PT Sampoerna Agro, the palm oil plantation company owned by the Sampoerna family, said on Monday that in the long term it might convert sago producer PT National Sago Prima into a biofuels company.<\/p>\n
Sampoerna\u2019s purchase of 91.85 percent of National Sago Prima for $12 million last February, through its subsidiary PT Sampoerna Bio Fuels, was revealed in its annual report to the Indonesian Stock Exchange (IDX) earlier this month.<\/p>\n
Michael Kesuma, head of investor relations at Sampoerna Agro, said the acquisition was part of a strategy for the company to become a multi-plantation company.<\/p>\n
\u201cIn the long term there is a possibility to convert the acquired business into a biofuel producer, but now we are still focusing our business on palm oil,\u201d Michael said.<\/p>\n
Based in Riau, National Sago Prima has 13,000 hectares of Sago already planted and a license to plant an additional 8,000 hectares.<\/p>\n
Michael said that before it converts National Sago Prima to a biofuels producer it will continue producing sago for food. However, he did not give any time frame about when National Sago Prima might be converted to a biofuels producer.<\/p>\n
\u201cThe market is quite big because sago is a staple food in eastern Indonesia,\u201d he said. \u201cIt is also used as an ingredients in other food products.\u201d<\/p>\n
Several analysts expressed pessimism about the acquisition.<\/p>\n
Ricardo Silaen, an analyst at PT Kim Eng Securities, wrote in a report quoted by Bloomberg that the investment was risky because Sampoerna Agro had no experience in the sago business.<\/p>\n
It takes sago plants 10 years to be ready for first harvest, compared to four years for palm oil.<\/p>\n
Last year, Sampoerna Agro posted a Rp 282 billion ($31.3 million) net profit, down 36 percent compared to 2008 due to higher-than-anticipated foreign exchange losses and lower-than-expected interest income.<\/p>\n
Michael said this year the company will plant another 10,000 hectares of palm oil on top of its existing 95,000 hectares.<\/p>\n
Sampoerna Agro shares closed up Rp 25 on Monday at Rp 2,725.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/sampoerna-agro-mulls-making-biofuel-from-sago-1271118228", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }