Carsons effects its biggest acquisition

Friday, 8 July 2011 03:49 -     - {{hitsCtrl.values.hits}}

Top blue chip Carson Cumberbatch Group has made its biggest ever acquisition investing Rs. 4.27 billion to take over a specialty fats manufacturer with operations in Malaysia and India.

The acquisition with strategic objectives comes hot on the heels of exiting from the previous biggest investment worth over Rs. 2 billion, to set up beer business in partnership with Carlsberg. With the latest move Carson Group makes a return to India to harness potential from the edible oils and fats market, among others.

In a statement Carsons said consequent to the recent restructure and consolidation of the Oil Palm plantation sector assets under Goodhope Asia Holdings Ltd. (GAHL) as the Plantations sector holding company of the Carsons Group based in Singapore, GAHL envisaged evolving as an integrated player within the edible oils and fats industry.

The rapid changes in the industry structure and dynamics made it imperative that GAHL extends its’ operations across the industry value chain and enhances in product and market reach.

The consolidation of the sector assets under one entity would thus facilitate GAHL in leveraging on its’ combined asset strength to expand both its’ upstream business and downstream business, one complementing the other.

In accordance with this strategy, GAHL is pleased to announce that it has successfully concluded the take-over of 3 of the operating entities of Premium Nutrients Bhd. (PNB), a specialty fats manufacturer with operations in Malaysia and India. Hence, GAHL Group has now acquired a 100% stake in the three operating Companies viz Premium Vegetable Oils Sdn. Bhd. (PVO), and Premium Fats Sdn. Bhd. (PF) each having manufacturing facilities in Malaysia, and Arani Agro Oil Industries Ltd. (AAO) which has a manufacturing plant in Andra Pradesh, India.

This acquisition will directly place GAHL group as an integrated player with significant downstream operations into specialised customer and product segments. This will further compliment the expansion in the upstream plantations and create a secure outlet for its increasing produce. More importantly enables GAHL to directly gain access to value added segments of the industry moving from its current commodity business, enable continuous product development through R&D and reach more specialised B2B customers. Thus, GAHL will be able to mitigate the commodity risks prevalent with upstream plantation operations, whilst at the same time being able to derive greater margins and value addition through specialty products.

Premium Nutrients, is a pioneer in the edible oils and fats industry with over 25 years of expertise in the manufacture of specialty fats. The company has innovated specialty fats for the bakery, confectionary, creamers and ice-cream industries through its advanced Research and Development capabilities for customer-specific food ingredient solution development.

The operations of the three manufacturing facilities encompass solvent extraction of palm kernel oil, refining of multiple oils including crude palm oil (CPO), palm kernel oil (PKO) and coconut oil (CNO). In addition to the manufacture of specialty fats, margarines and butter blends, it also caters to the animal feed industry.

Premium groups exports its specialty products to over 55 countries, catering directly and indirectly to multi-national players as well as regional brand leaders in the chocolates, confectionary and bakery industries. Its primary markets cut across the Middle East, CIS, Australia, China, North America, India and Europe. A majority of the products are tailor made to customer requirements as food ingredients for reputed international brands.

Further, the acquisition of Arani Agro Oil Industries Ltd. (AAO) provides direct access to the Indian edible oils and fats market considering the tremendous growth potential with an increasing middle income group. With the sustained economic growth and greater consumer demand, the edible oils industry as well as the specialty fats segment is poised to experience constant growth, thus providing further opportunities for AAO to expand from its current geographic locations to other locations and markets.

Most importantly, the acquisition of PNB subsidiaries will enable GAHL to expedite its value chain integration strategy that would otherwise have taken over a decade of effort to build on its own, with the required competencies and products for global markets and customer portfolios.

This acquisition will also create management and operational synergies through the combination of diverse competences and skills of GAHL and PNB subsidiaries, thereby resulting in increased shareholder value creation.

Through the expansion of volumes created by the acquired downstream operating companies, as well as the envisaged new product and market developments, GAHL would be in a position to generate constant increases in revenues and profitability.

The combined current turnover of the three PNB entities acquired is approximately RM 800 m (Rs. 29 billion) whilst their tangible total asset base (which does not include Brands, Patents & Trademarks etc) and debt portfolio is approx RM 334 m (Rs. 12.1 billion) and RM 265m (Rs. 9.6 billion) respectively. The total consideration paid by GAHL group for a 100% stake in the said three entities is RM 117.95 mn (approx. Rs. 4.27 billion), which has not only brought in an established business with over 25 years of expertise and resource-base built, but also provided access to an existing customer base of leading international brands. GAHL has directly acquired a comprehensive product portfolio and brands ranging from packed oils to advanced specialty fats and food ingredients, and industry-recognised R&D capabilities.

This acquisition will enhance the standing of GAHL within the industry, increasing its ability to further grow both in upstream and downstream businesses attracting other global players as business partners and evolve as a fully integrated player. GAHL envisions to further enhance the downstream business segment by upgrading the production and processing facilities acquired with the latest technologies, enhancement of supply-chain networks globally to enable servicing global food brands, acquiring highly specialised R&D capabilities, and entering into new markets through product innovations and market developments in pursuit of creating a globally recognised brand. Hence, the acquisition of PNB entities will bring immense value addition to the Group.