D&L Industries to spend P8B for new production facility

Food and plastic input manufacturer D&L Industries has earmarked P8 billion to build a new production hub in a special economic zone in Tanauan, Batangas, creating additional capacity to meet growing demand, especially from overseas clients.

This initiative is part of the group’s strategic direction in the next 20 years as it seeks to grow its exports business and focus on higher value and higher margin products, according to D&L president Alvin Lao.

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 in a recent briefing.

The new production hub will rise on a 26-hectare property in First Industrial Township, a special economic zone.

Two new plants will be built —one for food ingredients under D&L Premium Foods Corp. and another integrated facility to manufacture oleochemicals and downstream packaging under Natura Aeropack Corp.

D&L Premium Foods is a wholly owned subsidiary of Oleo-fats Inc. that was incorporated to cater to the growing export business for food.

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 manufacturing of coconut oil fractions, coconut-based surfactants and downstream packaging for consumer products that are sustainable, naturally-derived, mild and non-irritant. Product applications extend to health care, personal care, home care as well as baby care.

Oleo-fats, Chemrez, and Aero-Pack are wholly owned subsidiaries of D&L Industries.

The P8-billion project cost is estimated to cover the construction of buildings, machinery and equipment. The first phase of the construction is currently underway.

The company plans to 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 arises.

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.

Aside from the planned facilities, there are no other major capital expenditures planned for the next few years.