Chemical manufacturer D&L Industries Inc. has decided to push back the commercial operation date of its Batangas plant to May 2022 due to the delays caused by the government-mandated lockdowns.
The company on Thursday said its unit D&L Premium Foods Corp., the operator of the new plant, has already secured approval from the Philippine Economic Zone Authority (PEZA) to postpone its commercial operation.
D&L Premium, which will manufacture various food ingredients to cater to the company’s growing export business, was originally slated to start commercial operations in October.
The company had to reconsider its plans for the new plant due to the challenges and delays caused by the recent spike in Covid-19 cases and the reimposition of lockdowns as well as delays in the arrival of equipment and machines for the facility.
PEZA has given the company its go signal to extend the date for the commencement of commercial operations to January 2023.
Natura Aeropack Corp. another wholly-owned subsidiary of D&L, which will manufacture coconut oleochemicals for various consumer care products, will now be the first plant to operate within its Batangas facility. It will start its commercial operations in May 2022 as originally planned.
“While the Covid-19 pandemic and various mobility restrictions have caused challenges in the completion of our Batangas plant, we remain committed to this project. We see ever-growing opportunities in relevant industries in the new normal that we can tap into with this new plant,” D&L President and CEO Alvin Lao said.
“This is evidenced by the resilient and robust growth in our export sales which grew 84 percent year-on-year in the first quarter of the year. Our existing capacity is still sufficient to serve requirements in the near term, as such the extension in the SCO should have no material impact on current operations.”
D&L’s new Batangas plant sits on a 26-hectare property in First Industrial Townshipp-Special Economic Zone in Batangas. The ongoing expansion, or its phase 1, will occupy roughly half of the property. The company has so far spent about P4.5 billion for the project. The remaining capital expenditure (capex) budget to be spent this year and in 2022 stands at about P3.5 billion.
D&L will conduct its maiden bond offering later this year to fund the remaining capex for this expansion.
Once completed, the new plant will be instrumental to the company’s future growth, in line with plans to develop more high value-added coconut-based products and penetrate new international markets.
It will mainly cater to the company’s growing export business in the food and oleochemicals segment, add the capability to manufacture downstream packaging and allow the company to capture a bigger part of the production chain.
The new plants will allow it to pack at source, which means that it will have the ability to process the raw materials and package them closer to finished consumer-facing products.
“While the pandemic is still ongoing, D&L believes that the Batangas expansion is coming at an opportune time given the strong demand for high value coconut-based products in the export market,” the company said.