D&L sets expansion for exports

D&L Industries, the country’s largest specialty foods ingredients, plastics and oleochemicals firm, is spending 18 billion over the next two years for the construction of its expansion facility aimed at ramping up its export sales.

In an interview, D&L president Alvin D. Lao said they are building two new plants – one for food ingredients (under D&L Premium Foods Corp.) and an integrated facility to manufacture oleochemicals and downstream packaging (under Natura Aeropack Corporation).

D&L Premium Foods will cater to the growing export business for food while Natura’s facilities will be dedicated for the manufacture of coconut oil fractions, coconut-based surfactants, and downstream packaging for consumer products which are sustainable, naturally-derived, mild and non-irritant.

Product applications extend to health care, personal care, home care as well as baby care.

“This initiative will position D&L Group for the next 20 years of growth, as part of the group’s strategic direction to grow its exports while focusing on higher value and higher margin products,” said Lao.

He explained that, since the facilities are inside a special economic zone, the bulk of the products made there will be for export.

Lao added that, “the project is expected to generate about 700 new jobs, with construction and commissioning to be completed by 2021. During this time, the company’s current operations in Metro Manila will not experience any significant disruption.”

The first phase of the construction is currently underway, which involves building storage tanks for its various raw materials and finished products such as vegetable oils and oleochemicals.

“More than 50 tanks (which can be as large as 2,000 cubic meters) will be built for the two plants,” said Lao adding that the total capacity of these tanks are double the existing capacity of all the group’s operating plants.

D&L will finance the project through a combination of debt (70 percent) and internally generated cash (30 percent).

“Borrowing will take place gradually over the next two years as the need for funding arises for the construction.

The company currently has low levels of debt, with net gearing coming in at just eight percent as of the end of the third quarter this year,” said Lao.

Lao said the expansion facilities will occupy less than half of a 26-hectare property in First Industrial Township – Special Economic Zone in Tanauan, Batangas — leaving more space for future expansion projects.

In continuation of D&L’s asset light model, the property company of the Lao family will finance and own the land and site infrastructure, including buildings for generic purposes.

In turn, these will be leased to D&L at an arm’s length basis.