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PLANTATION

The year 2019 was marked with challenges for Kulim’s plantation segment with lower palm oil market prices experienced by the Group. During the year under review, our Malaysian operations produced a total of 907,188 tonnes of Fresh Fruit Bunches (“FFB”), a 1.38% decrease from 919,844 tonnes in 2018.

Meanwhile, the prices of CPO began to show a downward trend in the first quarter of the year but increased to RM2,813 per tonne in December 2019. Overall, CPO prices trended lower in the year at RM2,119 per tonne on the back of surplus palm oil production by the industry and lower CPO export volume to major countries (Source: Malaysian Palm Oil Council).


FINANCIAL PERFORMANCE

Nevertheless, Kulim’s plantation segment was accounting for 69.12% of the Group’s total revenue, making it the largest contributor by far. The total revenue earned was RM834.61 million, a 1.08% drop from RM843.68 million recorded in 2018. The decrease in revenue was mainly due to lower average CPO price of RM2,182 per tonne in 2019, against RM2,327 per tonne registered in the previous year. The average price of Palm Kernel (“PK”) also sank to RM1,289 per tonne, compared with RM1,792 per tonne registered in 2018.


TOTAL PLANTATION LANDBANK

Kulim’s plantation operations cover a total area of 65,556 hectares spread across Peninsular Malaysia and Indonesia. 51,045 hectares or 77.8% are located in the Southern part of Peninsular Malaysia. The remaining 14,511 hectares are in South Sumatera, Indonesia, where the Group has been granted cultivation rights or Hak Guna Usaha (“HGU”) status. Landbank area and maturity are broken down in the table below:

As of 31 December 2019, 55,501 hectares of the Group’s landbank was planted with oil palm, of which 47,230 hectares are located in Malaysia. The total planted area of mature palms stand at 44,626 hectares, whereof 41,819 hectares are in Malaysia and the balance 2,807 hectares are in Indonesia. During the year under review, the combined FFB production for both Malaysia and Indonesia operation amounted to 917,386 metric tonnes.


ESTATE OPERATIONS

Our Malaysian operations in 2019 produced a total of 907,188 tonnes FFB, a 1.38% drop from the 919,844 tonnes that were produced in 2018. As a result, Yield Per Hectare (“YPH”) also decreased to 21.69 tonnes from 22.13 tonnes recorded in the previous year. Nevertheless, these numbers were well above industry averages for the same time period. In 2019, YPH for Johor as well as in Peninsular Malaysia, only reached 19.41 tonnes and 17.95 tonnes, respectively.
Performance was better during the first six (6) months of 2019, due primarily to impact carried over from the bumper crop in year 2018. The trend however, did not continue and instead declined in the second half of the year (Source: MPOB).
Kulim continued its replanting programme in order to improve the age profile of its palms and achieve optimal productivity. In pursuit of this goal, a total of 776 hectares were replanted with high yielding clones in 2019. Replanting was undertaken on a staggered basis to maximise each crop’s potential before felling. As of year end, the Group’s Malaysian landbank comprised of prime mature areas (65%), immature/ young mature areas (29%)and areas with old palms of above 23 years (6%).
Malaysia’s tightening supply of labour, especially in the plantation industry, did not improve much over previous years. The situation was caused by considerable competition among industry players to attract and retain the workers they needed.
Notwithstanding this, the Group did fairly well in difficult circumstances and Kulim managed to recruit some 834 foreign workers in 2019, adding up to a total labour force of 4,703 for its hectares of oil palm planted areas in Malaysia.


MILL OPERATIONS

During the year under review, Kulim’s five (5) POM processed a total of 1,430,514 tonnes of FFB, including 523,326 tonnes from external suppliers and related parties. This saw a decrease in 1.97% from 2018, due primarily by a lower FFB supplied from the external suppliers.
For the year under review, total CPO production from our mills amounted to 309,867 tonnes, a 1.10% increase over the 306,484 tonnes recorded in 2018. During the same period, total production of PK slightly decreased by 2.39%, from 78,995 tonnes to 77,108 tonnes in 2019.
Our Oil Extraction Rate (“OER”) improved to 21.66%, from 21.00% achieved previously. As in earlier years, our OER remained higher than the industry average of 19.93% for Peninsular Malaysia and 20.21% for Malaysia as a whole. We achieved a slightly lower Kernel Extraction Rate (“KER”) of 5.39%, against 5.41% recorded in 2018.


