Financial Times

Guardian Group plans fresh capital infusion

The Guardian Group owned by Carson Cumberbatch and Company has announced plans to replant its oil palm plantations in Malaysia and indicated that it is planning a further infusion of fresh capital possibly through a rights issue.

This would be to take advantage of possibilities that could arise from stock market growth, possible privatizations and listing of new sectors such as infrastructure, the group's managers Carsons Management Services said in a statement.

The group has five Malaysian oil palm plantation companies quoted on the Colombo Stock Exchange - Shalimar (Malay), Selinsing, Indo-Malay, Good Hope and Bukit Darah - which collectively own 1,813 hectares of oil palm plantations in Western Malaysia

They reported a profit before tax of Rs 774.73 million for the financial year ending 31.03.2004.

Rs 97.44 million of this profit is attributable to plantations while Rs 677.29 million is attributable to investment income from the portfolios held by these companies.

Some of these investment holdings that were not generating an optimal return to shareholders were divested during the year to enable these companies to better apply their resources to their core business of plantations.

Furthermore, the market value appreciation of the plantation properties themselves, due to rapid urbanization and industrialization in Malaysia, would also lead to enhanced shareholder value in time to come, Carsons said.

It gave the Bukit Darah estate within a few kilometers of the capital Kuala Lumpur as one such example.

Carsons is in the process of selling this estate. "The sales proceeds would be re-invested in the oil palm plantation business in view of the industry's growth potential," Carsons said.

It said the plantation profits of the Malaysian companies have been gradually declining in recent year, due to the ageing of the palms and the resulting lower yields, as some of the planted areas were over 25 years old.

"These companies have now embarked on a planned, phased out replanting programme that will see yields and estate productivity improve over time, generating better returns to shareholders in future," the Carsons statement said.

Currently about 23 percent of the land area has been replanted. Estate infrastructure, including housing, is also being improved concurrently.

Replanting was undertaken in view of the future potential of this industry, which will see global consumption grow due to increasing usage in developing economies such as India and China, Carsons said. Recent world market price trends for the commodity have also been encouraging, it added.

Palm oil also has a variety of non-edible uses in addition to its predominant position as an edible oil.

holder value would also be enhanced with the Indonesian plantation project, PT Agro Indomas, in which these companies have an interest, when it begins to generate returns on reaching full maturity this year.

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