Muddy Water: Before you beat a dog, find out who its master is.

Chinese saying: Before you beat a dog, find out who its master is.


Olam plans to raise US$1.25 billon in rights issue

SINGAPORE: Farm commodities supplier Olam said Monday it plans to raise up to US$1.25 billion in a capital rights issue as its stepped up efforts to fend off a relentless attack by US-based research firm Muddy Waters.

Temasek Holdings, which is the second biggest shareholder in Olam, fully backed the exercise, Olam International chief executive Sunny Verghese told a news conference.

The rights issue will comprise of US$750 million in bonds with a five-year maturity and a cash coupon rate of 6.75 per cent, and 387.4 million free detachable warrants worth up to US$500 million. The bonds will be priced at 95 per cent of the principal amount.

Olam said the proceeds will be used to repay debts and to fund working capital until early 2014, and that the rights issue will be fully underwritten by Credit Suisse, DBS, HSBC and JP Morgan.

It also added that the bonds and warrants should be launched on the market by the first week of March 2013, pending an extraordinary general meeting in either late January or February 2013.

Temasek "will undertake to subscribe" to its pro-rated entitlement of rights based on its 16 per cent stake in Olam, Verghese said.

Temasek has however committed to take 100 per cent of all issues not subscribed to by other shareholders, which would raise its stake to 29 per cent, he added.

Olam's latest move follows a withering attack by short-seller Carson Block and his research firm Muddy Waters which questioned the company's allegedly flawed accounting standards that they claimed masked its debts.

Muddy Waters has predicted the Singapore-listed firm will collapse like US energy trader Enron, whose spectacular fall in 2001 was triggered by US government probes into its accounting practices.

The attacks have sent Olam's shares plunging since Block first made the allegations at an investment conference in London on November 19.

Olam shares have recouped some losses but were still down 9.5 per cent from when the allegations were first made. Trading of the stock was suspended Monday pending the announcement.

The counter last traded at S$1.575 on Friday.

"We are not doing this for liquidity, we already have the liquidity," Verghese said Monday.

"We are doing this to demonstrate... that we can access debt and capital markets at these rates today (and) we have a significant shareholder who is willing to backstop us and support us not with words but with action."

Temasek's commitment "is a very strong, decisive action (for investors) not to have any worries about any of the allegations".

Verghese on Friday bought one million Olam shares in the open market as part of efforts to boost shareholders' confidence.

On Monday, Verghese also rejected a call by Muddy Waters to have Olam rated by credit risk evaluator Standard and Poor's.

"It is not unusual that companies in our space have remained unrated for a long time... To make it as if we are the only unrated company is therefore completely wrong," Vergehese said.

Following Carson's remarks in London, Muddy Waters also released a scathing 133-page report supporting its allegations.

Olam fired-back with a 45-page rebuttal and a defamation suit.

Verghese last week also accused Muddy Waters of being a front for some hedge funds to drive down Olam shares in the hope of profiting from it later.

Short-sellers borrow shares and sell them in the hope their price will drop. They can then buy the shares back at a cheaper price and profit from the difference.

Muddy Waters' assessments of companies have been closely monitored, especially after a report in 2011 forced Chinese timber supplier Sino-Forest Corp to file for bankruptcy protection.

- AFP/jc

OLAM INTERNATIONAL LIMITED LAUNCHES A SHARE BUYBACK PROGRAMME

Olam International Limited ("Olam" or the "Company") has today commenced a share buyback programme (the "Share Buyback Programme") pursuant to its share buyback mandate (the "Share Buyback Mandate") renewed at the Annual General Meeting of the Company on 28 October 2011. Under the Share Buyback Mandate for market purchases, Olam may purchase up to 10.0% of its total number of issued shares (excluding treasury shares) (the "Shares"), or up to 244,230,986 Shares, at a maximum price of 105% of the average closing price of the last 5 market days at the time of acquisition. All Shares purchased under the Share Buyback Programme may be held as treasury shares or cancelled, as the Company may decide from time to time.

Olam International invests US$240m in Brazil sugar mill

By Carine Lee

Olam International Limited on Tuesday said it is investing US$240 million in its first sugar milling asset in Brazil.

