D&L investing in new factories

Five years after its last expansion program, chemical and food ingredient manufacturer D&L Group plans to build new manufacturing facilities in Batangas to set the stage for future growth.

In a disclosure to the Philippine Stock Exchange on Thursday, D&L Industries said two companies under the group – D&L Premium Foods Corp. and Natura Aeropack Corp. – submitted applications with the Philippine Economic Zone Authority (PEZA) for the registration of new manufacturing facilities in a PEZA zone in Batangas.

The proposed facilities will rise on a 26-hectare property in First Industrial Township, a special economic zone in Batangas. In line with D&L’s asset-light business model, the lot was acquired by the property company of the Lao family and it will be leased to the group.

The capacity-building project is expected to generate about 700 new jobs, with construction and commissioning to be completed in 2021.

“This initiative is part of the group’s strategic direction to grow the export business and focus on higher value and higher margin products. Once registered with PEZA, D&L Premium Foods and Natura Aeropack will be required to meet the 50 percent export sales requirement for Filipino enterprises,” D&L said.

D&L Premium Foods is a wholly-owned subsidiary of Oleo-fats Inc. (OFI) which was incorporated primarily to cater to OFI’s growing export business.

Natura Aeropack is 70-percent owned by Chemrez Technologies Inc. (CTI) and 30-percent owned by Aero-Pack Industries Inc. (API). Natura’s facilities will be used to manufacture coconut oil fractions, coconut-based surfactants, and downstream consumer products which are “sustainable, naturally-derived, mild and non-irritant.” This unit also offers healthcare, personal care, home care as well as baby care product applications.

OFI, CTI, and API are subsidiaries of D&L Industries.

The D&L group plans to finance the capital expenditure through debt and internally-generated funds.

“The planned expansion will position D&L Group to grow over the next 20 years. The group’s current utilization rate stands at 70 percent, allowing the group time to complete the expansion,” it said.

The last major capacity building of D&L had taken place prior to its initial public offering in 2012.

“The current operations in Metro Manila should experience no significant disruption,” D&L said.

D&L added that it would file the necessary disclosures in accordance to the guidelines and rules of the Philippine Stock Exchange, once further pertinent details are available.