COST MANAGEMENT AND PRODUCTIVITY INITIATIVES

Palm oil tends to be an industry in which producers are unable to significantly influence market price. Because of this, producers have to improve margins in other ways, such as cost control or improving productivity to enhance their bottom line. In this regard, the Group successfully containing our cost per mature hectare at RM6,246.25, which was lower by 4% compared to the budgeted cost at RM6,493.00. However our field costs at RM287.94 per tonne of FFB, which slightly higher by 1% than the budgeted cost.
Regulatory issues also play a role in shaping the planter’s performance and one of the examples was the government imposition of Employment Insurance Scheme (“EIS”) in 2018 for local workers. The EIS contributes to approximately 0.4% of monthly wage costs, with the employee and employer need to contribute of 50% each. Besides, the Minimum Wages Order has been implemented with effective from 1 January 2019 which the minimum wage to be paid to employees had increased from RM1,000 to RM1,100.
To mitigate the higher wage cost Kulim continues to adopt and enhance its Good Agricultural Practices (“GAP”) and operational practices to improve operation efficiency and productivity.
The Group has also progressively stepped up its mechanisation programme to reduce reliance on manual labour. To this effect, the Group has invested in more mini tractors mounted with Scissor Lift Trailers and Bin Systems for quicker and more efficient FFB loading and evacuation.
In addition, to improve work efficiency at the estate level, we continuosly monitor the effectiveness of Kulim In-Field Data Execution and Analytics System (“IDEAS ”) implementation. The system was designed to facilitate our estates in capturing and recording their daily data, particularly on workers’ attendance, bunch count number, loose fruit record and total bunch number, through the collection and processing of field data via portable digital barcode terminals.


RENEWABLE ENERGY PROJECTS

A waste-product in the production of CPO is Palm Oil Mill Effluent (“POME”), which produces huge amounts of methane gas from its anaerobic process and has 21 times the Global Warming Potential (“GWP”) compared to other gases. However, the high organic content of POME carries great potential for biogas production, a source of renewable energy. In killing two birds with one stone and to achieve its goal of reducing the Group’s overall carbon footprint to 50% by 2025, Kulim will establish biogas plants at all of its five (5) mills by 2025.
Three (3) biogas plants have already been installed and in operation, while another two (2) biogas plants are in progress. Our Palong Cocoa POM was the latest being commissioning in March 2020.
Total biogas produced by the mills in 2019 was 3,781,857 cubic metres, which was primarily used for power generation and flaring. Biogas plant at Sedenak POM and Sindora POM were closed for maintenance during the year under review, thus all biogas produced derive from the Pasir Panjang POM. The maintenance work in Sindora POM is expected to be completed by June 2020. While, the biogas plant in Sedenak POM will be upgraded to take all POME produced by the mill, and the biogas produced will be converted to biomethane and to be injected into Gas Malaysia’s Natural Gas Distribution System (“NGDS”) network. The biomethane project is expected to be completed by December 2020 to produce an estimated 250,000 MMBtu of biomethane gas per annum.
During the year under review, a total of 17,662 tonnes of palm kernel shells and 16,841 tonnes of palm fibres were also sold for external use as replacements for fossil based fuels.
In compliance with the Environmental Quality (Clean Air) Regulation 2014, air pollution control devices have been installed in our mills. Two (2) of our mills installed Hurricane Recyclone Systems in 2016 and one (1) mill installed an Electrostatic Precipitator System in 2018. Two (2) more mills are in the process of installing Electrostatic Precipitator Systems and the installation is expected to be completed by March 2020.
Also, as part of our compliance to a new regulation imposed by the Department of Environment (“DOE”) of Johor, on final discharge of waste water, three (3) mills are in the process of installing Tertiary Treatment Plants which are expected to be completed by March 2020. Previously, the Tertiary Treatment Plant in Pasir Panjang POM was completed and running in December 2019. While, Sindora POM had already completed the installation and has been in operation since December 2017. Break of day, Selai Estate Scissor Lift Trailer- Faster and more efficient FFB loading and evacuation


