Oil Palm Cultivation

Introduction

MKH Berhad (‘MKH or ‘The Group’) ventured into other sustainable businesses such as oil palm plantation in 2008. The Group acquired a 90- years lease on 16,000 hectares of plantation land in East Kalimantan, about 75km from Kota Samarinda Indonesia which is operated under its subsidiary P.T. Khaleda Agroprima Malindo (P.T. KAM).

Since its first planting in 2008, MKH has fully planted all trees across its 15,400 hectares land today. Currently, this division accounts 20% of the Groups’ total revenue and will contribute more significantly in the years to come. Key products include crude palm oil (CPO) and palm kernel which are sold to international listed companies. To support the increasing volume of fresh fruit bunches (FFB), its CPO mill has been upgraded to 90 metric tonnes (MT) per hour.

In FY2014, the Group surpassed its yearly FFB yield target by achieving 295,000 MT which contributed to its impressive revenue and profit. Moving forward, the Group targets to achieve 420,000 MT of FFB yield when all trees reach their peak maturity in 2017. In support of the United Nation’s Millennium Development Goals of basic education for all children towards the development of the future generation, MKH has set up schools at its estates in Kota Samarinda in 2008. Its primary aim is to provide basic primary education to the children of plantation workers and villages near the plantation area. In this manner, MKH does its part to ensure that underprivileged children with little or no access to school due to poverty and distance in remote areas of Kalimantan equally have an opportunity to turn their lives around.

MKH has been supporting the Plasma programme, an initiative by the Indonesian Government to encourage plantation owners in Indonesia to provide economic and social assistance to surrounding villagers, thereby helping their income and welfare. In developing and maintaining the Plasma programme, the Group applies the same high standards as that of MKH estates. For Plasma Desa Sedulang, area planted is 1,350 hectares or 90% out of the total plantable land of 1,500 hectares and as for Plasma Puan Cepak, 406 hectares has been fully planted for the financial year ended 30 September 2013.

MKH will continue to explore the feasibility of acquiring greenfield or brownfield land to tap the growing demand for palm oil. Palm oil is a sustainable industry and MKH aims to leverage itself as a growing player in this industry.