Fulfilling a global ambition

  • Corporate News
  • Thursday, 03 Oct 2019

Up next: Agromate Holdings Sdn Bhd CEO Edward Tang hopes to grow overseas sales contribution to 50% by 2023, from around 30% now.

A FAMILY-ORIENTED culture is the bedrock upon which Agromate Holdings Sdn Bhd (AHSB), an integrated fertiliser manufacturer and distributor that turned 40 this year, has built on over the decades.

Raymond Tang, who founded the group in 1979 and now chairs it, spent years building up the business and its reputation for dependability in Malaysia.

Today, the group supplies an estimated 25% of all the fertilisers used in the country.

To become a one-stop fertiliser manufacturer and distributor, the group set up or acquired other businesses over the years, starting with Agromate (M) Sdn Bhd (AMSB) set up to serve the large plantation segment, to Fertitrade (M) Sdn Bhd, which was acquired to supply to the oil-palm smallholders and cash-crop farmers.

Success story: The people fronting PT. Agro Tradisi in Indonesia.Success story: The people fronting PT. Agro Tradisi in Indonesia.

With business growing and for more efficient distribution, the group set out to acquire or lease warehouses throughout Malaysia and Indonesia.

Bulk Forwarding & Warehousing Sdn Bhd was formed and Bulkchem Logistic Sdn Bhd was acquired to serve different regions of Malaysia, as well as for handling overseas sales.

A joint venture company, Agro-Tech NPK (M) Sdn Bhd, was also formed in which AHSB has a 70% stake. This subsidiary owns a 200,000-metric ton capacity plant in Lahad Datu, Sabah producing premium-grade granulated NPK compound fertilisers.

It is now expanding abroad as part of the next phase of the group’s growth strategy.

“The Malaysian market has matured and plantation acreage is also limited, so the natural step for us is to expand to foreign markets. We’ve a five-year plan stretching to 2023 for this strategy, ” Edward Tang, AHSB chief executive officer, says.

It already has a strong presence in Indonesia, where it started supplying in 1998 but it was not until 2008 that PT. Agro Tradisi, its Indonesian subsidiary, was set up to tap on the country’s robust

agriculture sector growth. Today, the group leases third-party warehouses in seven locations on the islands of Sumatra, Java and the Kalimantan side of Borneo.

Besides Indonesia, the group developed and grew a network that includes partnerships with multinational companies in Thailand, Myanmar, Sri Lanka, Vietnam and the Philippines. It also distributes to China, Taiwan and even Papua New Guinea.

The group also sells to eastern and southern African markets and has a presence in the eastern European and UK markets.

Overall, oil-palm plantations are the main customers in Malaysia, Indonesia and Papua New Guinea.

For the other markets, the sales are mainly to other crops such as fruits, rice and vegetables.

According to Edward, the plan is to grow overseas sales contribution to 50% by 2023, from around 30% now. To put things in perspective, the group reported a total sales turnover of RM2.1bil in 2018.

Solid teamwork: Agromate’s delegates and business partners in Taipei.Solid teamwork: Agromate’s delegates and business partners in Taipei.

“We only have a fraction of the markets that we’re selling to right now and we want to grow this by leveraging on our expertise and specialisation, ” Edward adds.

Indonesia will remain an obvious focus given the expected growth of its economy and particularly, of the country’s agriculture sector.

“There’s room to grow in Indonesia where we mainly sell to plantations.

“We’ve a good reputation in the country and while the focus is on plantations, moving forward, we are looking into another sector of the market, which is selling to cash-crop farmers, ” Edward says.

He shared that to achieve the above objective for Indonesia, the group is looking to acquire other companies to boost its distribution network and also partner with Indonesian companies for manufacturing activities.

“We’re ready to invest further in Indonesia as and when required to cater for our rapid business growth in the country as part of the strategy to achieve the 2023 targets, ” Edward says. “We already have a presence in South Africa for 11 years in trading business.

“To strengthen our position there, we have employed people who are familiar with the market as it’s very different and we will

set up an office in South Africa in 2020 to involve in the trading and distribution”, Edward says.

A definite move to raise its profile in the overseas fertiliser markets was made when Minerals & Chemicals Corporation Sdn Bhd (MCCSB) was acquired in 2007.

This subsidiary manages the group’s rapidly expanding portfolio of international operations, including exports and drop shipments based out of Malaysia.

In 2016, MCCSB obtained the “International Procurement Centre” status by the Malaysian Investment Development Authority for a 10-year period.

“This status allows us to be more competitive in our export business, ” Edward says.

To further support the group’s international operations, Agromate International Pte Ltd was formed in 2010 based in Singapore.

With the rapid expansion of business, there was a need to have a continuous and consistent source of high-grade fertilisers for our trading and distribution as well as raw materials required for the Lahad Datu plant.

A decision was then made in 2009 to set up a representative office under AMSB, in Moscow, Russia.

“We’ve known our Russian suppliers for a long time and decided that as business grew, we needed to have a representative office to liaise with the suppliers directly, ” Edward says, adding that a substantial quantity of the group’s fertilisers are imported from Russia and neighbouring Belarus.

“We’ll continue to leverage on our expertise and knowledge base to develop partnerships overseas to help us open up new markets or to strengthen our presence in markets where we’re already present, ” Edward says.

The group, which started from a rented shop lot in Shaw Parade in downtown Kuala Lumpur, and has now grown to eight subsidiaries with more than 250 employees, believes that its family-oriented culture is a source of strength that it can draw upon to provide the cohesion that is needed as it expands and penetrates new markets.

“It is this culture that makes us unique and we want to ensure that wherever we go and whoever we do business with, we’ll continue to have this culture to provide the support that is needed, ” Edward says.

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