PLANTATION IN INDONESIA

Kulim has been granted cultivation rights HGU to a total of 14,511 hectares in South Sumatera (“SumSel”), Indonesia. 57.20% or 8,271 hectares of the allotted area has been developed with 5,228 hectares managed by PT Rambang Agro Jaya (“PT RAJ”) and the remaining 3,043 by PT Tempirai Palm Resources (“PT TPR”).
The original projected timeline for the Group’s rehabilitation programme for its Indonesian plantation was in April 2019. However, this was achieved way ahead of schedule with PT RAJ completing the rehabilitation work on 4,317 hectares of land in October 2018. Meanwhile, PT TPR completed its rehabilitation work on 3,191 hectares in July 2018, nearly ten (10) months earlier than anticipated.
The Group’s investment in rehabilitation since the past two (2) years has been proven beneficial, as it resulted in a significant improvement in crop recovery. Both estates produced 8,152 metric tonnes of FFB representing a production yield of 4.20 metric tonnes per hectare from a harvesting area of 1,938 hectares. This represents a 39.20% improvement over the yield of 5,856 metric tonnes in 2018.
This trend is expected to remain steady as field conditions and palm vigour improvement indicate a strong potential for continued high yields in years to come. The Group anticipates that by 2023, harvesting area will grow by 426.67% to reach 8,271 hectares. While, FBB production will stand at 95,730 metric tonnes per year by 2024, and the figure will be increased over time.
With regards to infrastructure development, PT RAJ completed construction of 20 Reinforced Concrete (“RC”) bridges, a workshop, a fertiliser store and 432 unit of foot bridge. Meanwhile to overcome the flood crisis that constantly occur, two (2) water pump houses and a genset house have also been built to minimise disruptions to operations. In addition, PT TPR has successfully completed a workshop, seven (7) units of RC bridges and 389 units of foot bridge.
As of end-2019, PT RAJ completed 109 kilometre (“km”) of laterite field roads while PT TPR completed 76 km for a total of 185 km of roads to facilitate smoother operations.
On 15 November 2019 saw the completion and launch of the Kayuagung-Pematang Panggang toll road which connects Palembang to Jakarta. This road cuts across 63 hectares of PT RAJ land and is expected to increase the land valuation in the surrounding areas

RESEARCH AND DEVELOPMENT

R&D is the game changer for the global palm oil industry. The industry’s growth continues to depend in large part on advances brought by R&D.
Kulim has long invested in R&D to remain at the forefront of the industry. In 3 February 2019, Kulim opening of new R&D centre known as the Kulim Agrotech Centre (“KAC”) in Kota Tinggi Johor which brings together a team with expertise in a broad range of disciplines, including agronomy, remote sensing, microbiology, seed production, plantbreeding, biotechnology and chemistry, and more.
The KAC provide a better facilities and environmentally compliant consist of five (5) operating units namely tissue culture, genomic laboratory, plant breeding laboratory, Ulu Tiram Central Laboratory, and R&D Management Office which consist of agronomy, plant breeding as well as microbiology lab. The mini microbiology lab enable us to embark on our own research on beneficial microbes in pursuit of yield enhancement via a more sustainable oil palm production. The centre will also support the team’s studies in genomics, ensuring that Kulim remain at the cutting edge of technology.


PRECISION AGRICULTURE AND ANALYTICAL SERVICES

The Kulim Agrotech Information System (“KAT IS”) was designed based on the concept of precision agriculture. It aims to optimise field-level management by capturing agronomic and management data from the Global Positioning System (“GPS”), Geography Information System (“GIS”) and the Oil Palm Monitoring Programme. The data provide a quick overview of an estate’s performance so that underperforming areas can be identified and remedial actions can be taken.
Under KAT IS, drones are deployed to capture high-resolution aerial photographs. These images are then integrated into available GPS digital maps. The system is also equipped with avionics-autopilot, an imaging sensor from a digital camera or any advanced sensor and a cradle system, ground control points and photogrammetric processing software. With the information gathered, we improve land utilisation, precisely control the amount of fertiliser, accurately map fields and monitor crop health for signs of diseases and pest infestations.
Harnessing even more opportunities provided by digital technologies, the Group has also ventured into computerised terrain modelling using digital elevation data taken from an airborne Interferometric Synthetic Aperture Radar (“IFSAR”) sensor. A Digital Elevation Model (“DEM”) is a digital geographic data set of elevations in “xyz” coordinates. The elevations for ground positions are sampled at regularly spaced horizontal intervals, whereby providing information that helps improve land preparation during replanting.