"Olam's strategic plan for the sugar business is to build a configuration of milling assets in large sugar producing countries that have a comparative cost advantage, and invest in refining assets in large deficit-prone, consuming countries with regulated, structurally inefficient markets that offer the potential to extract high economic rents," the company said.

It is acquiring Usina Acucareira Passos SA (UAP) for 255 million Brazilian Real (US$128.8 million) and investing an additional capital expenditure of US$111.5 million over the next five years to improve its agricultural and industrial capacity and efficiency.

UAP owns and operates a sugar mill located in Passos within the state of Minas Gerais in Brazil's Centre South, with a cane crushing capacity of 1.75 million metric tonnes per annum with an output capacity of up to 200,000 metric tonnes of sugar per year.

Olam: NOTICE OF CESSATION OF SUBSTANTIAL SHAREHOLDING

The Capital Group Companies, Inc. ("CGC")

From 5.624 % To 4.9711 %

 Shares were disposed of through a series of transactions from 15/3/2012 through 09/5/2012. 

--------------------------------------------------

From now onwards, CGC doesn't need to report its sale for the remaining 4.911% share holding. It can now quietly distribute them out to the market.

Singapore's Olam in $183 mln Gabon rubber joint venture

SINGAPORE, March 19 (Reuters) - Singapore commodity firm Olam International Ltd said on Monday it will invest $183 million for an 80 percent stake in a joint venture with the government of Gabon to develop 28,000 hectares of rubber plantations in the African country.

Olam to raise S$275m through issuing securities

SINGAPORE - Commodity firm Olam said it has launched and priced the issue of Singapore dollar denominated perpetual capital securities and will raise S$275 million through the offering. -- REUTERS

Olam acquires 2nd largest candy and biscuit franchise in Nigeria for US$167m

By CARINE LEE


Olam International Limited on Thursday acquired Nigerian biscuits and candy maker through the acquisition of Titanium Holding Company and its subsidiaries for a price consideration of US$167 million.

'This acquisition presents a unique opportunity for our packaged foods business to scale up and move immediately into a leadership position in two attractive packaged foods categories in the largest consumer market in West Africa,' said M Ramanarayanan Olam's senior vice president and head of packaged foods.

Titanium Holding owns Nigeria's second largest biscuits and candy franchise with a turnover of approximately US$162 million in 2011.

It owns and manages three biscuit and candy factories with modern production lines.

Funded through internal accruals and borrowings, the acquisition is immediately earnings and cash flow accretive to Olam.

The processor of agricultural products and food ingredients expects to deliver 17-18 per cent in EBITDA margin and generate in excess of 29 per cent equity internal rate of return on this investment.

Olam invests US$75m in Russian Dairy Co

By CARINE LEE


Olam International Limited on Monday announced that it has invested US$75 million for a 75 per cent stake in Russian Dairy Company, a growing player in the Russian dairy industry.

The company plans to develop large scale dairy and grains farming in the Penza region of Russia.

'The investment in Russian Diary is another important step towards the implementation of Olam's dairy and grains strategy, which involves selective integration across the value chain with a focus on building end-to-end capabilities,' said Sunny Verghese, CEO of Olam.

Russian Diary plans to invest US$400 million over the next four to five years to expand the area under grains cultivation from the current 52,000 hectares to 106,000 hectares.

It will also construct four new modern dairy farms to increase the total milking cows population to 20,000 heads from 3,600 heads.

The company also has plans to establish a training and development centre aimed at inculcating best practices in international farming and milk production.

Olam to buy 75.2% of Spain's Macao Commodities Trading for US$20m

By ANGELA TAN

Olam International Limited said on Thursday that it plans to buy a 75.2 per cent interest in Macao Commodities Trading SL (MCT) for US$20 million.

'This transaction provides an accelerated entry into the Spanish and larger Iberian market for Olam,' the commodities group said, adding that the purchase also opens up new markets involving chocolate, bakery and beverage ingredients.

The purchase will include all land, buildings, inventories of MCT and its shareholding in Solimar Food Ingredients (SFI) - a joint venture established in 2005 as a 51:49 holding between MCT and Olam.

