CHEMICAL firm D&L Industries Inc. (DNL) said it will spend P8 billion to expand its facility at the 26-hectare property in First Industrial Township—Special Economic Zone in Tanauan, Batangas.
The company is 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 Corp.
DNL President Alvin Lao said the company may source part of the investments from debt and part from its earnings.
“Work has started in our new facility. We started to build over 50 storage tanks,” Lao told reporters.
The P8-billion spending for the project will cover the construction of the plant-specific buildings, machineries and equipment. About 70 percent of the spending will come from debt and the rest from internally generated cash.
Lao said its borrowing will take place 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 8 percent as of the end of the third quarter this year.
D&L Premium Foods is a wholly owned subsidiary of Oleo-fats Inc., to cater to the growing export business for food.
Meanwhile, Natura Aeropack is 70 percent owned by Chemrez Technologies Inc. and 30 percent owned by Aero-Pack Industries Inc. 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 nonirritant. Product applications extend to health care, personal care, home care, as well as baby care.
The first phase of the construction involves building storage tanks. More than 50 tanks, which can be as large as 2,000 cubic meters, will be built for the two plants.
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 the company at an arm’s length basis.
Aside from the planned facilities, there are no other major capital expenditures planned for the next few years. 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.
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, Lao said.