ANALYTICAL SERVICES

Kulim’s Ulu Tiram Central Laboratory (“UTCL”) improves the productivity of agronomic and fertiliser decisions by conducting both chemical and physical testing on samples.
In addition, they also provide services for effluent testing for palm oil mills. Equipped with the latest testing equipment including Inductive Coupled Plasma-Optical Emission Spectrophotometer (“ICP-OES”), Atomic Absorption Spectrophotometer (“AAS ”), UV Spectrophotometer and Nitrogen Auto Analyser, to provide fast and reliable sample analysis for both in-house and external customers.
As an assurance of quality, UTCL has maintained its accreditation to MS ISO/IEC 17025 SA MM (Skim Akreditasi Makmal Malaysia), the main ISO standard for testing and calibration laboratories. It also participates in the National Crosscheck, an annual event organised by Agricultural Laboratory Association of Malaysia (“AgLAM”).
UTCL’s standards have also been acknowledged by the global community in the form of the Mutual Recognition Agreement (“MRA”) endorsed by the International Laboratory Accreditation Cooperation (“ILAC”), an international organisation for accreditation bodies operating in accordance with ISO/IEC 17011. ILAC is involved in the accreditation of conformity assessment bodies including calibration laboratories, testing laboratories, medical testing laboratories and inspection bodies. Over 90 accreditation bodies including the Department of Standards in Malaysia from more than 80 countries have signed the ILAC MRA.
Locally, UTCL has also been recognised for its contributions. Institut Kimia Malaysia (“IKM”) awarded UTCL with its prestigious IKM Laboratory Excellence Award in a ceremony officiated by the Deputy Secretary-General of the Ministry of Energy, Science, Technology, Environment and Climate Change (Science, Technology and Innovation). The award is part of UTCL’s commitment in providing quality and competent testing services pertaining to local legislation especially in the field to protect safety and the environment.


AGRONOMY

Agronomy is the science and relevant technologies of soil management and crop production. Over 20 years of gathered knowledge enables Kulim to more effectively gauge the performance of different planting areas, provide analysis and recommendations on best practices, identify sites for new agronomy trials and put forward suitable measures to overcome pest and disease outbreaks.
Kulim’s Agronomy Unit has branched beyond merely providing technical advice and services to undertaking fullfledged R&D activities. Its research findings are shared with estates across the Group to enhance the monitoring of field performance and facilitate benchmarking against the high-performers.


INTEGRATED PEST MANAGEMENT (“IPM”)

Both prior experience and an ongoing commitment to sustainability are behind Kulim’s balanced approach to pest and disease control. One of its longstanding efforts to reduce over dependence on pesticides involved a collaboration with well-known Tyto alba (barn owl) researcher, Dr. Chris Small, in which owls were used as pest control in oil palm plantations. While this initiative started in the early 1980s, barn owls and snakes continue as a useful and sustainable role in helping to keep rodent population in check, while predatory insects, parasitoids and pathogenic fungi keep defoliating insects at bay.
Only in an outbreak situation, where natural predatory controls are inadequate, we do resort to using insecticides. Kulim has also adopted mechanical control techniques in land preparation to minimise the spread of Ganoderma infections, a fungus capable of killing palm oil trees. Planting of beneficial plants has also been advocated to provide a conducive environment for parasitoids and predators to deter defoliating insects. In addition, pheromone traps have been widely used in replanting areas to control the Oryctes Rhinoceros beetle population, which can inflict serious damage to young palms.


RESEARCH COLLABORATION

Kulim has long collaborated with research institutions such as the MPOB and Universiti Putra Malaysia for the further advancement of the palm oil industry. A long-standing collaboration focuses on Ganoderma research, severe oil palm disease. With signing of MoA and MoU in December, the collaboration with MPOB as well as Malaysian Nuclear Agency will be further enhanced.


