Sime Darby Plantation eyes stake in troubled Indian firm

By P PREM KUMAR / Pic By ISMAIL CHE RUS

NEWLY-listed Sime Darby Plantation Bhd (SD Plantation) is geared up to acquire a stake in India’s largest edible oil manufacturer, Ruchi Soya Industries Ltd.

Executive deputy chairman and MD Tan Sri Mohd Bakke Salleh (picture) said SD Plantation has already submitted its preliminary interest notice to the Indian firm.

“We can confirm that we have submitted an interest to acquire a stake in the company, but it is still preliminary,” he told reporters in Kuala Lumpur yesterday.

Mohd Bakke said Ruchi Soya would be an ideal investment for SD Plantation, as it controls a substantial share of the Indian edible oil market.

“They used to control about 35% of the Indian edible oil market, with recent numbers suggesting up to 19% market share,” he added.

Mohd Bakke, however, did not divulge financial details of the deal.

Ruchi Soya is currently negotiating terms for debt resolution with its creditors as it battles insolvency proceedings in India’s National Company Law Tribunal with lenders DBS Bank Ltd and Standard Chartered Ltd for pending repayments worth US$27.7 million (RM108.49 million).

The Indian media had reported that Ruchi Soya’s total borrowings stood at US$797 million as of March 31, 2017. Meanwhile, Mohd Bakke said SD Plantation is also currently looking for a strategic partner to take up a minority stake in its Papua New Guinea unit, New Britain Palm Oil Ltd (NBPOL).

He said SD Plantation’s intention since investing in NBPOL is to hold “an ideal stake” of between 51% and 60%.

“We have been approached by some parties to purchase the stake but it must fit into our appetite. It will be on a willing buyer-willing seller basis and a strategic partner from Papua New Guinea would be our preference,” he added.

Analysts have indicated that SD Plantation could boost its cash reserve by about RM2.9 billion and substantially reduce its gearing level if it sells up to a 49% stake in NBPOL.

SD Plantat ion bought Roundtable on Sustainable Palm Oil-certified NBPOL, which has a total landbank of 139,899ha, in March 2015.

NBPOL is now 100% owned by SD Plantation, following a general offer that was exercised recently. Of the total NBPOL landbank, 86,542ha is currently planted with oil palm.

NBPOL also has more than 5,600ha of sugar cane and 8,956ha of grazing pasture.

The company also operates 12 oil mills and two refineries, one each in Papua New Guinea and Liverpool, UK.

NBPOL also owns a seed production and plant breeding facility.

Meanwhile, Mohd Bakke said SD Plantation expects crude palm oil price to hover between US$2,500 and US$2,600 per metric tonne.

On financial performance, he said SD Plantation expects to register satisfactory results in the current financial year ending June 30, 2018.

SD Plantation registered a net profit of RM429 million for the second quarter (2Q) ended Dec 31, 2017, 34% higher than the RM319 million registered a year ago.

Revenue also increased 4% to RM4.08 billion from the RM3.92 billion that was reported previously.