KUALA LUMPUR: Sime Darby Plantation Bhd (SDPlant), which yesterday announced a 35 per cent net profit surge in the second quarter to RM429 million, is keen to buy into India’s Ruchi Soya Industries Ltd.
SDPlant is also looking to selling a minority stake in New Britain Palm Oil Ltd (NBPOL) to an investor in Papua New Guinea, said SDPlant deputy executive chairman and managing director Tan Sri Mohd Bakke Salleh.
Ruchi Soya, which is listed on Bombay Stock Exchange, is India's largest supplier of edible oil with 19 per cent market share of 17 million tonnes consumed annually by 1.35 billion people there.
Two months ago, India’s National Company Law Tribunal ordered debt-ridden Ruchi Soya to file for bankruptcy and had Ruchi Soya put up for sale.
Two days ago, India’s mediahouse CNBC-TV18 reported that SDPlant was one of the suitors for Ruchi Soya.
The other global agri-business players keen to rescue Ruchi Soya are Adani Wilmar Ltd, Godrej Agrovet Ltd, Patanjali Ayurved Ltd, Emami Ltd, Cargill India Pvt Ltd, ADM Agro Industries India Pvt Ltd and Indonesia’s Musim Mas Group.
In a briefing here today, Bakke confirmed SDPlant was keen to buy into Ruchi Soya. “We have submitted our expressed interest in Ruchi Soya.”
On how much SDPlant is willing to pay for Ruchi Soya, he said: “We are in early talks so we are not able to reveal details.”
On NBPOL, Bakke said the group was hopeful of selling a minority stake to a strategic investor from Papua New Guinea.
“When Sime Darby bought into NBPOL in 2015, our intention was to only hold a controlling stake of between 51 and 60 per cent in NBPOL.
“This aspiration still holds up to today as we seek to sell a minority stake in NBPOL. We hope to secure a strategic investor for NBPOL, preferably from Papua New Guinea,” he said.
In March 2015, Sime Darby Bhd bought NBPOL for US$1.7 billion. NBPOL has a total agricultural landbank of 139,899ha, of which 86,542ha is planted with oil palms.
NBPOL also has more than 5,600ha of sugar cane and 8,956ha of grazing pasture, and operates 12 oil mills and two refineries in Papua New Guinea and Liverpool, the UK, as well as a seed production and plant breeding facility.
Last month, it was reported SDPlant is thinking of selling between 25 and 49 per cent stake in NBPOL and had asked advisers for proposals.
Analysts calculated SDPlant can reap some RM3 billion and substantially reduce its gearing level if it sells up to a 49 per cent stake in NBPOL.
Also present at the briefing today are SDPlant chief advisor and value officer Datuk Franki Anthony Dass, chief financial officer Renaka Ramachandran, chief operating officer (upstream) Helmy Othman Basha and chief operating officer (downstream) Mohd Haris Mohd Arshad.
The company’s net profit jumped to RM429 million in the second quarter ended December 31 2017 from RM319 million previously, thanks to higher palm oil prices and lower financing cost.
Its quarterly revenue went up four per cent to RM4.09 billion from RM3.93 billion a year earlier.
Bakke noted SDPlant’s earnings for the year ending June 2018 would be satisfactory on good production of oil palm fruits at its estates across Malaysia, Indonesia and Papua New Guinea.
At the close of trade yesterday, the third month benchmark palm oil futures on the Bursa Malaysia Derivatives Exchange was up 0.4 per cent at RM2,499 a tonne.
On palm oil price outlook, Bakke said it is likely to trade between RM2,500 and RM2,600 per tonne in the months ahead.
He cautioned that currency fluctuations and production volume of rival vegetable oils greatly influence price movements.
To a query on SDPlant’s succession plan, Bakke who has lead the Sime Darby team since 2010 and will be 64 years old this year, said: “I am due to retire next year and the board is looking at suitable candidates to succeed me.”