the same time, the company is willing to dispose of certainparts of its estates in Johor to property developers who are willing topay good price.

StarBiz: Do you plan to acquire companies that will add synergy to youroperations?

Ahamad: Kulim is always open to new businesses, which will complement ouractivities, be it in upstream or downstream. In December 2002, the companyacquired a 30% stake in the Kuala Lumpur-based AsiaGreen Environmental SdnBhd. The company is a pioneer in turning empty fruit bunches and palm oilmill effluent into bio-compost fertiliser using the mill-integrated wastemanagement solution system. By using in-house bio-compost fertiliser, thecompany has managed to reduce money spent on using in-organic fertiliserpreviously. Kulim also benefits as it could sell the bio-compostfertiliser locally and overseas. We can also earn royalty from other millsthat want to duplicate our system.