Vietnam-based food firm Kinh Do along with Indo-Trans Logistics Corporation (ITL) and Malaysia’s Felda Global Ventures (FGV) on Monday signed a memorandum of understanding to establish a joint venture that will produce bottled palm oil for the Vietnamese market.
Kinh Do will contribute 45 per cent to the joint venture’s capital, while ITL and the Malaysian investor will collectively own 55 per cent. The JV is expected to be launched within the next six months.
With its experience of operating in the palm oil refining industry, the world’s largest producer of crude palm oil, FGV will assist the JV by guaranteeing high quality products, Kinh Do said in a statement.
Meanwhile, ITL will provide integrated solutions for local logistics, maritime and aviation transport management. “Based on combining the strengths of three corporations, the joint venture company will become a strong, successful bottled oil firm in the market,” commented Tran Le Nguyen, Kinh Do’s chief executive.
The JV will not build a new plant during its inception. Instead, it will capitalise on current available infrastructure to implement production with raw materials imported from Malaysia by FGV and ITL.
Kinh Do, headquartered in the southern Ho Chi Minh City, entered the cooking oil business last year after acquiring some 24 per cent of the Vietnam Vegetable Oil Industry Corporation (Vocarimex) during its initial public offer in July. It has plans to consolidate its presence in Vocarimex by investing another VND530 billion ($24.5 million) in the newly equitised state firm, increasing the holding to 51 per cent.
Beyond the oil segment, Kinh Do has also formed a $30 million instant food JV with Taiwan-invested Saigon Ve Wong Co Ltd, where it owns 49 per cent stake. “It is the next step for us to quickly reach the goal of becoming the top three company in the essential food industry,” Nguyen said.
Latest financial data show that the Vietnamese firm earned more than VND1 trillion in revenue for the first quarter, an increase of 28 per cent year-on-year. Profit before tax remained stable at VND47 billion.