D&L Industries Inc., a listed company engaged in the production of food ingredients, plastics and chemicals, said it will spend up to P8 billion to triple production.
D&L president Alvin Lao said the company started the construction of its expansion facility on a 26-hectare property in First Industrial Township–Special Economic Zone in Tanauan, Batangas province.
The company is building two new plants—one for food ingredients under D&L Premium Foods Corp. and an integrated facility to manufacture oleochemicals and downstream packaging under Natura Aeropack Corp.
The expansion of the food ingredients facility will address the growing export business for food.
Meanwhile, the expansion of Natura Aeropack’s facilities will be dedicated for the manufacture of coconut oil fractions, coconut-based surfactants, and downstream packaging for consumer products that are sustainable, naturally-derived, mild and non-irritant. Product applications extend to health care, personal care, home care as well as baby care.
Lao said the first phase of the construction was underway, mostly involveing building storage tanks. More than 50 tanks, which can be as large as 2,000 cubic meters, will be built for the two plants.
The P8-billion programmed capital expenditures will mainly cover the construction of the plant-specific buildings, machineries and equipment.
The company plans to finance the project through a combination of debt (70 percent) and internally generated cash (30 percent).
The borrowing will take place gradually over the next two years as the need for funding arises for the construction. Lao said the company had enough room to borrow because of low debt levels.
In continuation of D&L’s asset light model, the property company of the Lao family will finance and own the land and site infrastructure, including buildings for generic purposes. These, in turn, will be leased to D&L at an arm’s length basis.
Lao said the expansion would position D&L Group for growth over the next 20 years, as part of a plan to expand exports while focusing on higher value and higher margin products.
The project is expected to generate about 700 new jobs, with construction and commissioning to be completed by 2021.
D&L has five manufacturing facilities in Metro Manila and one in Laguna.