By SHAZNI ONG / Pic By RAZAK GHAZALI
FGV Holdings Bhd’s wholly owned subsidiary, Delima Oil Products Sdn Bhd, is aiming to double its monthly sales in the food service sector over the next year with the distribution reach of DKSH Holdings (M) Bhd in the country.
Delima Oil acting CEO Shammim Azad Kamruzaman said the target was made following a distributorship agreement with DKSH (M) Sdn Bhd, a unit of DKSH Holdings, to widen the distribution of FGV’s downstream products into the hotels/restaurants/cafe (Horeca) sector.
“We are increasing both in terms of our volume and value. Whatever we do this year, we are looking to double it up next year. Our business for food service only constitutes about 10% of Delima Oil business right now, which is roughly a monthly turnover of about RM3 million.
“So, we are (planning) to look at doubling it up within next year,” he told reporters at a press conference after the distributorship signing agreement in Kuala Lumpur yesterday.
The agreement will see the distribution of Delima Oil’s products such as Saji cooking oil and creamer, and Adela margarine, shortening and dough fat to the food industry across Peninsular Malaysia.
Shammim Azad added that Delima Oil is leveraging on DKSH’s network and hopes its products will now be able to reach a wider range of consumers.
“We want to increase our value chain in terms of reaching the Horeca and food service segments. Delima Oil speciality has been in retail and it’s time we expand our reach to the food service sector through DKSH expertise as our strategic partner,” Shammim Azad said.
FGV group CEO Datuk Haris Fadzilah Hassan said the collaboration is part of the group’s strategic plan to expand its downstream business into the untapped food service market.
He added that there is a huge demand for halal and high-quality ingredients in the Horeca sector, and the FGV group hopes to tap into this demand because food service operators are attractive customers as they order in large quantities on a recurring basis.
“DKSH has a wide and efficient distribution network that could build and further position Delima Oil as a dominant edible oils and fat player in the domestic market, and eventually the international market,” he said.
Meanwhile, FGV COO of plantation sector Syed Mahdhar Syed Hussain does not rule out Delima Oil expan- ding into other segments and overseas markets in the future.
“We produce the biggest volume of crude palm oil (CPO) and must try to capture any leakages in the whole value chain. At the moment for the Malaysian market, we are looking at DKSH to service all of our Horeca outlet and food services,” he said.
DKSH head of country management and VP of finance Nicholas McLaren said the company is open to mergers and acquisitions (M&As) if there are synergistic opportunities to add value to the company’s business.
In March this year, DKSH completed its purchase of Auric Pacific (M) Sdn Bhd from its Singapore shareholder, Auric Pacific Group Ltd, for RM480.91 million.
Auric Pacific, known for its SCS butter/cheese, Buttercup luxury spread and Twin Cows blended spread, also distributes sauces and breakfast cereals such as Lee Kum Kee, Heinz, Kraft, McCain, Sara Lee and Berri.
“We are always open to the idea, but it is not really the cornerstone of our strategy right now. The reason Auric Pacific was such a good fit for us is because it operates in a very similar segment that we were not in — food service — something that they have expertise in. But it is not a thing that we will be looking to do a lot more in the immediate term,” he said.
Asked if Delima Oil is open to possible M&A with competitors, Syed Mahdhar said “Delima (Oil) is not for sale”.
FGV closed half-a-sen lower at 93 sen yesterday, valuing the company at RM3.4 billion, while DKSH Holdings closed three sen lower at RM2.53, giving it a market capitalisation of RM398.9 million.