KSL counts on Laos, Cambodia projects

Sugar giant plans for B20bn 2010 revenue

YUTHANA PRAIWAN

Khon Kaen Sugar Industry Plc (KSL), Thailand's fourth largest sugar producer, hopes its revenue will double to 20 billion baht in 2010, buoyed by returns from its seven-billion-baht investments.

''Revenue this year was projected at 10 billion baht, up 25% from a year earlier on high sugar prices driven by global supply tensions,''said Chanachai Chutimavoraphan, assistant vice-presidhdent of SET-listed KSL.

KSL reported net income of 159 million baht for its third quarter ending July 31, up 10% from 144 million a year earlier. Sales rose 32% to 2.8 billion during the same period. Revenue was 8.92 billion baht for the last fiscal year.

The company is now proceeding with its two-year investment plan ending next year, aimed at integrating the operations of plantations and sugar mills.

To finance the expansion next year, the group plans to issue two billion baht worth of bonds in November. The bonds will be divided into two lots, with maturities of three years and five years, valued at 1.5 billion and 500 million baht respectively.

He said that around three billion of the total seven-billion-baht investment budget will finance sugarcane plantadhtions and processing plants in Cambodia and Laos, both scheduled to start operation next year. The remaining four billion baht was earmarked for domestic investments.

He said these projects would help boost revenue to 12 billion baht in 2009.

The group was granted a 30-year concession to grow sugarcane on 60,000 rai in Laos and a 90-year concession for 120,000 rai in Cambodia.

In the first year of production, both projects would produce at 30% of their total capacities of 150,000 tonnes a year, expected to be achieved in 2010.

Mr Chanachai said the company hoped to benefit from growing sugarcane in the two countries, which as less developed nations have special export quotas from the European Union.

Under the special quotas, EU guarantees the prices 1.6 times higher than the global market prices through 2015.

In 2010, KSL's projects in neighbouring countries would contribute 20% to total revenue. Domestic revenue would drop to 60% from 80% as a result, with the remaining 20% being contributed by power and ethanol businesses. In 2010, its expanded sugar mills in Thailand would run at full capacity of 78,000 tonnes per day from 67,000 tonnes now.

KSL earmaked four billion baht for domestic growth including doubling its power plant's output to 40 megawatts and raising ethanol and fertiliser output to 350,000 from 150,000 litres per day.

As its biomass power plant received a United Nations clean development mechanism (CDM) certificate for cutting carbon emissions by 40,000 tonnes a year, from 2009 KSL could earn US$1 million a year trading carbon credits.

KSL shares closed yesterday on the SET at 8.50 baht, down 10 satang, in trade worth 6.3 million baht.