Sunday, 26 December 2010

Guan Chong banks on Batam plant to meet rising cocoa demand

Saturday December 25, 2010


JOHOR BARU: Cocoa-derived food ingredient processor Guan Chong Bhd is counting on its new processing plant in Batam, Indonesia, to meet strong demand from chocolate manufacturers globally.
Chief executive officer and managing director Brandon Tay Hoe Liansaid the companys plant in Pasir Gudang, Johor, had reached its maximum capacity of 80,000 tonnes yearly with no more room for expansion.
He said the RM80mil Batam plant on a 3.3ha site would start production in the first quarter of next year. Initially, it will be able to process 60,000 tonnes of cocoa beans that will be sourced from all over Indonesia.
Alan Tay How Sik (left) and Brandon Tay Hoe Lian with some of the company’s products.
The Batam plant will increase its annual capacity to 180,000 tonnes within the next three years, overtaking the Pasir Gudang plant, Tay toldStarBizWeek after Guan Chongs EGM recently.
At the EGM, shareholders approved the issuance of 80 million bonus shares on the basis of 1-for-3 at 25 sen each and 60 million five-year warrants on the basis of 1-for-4.
Tay said prior to the setting up of the Batam plant, 60% of the cocoa beans processed at the Pasir Gudang plant came from Indonesia. However, starting next year, the plant would process beans imported from Ghana, Ivory Coast, Papua New Guinea and Solomon Islands.
Tay said Guan Chong would be the first foreign company to set up a cocoa beans-processing plant in Indonesia. There are other similar plants owned by Indonesian companies in Java and Sumatra.
Executive director Alan Tay How Sik said by setting up a plant in Batam, the company would save on the 10% export tax imposed by the Indonesian government on cocoa beans and other costs, including freight charges, as the cocoa beans no longer needed to be sent to Johor.
He said the company also enjoyed pioneer tax status and incentives as the Batam plant was set up in a Free Trade Zone which offered good infrastructure.
How Sik said the demand for cocoa for dark chocolate was now on the uptrend following scientific findings that eating dark chocolate could help reduce cardiovascular disease.
Guan Chong is one of the top 10 cocoa ingredient makers in the world, producing cocoa-derived food ingredients such as liquor, butter, cake and powder under the Favorich brand.
For the nine months ended Sept 30, the companys revenue soared to RM836mil from RM425mil in the same period a year earlier while net profit jumped six-fold to RM57mil against RM8mil previously.

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