AV Birla Malaysian arm may invest $180 million

The Aditya Birla group's fully-owned Malaysian subsidiary Pan Century Edible Oils Sdn Bhd is likely to invest about $180 million over the next two years towards expansion in the oleochemicals business, said P R Thakore, vice-president - marketing. The company is a leading player in the oleochemicals market in Malaysia.

The company expects better growth prospects in oleochemicals than in edible oils trade with the former's demand rising 3-4 per cent annually.

"We are hopeful that the demand will grow further as a couple of inefficient plants in the European Union are on the verge of closing down. We, on the other hand, have an advantage with our base as Malaysia, the raw material source."

While two small-to-medium sized projects are in the pipeline, a big one is still on the drawing board, he said.

To double its soap noodle capacity, the company will invest about $30 million in a new project at its existing facility and this project is scheduled to become operational by January 2006, Thakore said.

Another project, envisaging an investment of $50 million, is planned to increase the company's production of fatty alcohol. Both projects will be funded by internal accruals, he said.

The company is at present contemplating setting up processing business in Indonesia to benefit from cheaper raw material.

"In Malaysia our plant is situated on the border with Indonesia. So just across the border, we are looking out for a plant involving a minimum investment of $75-100 million. The project will take at least a year to see light of day."

The company is not keen to enter the plantation business. "Our core competence is processing and we will stick to it."

Pan Century expects its turnover to touch 1.8 billion Malaysian ringgits (approximately $500 million) in 2004-05, year ending September. The company expects the turnover to grow by at least 10 per cent to 2 billion Malaysian ringgits in 2005-06.

The company has a 1 million tonne refiner with a capacity of 3,200 tonne per day. It produces 250,000 tonne of oleochemicals per year and is the largest Indian investment in Malaysia. The unit was set up with an initial investment of $75 million.

It supplies edible oils (on freight on board basis) and oleochemicals to about 60 countries, including India, and has a strong customer base of over 500.

(This correspondent's trip was sponsored by Malaysian Palm Oil Promotion Council)