ZERO-BURNING REPLANTING TECHNIQUE

Since early 1990s, the industry standard has been adopted the zero-burning replanting technique. One eco-friendly alternative to burning involves the shredding of palm oil stands and leaving them to decompose naturally in situ, thereby recycling nutrients into the soil. Apart from complying with local environmental legislation and RSPO, this zero-burning practice is part of Kulim’s contribution to minimise global warming through reduced emissions of GHG.


PLANT BREEDING

Conventional Breeding

The primary objective of Kulim’s breeding programme is to produce elite planting materials to achieve high oil yields. To this end, several new crosses were nurtured for the 2019 planting and evaluation programme.
Experiments were undertaken to find new sources of improved dura and pisifera parental palms that can be used as future planting materials. Besides Dami duras, another new 76 SIRIM-certified duras from the ex-Oil Palm Genetic Laboratory (“OPGL”) were used as mother palms for dura population enrichment. Our efforts have resulted in 0.5 million commercial DxP seeds being sold.
The Plant Breeding team also closely monitored elite tenera clones from MPOB in their breeding test plots. Based on seven (7) consecutive years of FFB data collection, Clone P325 was developed to produce the average FFB of 30t/ha/year with an Oil-to-Bunch (“O/B”) ratio of 37.5%. Other various clones such as P379, P373, P252 and P577 are being evaluated for specific traits.


GENOMIC STUDY

Mapping the Shell Gene

Mapping the shell gene was one of MPOB’s early ventures into exploiting the genome data to identify the location of a specific gene. The use of a marker linked to shell gene can be used as a quality control tool to check for dura contaminants in commercial planting materials, thus indirectly increasing yields.
This control checking can be carried out as early as at the fresh seeds stage. Through collaboration between Kulim and MPOB, it was found that the occurrence of dura contaminants in Kulim DxP seeds after several testings was far below the permissible level of 5%.
Marker for Fruit Colour The MPOB’s marker can distinguish virescens fruits (green when young and orange when ripe) and nigrescens fruits (black when young and red when ripe) before field planting, even in the prenursery stage.
This marker has a potential to select virescens materials with non abscission fruits for ease of ripeness determination and to reduce the problem of uncollected loose fruit due to labour shortage in the plantations.
This marker is targetable for homozygous virescens pisifera or dura. Through collaboration between Kulim and MPOB, some duras of Tanzanian and Angolan populations were identified as heterozygous virescens that require a cycle of selfing in order to obtain a generation of homozygous virescens.


TISSUE CULTURE

Selection of High Yielding Tenera Clones for Recloning

Tissue culture is the way forward to produce elite palms in mass quantity. 40 palms with O/B over 33% and oil yield above nine (9) tonnes per hectare per year have been identified and were recloned in 2019. A total of 30,000 high yielding ramets have been produced by Kulim TopPlant Sdn Bhd (“KTPSB”) in 2019 and sold to Kulim Estate.
Through mutual collaboration with MPOB, we managed to secure a very promising clones which is P325. Records on clone P325 showed that mean FFB was 243.76 kg/palm/year (33.15 tonnes/ha/year). Laboratory study showed O/B ranged from 34.52% to 39.37% thus may give potential oil yield between 9.38 ta/oil/ha to 15.37 ta/oil/ha.
For P700 clones yield recording data showed that mean yield of 203.86 kg/palm/year (27.72 tonnes/ha/year). Bunch analysis data showed that O/B ranged from at 34.39 % to 36.93 %. This clone has the potential to produce oil yield varies from 9.21 ta/oil/ha to 10.93 ta/oil/ha with an average for the clone at 9.75 ta/oil/ha. These two (2) clones are among the clones that will bring Kulim Group to another level.
Challenge and Expectation The future challenge for KTPSB was the increase in cost of production and to find the better solution in finding ortets with high amenability. KTPSB will also explore tissue culture production for other crops such as pineapple and banana. KTPSB tissue culturist has taken a step ahead by attending training at Malaysian Nuclear Agency, Bangi in order to equip themselves in new bio reactor technology to extend and integrated new knowledge towards successful of tissue culture.


