IJM plans to list plantation unit


  • Business
  • Wednesday, 01 Jan 2003

By HASNI MOHD NASIR

IJM Corp Bhd expects to list its wholly-owned subsidiary IJM Plantations Bhd (IJMP) in three months, the timeframe usually taken by the courts to grant approval for a capital reduction exercise. 

Its group managing director Krishnan Tan Boon Seng said the company would submit an application to the High Court tomorrow – the final step for it to proceed with the listing exercise. 

“We have received the green light from all other parties concerned for us to proceed with the listing – the Foreign Investment Committee, the Securities Commission and shareholders,” Krishnan told re- porters after the company's EGM in Petaling Jaya yesterday. 

At the EGM, shareholders approved the distribution of 176.9 million IJMP shares on the basis of two IJMP shares for every five IJM shares held, and the proposed listing of IJMP in place of Rahman Hydraulics Bhd. 

The share distribution is to comply with the 25% public shareholding spread requirement for a public-listed company. 

To facilitate the capital distribution, IJM has proposed reducing up to RM96.689mil from its share premium account. 

IJM had earlier proposed to acquire the listing status of Rahman Hydraulics for RM25mil and an exchange of one IJMP share for every 40 Rahman Hydraulics shares. Upon the listing, IJM will hold a 49% stake in IJMP. 

Krishnan said the listing of IJMP was aimed at unlocking the value of the investments and to even out the mismatch between assets and returns. 

“When the two businesses of plantation and construction are lumped together, there would always be the question of huge assets as opposed to returns,’’ he said. 

Krishnan said that following the listing IJMP could proceed to be a significant player in the oil palm industry. 

IJMP has a total of 80,000 acres of plantation land in Sandakan, of more or less equal acreage of mature and immature trees, and unplanted areas.  

“We plan to double that acreage in 10 years' time,” he said. 

Krishnan said IJMP was also looking at mobilising its construction experience into the plantation sector. 

“IJMP is planning to invest between RM30mil and RM40mil to construct a jetty and a tank farm to serve all the oil palm plantations in the area,” he said. “Financing is already in place and we would be able to start construction in the 1st quarter of 2003.”  

On IJM, Krishnan said the outlook for 2003 would very much depend on the government pump-priming the economy through the construction industry. 

“The measures have been a blessing for contractors like us. We should be able to sustain our operations. Of course, competition will be greater, but if you are up the learning curve and keep your focus, then you should be okay,” he said. “Overall, it will be a decent year.”  

Krishnan said IJM's order books currently stood at RM1.4bil, with 20% of the projects coming from India. 

He said that even though there were opportunities in construction activities in territories like Sri Lanka, China and the Middle East, India remained familiar ground to IJM. 

“We have a reasonably good record and an existing team in India,” he said. 

Krishnan said that the RM1.4bil order book could be completed in one year, but he was confident as had been proven a number of times of securing more projects along the way. 

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