By Mary Grace Padin
LEADING hybrid-rice seeds and premium rice producer SL Agritech Corp. (SLAC) said on Friday it is set to expand its production and market penetration in the next two years.
SLAC Chairman and CEO Henry Lim Bon Liong told reporters in an interview that the company is aiming to triple its production growth and increase its foreign shipments as part of its plans for expansion in the next couple of years.
“The potential of SLAC is great in terms of market penetration and financial performance. Expansion is the way forward,” Bon Liong said during the listing ceremony of SLAC’s short-term commercial paper (STCP) program in Makati City.
Bon Liong said the company’s faster growth in the next two years will be possible through the P1 billion it has raised from the sales of its STCPs.
This is the SLAC’s first time to issue STCPs. The public offering was closed on Wednesday after an oversubscription by up to P300 million, Bon Liong said.
The agricultural firm tapped Multinational Investment Bancorporation as its sole issue manager, lead arranger and underwriter, while the AB Capital and Investment Corp. and Philippine Commercial Capital Inc. served as its selling agents. The STCPs were listed with the Philippine Dealings and Exchange Corp.
Bon Liong said the proceeds will be used for the expansion efforts of the company.
“We really hope to triple our business for the next two years, and one good thing is as we grow, the farmers grow together with us. Any investor that would put their money on SLAC would know that this money is at least used to help in uplifting the lives of our farmers,” he said.
For the next fiscal year, 2016 to 2017 alone, Bon Liong said the volume and capacity of the company is expected to increase by 10 percent to 15 percent. SLAC’s current fiscal year ends on May 30.
The company is also planning to double its seeds production and growing area from 300,000 hectares to 600,000 hectares, at most, next fiscal year, he added.
He said the potential for growth for the company is great as the country’s population grows and the need to produce more food becomes more urgent. He said many countries have expressed their interest to buy SLAC’s signature brand, the Doña Maria rice, and to cultivate the company’s high-yielding rice varieties, such as SL-8H.
SLAC has already introduced its rice varieties to neighboring countries such as Indonesia, Myanmar, Bangladesh and Vietnam, while its Doña Maria Jasponica and Miponica rice brands are being shipped to the US, Canada and the Middle East.
Bon Liong said Dubai is currently its biggest market for premium rice as there are many overseas Filipino workers there.
Just recently, SLAC signed an agreement with the government of Myanmar to provide that country’s farmers technical assistance in growing hybrid rice. The company is also eyeing the exports of Doña Maria rice to China.
“Three Chinese companies or importers want to buy [Doña Maria] rice, but of course, we have to hurdle the quarantine protocols of China,” Bon Liong added.
He also said he is contemplating the possibility of making Myanmar as the company’s manufacturing hub for its exports to China—should it successfully address the nontariff constraints it is facing.
He said it will be much easier to ship rice to China from Myanmar, as producing rice in that country is much cheaper than in the Philippines and it is just outside the border of China.
“It will [also] depend on how much we succeed in Myanmar. [Our agreement with them] is short term. Hopefully, we can do some follow up later on,” Bon Liong said.
“We view the whole Asean region as a manufacturing hub. Indonesia is also inviting us to do production there. They have a big market, but we’ll do one thing at a time,” he said.
SLAC is also looking at Europe as another potential market.
“We are starting to be more aggressive in our export market. Before, we didn’t have an international team. Now we have one. They are going to international food shows and trade fairs,” the company chairman said.
After its expansion plan in the next two years, Bon Liong said the agricultural firm will look into holding an initial public offering. The chairman has announced in the past SLAC’s plan to become public.
“It will not be fair to my company if I go public at a very early stage. I know the potential of my company. I know it’s worth at least P20 billion. But if I go public earlier, we might only be valued at less than P10 billion. But after two years—after our expansion—then I think we could go public,” he said.