PINEAPPLE BUSINESS

Kulim has been involved in the pineapple industry since 2008 and today is one of the biggest producers of premium MD2 fresh pineapples in Malaysia. The MD2 pineapple plantations, run by Kulim Pineapple Farm (“KPF”), is responsible for growing, promoting and marketing pineapple products under the brand of “Melita”. Producing for the local as well as export markets, as of 31 December 2019, the total area of MD2 farms stood at 418 hectares in Ulu Tiram, Kluang, and Mersing.
Melita pineapples are certified Halal by Department of Islamic Development Malaysia (“JAKIM”) and have also been awarded certifications by MYGAP, MYBest, and System Approach and Seed Certification Scheme (“SPBT”). In addition, Kulim is one of three (3) companies in Malaysia to have obtained approval from General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China (“AQSIQ”) to export fresh pineapples to the Republic of China. Such official recognition has raised trust for the primary product as well as for downstream products.
During the year under review, KPF became one of the pit-stop destinations selected for Kembara Mahkota Johor 2019. His Majesty, Sultan Ibrahim Ismail Ibni Almarhum Sultan Iskandar and Her Majesty, Raja Zarith Sofiah Binti Almarhum Sultan Idris Shah had spent their precious time to visit the kiosk and pineapple farm. Following a good quality product and delicious taste of Melita pineapples, KPF had gained recognition during Hari Peladang, Penternak dan Nelayan Kebangsaan 2019 as has been awarded as the winner of MD2 pineapple competition for the agricultural produce category. To date, nine (9) Melita kiosks are located in Johor Bahru, Seremban and Kuala Lumpur have shown an increased in revenue for 2019 compared to the previous year.
In a collaborative expansion programme with Malaysian Pineapple Industry Board (“MPIB”) and Agrobank for the Agropreneur B40 programmes, 12 Agropreneur participants have successfully developed 24.29 hectares at end-2019. Moving forward, KPF is looking into additional areas for expansion with targeted of more than 800 hectares by 2024. The expansion project is expected to raise production from 1,954 metric tonnes in 2019 to 6,800 metric tonnes in 2020. Greater production, in turn, will significantly elevate KPF’s revenue in terms of sales. To increase sales even further, KPF is exploring opportunities for the Melita brand to reach a far greater market by venturing into E-Commerce services.
During the year under review, Kulim made significant strides in its pineapple projects generated over RM14.62 million in revenue.


CATTLE PROJECT

Kulim’s involvement in the Agribusiness segment was a logical offshoot of its traditional palm oil business.
In line with the government call to implement a cattle breeding and rotational grazing programme and to comply with its established Good Animal Husbandry Practices (“GAHP”), the Group started with small scale cattle rearing programme.
In oil palm plantation, the inter-row spaces promotes the growth of plant species are usually considered as weeds. Typically, another intensive oil palm plantation is using chemicals to control weed growth in order to minimize the competition of crop nutrients. However, Kulim practice is using inter-row space for cattle grazing. Cattle were brought into the estates primarily as a way to manage weeds but also as part of cost saving initiatives.
There are three (3) dominant cattle types under cattle project which are pure Kedah Kelantan (KK), pure Brahman and Brahman-KK crosses. These breeds are hardy and conveniently to be reared under oil palm plantation. There are more than 14,000 hectares plantation area have been utilized for cattle grazing. The grazing area is dependable with the age of oil palm itself. Most cattle are grazes under more than ten (10) years of oil palm tree. As the palm matures, the canopy increases and limits light penetration, as a result will reduce grasses present in the inter-row spaces. Hence the number of cattle also need to be adjusted to correspond with the grasses.
Our cattle project (“Selai cattle”) is currently being run by Selai Sdn Bhd, a subsidiary of Kulim.
At end-2019, Selai cattle had a total head count of 5,808 versus 6,199 heads at the end-2018. During the year under review, the total population within feedlot and integration segment was 6,024 heads, which decreased by 8% from 6,479 heads in 2018. This was due to decrease parallel with palm oil age and culling of unproductive cows which has stopped being productive as well as the halt of feedlot fattening activities.
Total cost saving of cattle grazing for the year 2019 was RM331,871 an increase saving of 8% on weeding compare to 2018 at RM304,285. It shows a good form of agriculture practice executed by Kulim to optimize and maximize the use of land.
Selai cattle also engage a good collaboration with the Department of Veterinary Service for their expertise and advice regarding cattle health and productivity. Series of herd health programme like screening of diseases and productivity examination has been done to ensure our cattle in optimum and good quality condition. Moving forward, Kulim aims to become a significant cattle integration player in Malaysia with targeted of 10,000 heads of cattle grazing freely under Kulim’s estate within next five (5) years.
During the year under review, cattle projects generate over RM5.44 million in revenue from sales of cattle and RM13.6 million valued from the cattle stock.


