KUALA LUMPUR (May 8): FGV Holdings Bhd is partnering with Indian company Pre Unique Pvt Ltd (PreU) to establish a direct presence in the Indian market.
According to a filing with Bursa Malaysia today, FGV’s subsidiary FGV Trading Sdn Bhd had signed a joint venture (JV) agreement with PreU to form a JV company, in which FGV and PreU will hold 70% and 30% respectively.
FGV group CEO Datuk Haris Fadzilah Hassan highlighted that the growth potential of India’s market is huge, given its more than 1.3 billion population, adding that the JV will serve as a vehicle for FGV to directly participate in the food products market in India, particularly in the South India region.
Previously, FGV Trading exported crude palm oil (CPO) and refined products into the Indian market, Haris said.
“This JV fits well into FGV’s long-term strategy to become one of the world’s leading integrate and sustainable agribusiness players.”
“It is also a great opportunity for FGV to create a presence along the palm oil value chain in the Indian consumer market, with a special focus on fast moving consumer goods (FMCG) food products,” Haris said.
The initial capital for the operation will be funded by FGV and/or its subsidiaries via internally-generated funds.
FGV Trading is the group’s one-stop entity, focusing on the bulk sale of vegetable oils, processed palm and lauric oils to local markets and export destinations such as China, India and Pakistan. It manages the entire end-to-end supply chain spectrum, as well as handling edible and non-edible products.
Meanwhile, PreU is involved in the business of engineering solutions for palm oil mills, biomass and gasification power plants, methane compost plants, civil constructions and all related works. In this JV, PreU will be responsible to provide local access and market reach for the JV.
Upon finalisation of the business plan, the proposed JV is expected to contribute positively to FGV group.
Barring any unforeseen circumstance and subject to all relevant approvals being obtained, FGV said the proposed JV is expected to be completed within six months from the date of this announcement.
Shares of FGV closed two sen or 2.12% lower at 92.5 sen today, with 28.24 million shares traded. This values the company at RM3.38 billion.
Year to date, the counter has fallen some 39%.