Victorias Milling plans diversification
MANILA, Philippines—Sugar firm Victorias Milling Corp. plans to diversify into allied businesses to strengthen operations ahead of a low-tariff regime under the Asean Free Trade Area (Afta) by 2015.
Within the next two years, VMC may raise fresh funds to go into new ventures, first of which will be power co-generation, then bio-ethanol production and allied infrastructure like co-investing in a railroad system to transport sugarcane.
“The challenge is Afta, but we’re transforming VMC,” company chairman Wilson Young said in an interview at the sidelines of the company’s stockholders’ meeting last week.
VMC has obtained consent from its shareholders to amend its secondary purpose under the charter to allow the co-generation of electricity for its own use for lighting and other purposes. In addition to the leeway under its existing charter to go into manufacturing, agricultural, educational, mercantile, insurance, trading, real estate and fiduciary businesses, more amendments were made to include infrastructure, transportation, telecommunications, mining, water, power generation, recreation, financial or credit and consultancy.
In manufacturing, it was specified in the amendment that this would include but not be limited to ethanol and potable alcohol production, harnessing synergies from its sugar milling operations.
Young explained that the company was not planning to pursue all these activities, but only needed the flexibility. The amendments will be presented for approval by the Securities and Exchange Commission and creditor-banks.
“We definitely need new money,” Young said, when asked how new ventures would be funded. “We will study that; maybe in the next two years we can tap new loans again.”
Power co-generation could be prioritized, he said, because the feed-in-tariff (to encourage renewable energy) was already put in place by the government.
Reviving a railway system to transport sugarcane and passengers is also part of VMC’s plan for the future. The company earlier announced plans to spearhead a new railroad project in Negros Occidental to transport sugarcane and passengers. Such an infrastructure could reduce cost by about a third, Young said.