Kencana Agri

Kencana Agri is an Indonesian crude palm oil (CPO) and crude palm kernel oil producer.

Kencana has crude palm oil and crude palm kernel oil plantations in Sumatra and Kalimantan. It also operates a bio-mass power plant on Bangka Island, Sumatra that sells most of the electricity generated to state-owned utility PLN. The group counts India, China, Malaysia and Vietnam among its customer areas. Its crude palm oil and crude palm kernel oil are also sold in Indonesia.

For FY2007, net profit was US$39.2m, more than doubling from US$14.84m the year before. Revenue was US$69.28m, up 69.7% from US$41.1m previously, on increased contributions from plantation and bio-mass business. Most revenue (99.7%) came from plantations, as the bio-mass power plant only started operating in 2007.

The group aims to capitalise on expected strong demand for crude palm oil and crude palm kernel oil by expanding its plantations, building more processing facilities and relying on new technology. It aims to increase its planted oil palm area from 24,349 hectares to over 80,000 ha in the next 5 years. It is also looking to develop complementary businesses. A second bio-mass power plant with generating capacity of 7.5 megawatts is under construction and expected to come on stream in 2009.

On potential risks, Kencana Agri says expansion plans could be scuppered by events beyond its control, such as government policies limiting its ability to obtain adequate rights to land suitable for plantations or an inability to obtain certification. Kencana is in the final process of obtaining certification for 42,640 hectares of land - close to 50% of its total land bank.