TOTAL QUALITY MANAGEMENT

Kulim’s steadfast commitment to Total Quality Management across all business processes which has led to five (5) of the Group’s operating units, namely Tereh Selatan Estate, Palong Cocoa POM, Tereh POM, Sindora POM and Sedenak POM which have successfully earn ISO 9001:2015 accreditation. This flagship standard as bestowed by the International Standards Organisation (“ISO”) sets out the requirements for a world class Quality Management System (“QMS”).
Having achieved this certification enables to group to monitor, maintain and provide top quality products and services to our customers. The most recent edition of ISO 9001 has incorporated new approaches in the Quality and Environmental Management System and places a greater focus on performance as opposed process alone.
In our efforts to reduce any negative impact on the environment, three (3) of our operating units, namely Sindora Estate, Sedenak Estate and Sindora POM have received ISO EMS 14001:2015 certification, the world’s most recognised system for environmental management standards. Kulim’s UTCL has also been accredited with ISO/ IEC 17025:2015 certification, which recognises technical competence of testing and calibration laboratories.
In addition, all products produced by the Group palm oil mills, namely Palong Cocoa POM, Tereh POM, Sindora POM, Sedenak POM and Pasir Panjang POM have been certified Halal by JAKIM.


QUALITY ENVIRONMENT (5S) CERTIFICATION

The 5S concept, come from the Japanese words Seiri (Sort), Seiton (Set In Order), Seiso (Shine), Seiketsu (Standardise) and Shitsuke (Sustain) have guided us in our quest for continuous improvement.
Kulim adopted the 5S Quality Environment principles since 8 January 2015 as a respond to JCorp’s mandate for all companies within its corporate umbrella to adhere to the principles of 5S, which marks the start of a healthier, more efficient and more productive workplace. Keeping the QE/5S principles in mind, we strive to attain the following main objectives:

  • Improve the corporate image of Kulim
  • Ensure the participation of all employee to indicate good work habits
  • Achieve an average score of average score of zones
  • Set a target of file and item retrieval of 30 seconds

The QE/5S principles are based on the main premise that cleanliness and tidiness will contribute towards a safe and conducive work environment. This in turn, has a positive impact on staff performance and ultimately, the Group’s profitability. For the year of 2019, Kulim has successfully conducted the fifth Surveillance Audit on 30 April 2019 with the Certification Body of Malaysia Productivity Corporation (“MPC”). The audit was conducted based on new criteria and requirements as set by MPC, which place greater focus on the concept of Plan-Do-Check-Action and Impact.


OUTLOOK AND PROSPECT

The Malaysian palm oil industry is expected to bullish on this year’s outlook for the sector amidst flattish production, depleting global vegetable oil inventories and growing demand for the commodity. The country’s palm oil production is projected at 19.3 million to 19.5 million tonnes this year, lower than last year’s forecast of 20 million tonnes, which augurs well for the price to climb higher.
By early March 2020, stocks of world vegetable oils are likely to deplete, making the price outlook for palm oil bullish. The golden crop is expected to have a stellar performance throughout the year which is the CPO price assumption of between RM2,600 per tonne and RM2,700 per tonne for this year. At this price, the commodity could still be well supported with demands from key markets like China and India.
The Group expects a higher CPO price would lift the equity market since many of the country’s big plantations companies are listed on Bursa Malaysia therefore potential to lift the index higher and the higher ringgit could make the palm oil expensive thus reducing export prospects (Source: MPOB).
Kulim also plans to strengthen our competencies through expansion from the existing upstream activities into an integrated agribusiness value chain with involvement from upstream, midstream, downstream and circular economy via waste-to-wealth activities.. The Group also will continue our efforts to increase productivity by continually developing and deploying new technology, utilising environment- friendly fertilisers, improving field mechanisation, providing on-the-field training for operational optimisation, allocating more funds for R&D to produce improved clones with higher yields, switching to alternative energy sources and imposing more stringent controls on operational costs. Hence, the Group are expected to perform satisfactorily during the upcoming FYE 2020.