Established in 1994 in Valencia, Spain MCT is a leading supplier of cocoa powder, cocoa beans, desiccated coconut, dried fruits, vegetable fats and dairy products to the chocolate, beverage and biscuit Industries in the Iberian region.

Olam has the option to acquire the remaining 24.8 per cent interest in five years' time.

The acquisition would be funded through internal accruals. It will be both EBITDA and earnings accretive from the first full year after consolidation.

Olam to set up US$49m rice farming and milling facility

The facility, located in Nigeria, will see operations commence in 2012


By FELDA CHAY

OLAM International is investing US$49.2 million in its first rice farming and milling facility, which it said will be located in Nigeria and will deliver an internal rate of return (IRR) of 28 per cent.


One analyst noted that the IRR is high, but said the project also carries high risks.

'There is no free lunch,' said OCBC Investment Research's Carey Wong. 'Agriculture is subject to issues such as pests (wiping out crops), diseases and bad weather. There are also political risks in Nigeria.'

Olam said in a statement yesterday that it will start rice planting during the April-June period, its last quarter for FY2012.

The facility will begin to generate revenue in FY2013, and will be fully operational by FY2016.

The 6,000 hectare farm in Nasarawa, one of Nigeria's main rice growing belts, is expected to yield 36,000 tonnes of milled rice annually at its peak, and will be sold through Olam's distributors and dealers across Nigeria, where it already has a presence.

UOB-Kay Hian analyst Eugene Ng said that the farm will likely raise profit margins for Olam's rice operations, but that it is likely to be a 'very tiny' increase.

The company currently works with several rice farms, but does not own any of them. It is among the largest rice traders globally.

The company's investment in rice farming in Nigeria comes at a time when the government has pledged to raise rice production in the country - said to be among the world's largest consumers of rice.

Nigeria consumes about 5.5 million tonnes of the commodity each year, of which 1.9 million tonnes are imported.

'Globally, land under rice cultivation has remained stagnant around 150 million ha over the last 30 years,' said Rajeev Raina, president of Olam's rice business. 'With the growth in population not being accompanied by an increase in the area under cultivation, we have seen a lot of pressure in respect of global rice supplies with growing countries either banning exports altogether or increasing the support prices of farmers, thereby increasing the selling price of milled rice in the international market.'

Mr Raina added that Olam's investment in rice farming and processing in select markets, while helping the importing countries in their import substitution efforts, 'would also help us to selectively get integrated in the value-chain by participating in attractive and higher margin profit pools upstream in rice farming'.

Olam said that it would fund its investment through a combination of internal accruals and borrowings.

Last month, the group announced a 15.1 per cent year-on-year jump in first-quarter net profit, with an overall rise in sales volumes helping to lessen the impact of lower net contribution from its cotton business.

Olam to invest US$50m to expand Nigeria flour mills

By CARINE LEE


Olam International Limited on Friday announced plans to expand its wheat milling capacity at Crown Flour Mills in Nigeria for a total outlay of US$50 million.

'The addition of two swing mills will enable us to produce both standard flour / semolina or a special blend of flour and semolina for manufacturing pasta,' said K C Suresh, president for the grains business.

The project is expected to deliver a 20 per cent return, it said.

Olam buys spice assets, businesses of VKL for US$18m

By YEO AIQI


Olam International Limited on Monday announced that it has acquired the spice assets and businesses of Vallabhdas Kanji Limited (VKL) for US$18 million.

The acquired business is one of Asia's leading processor and exporter of multiple spices in both bulk and private label form.

'We are acquiring midstream and downstream processing assets in two important spice origins namely India and Vietnam, from a leading producer and exporter of spice and spice ingredients. This offers us a unique opportunity to accelerate our entry into new, attractive product segments namely chilli and turmeric, as well as into the private label segment of the value chain,' said Olam's president and global head for spices and vegetable ingredients, Greg Estep.

'We also expect these operations to bring in additional revenue and cost synergies for Olam as we combine our sourcing, processing and distribution capabilities under one network for adjacent products and geographies,' he added.

Olam International is a leading global integrated supply chain manager and processor of agricultural products and food ingredients.

Olam's long-term commods outlook bullish; cautious on cocoa

SINGAPORE - Singapore-listed Olam International said on Monday the long-term outlook for most agricultural commodities was still bright despite the threat of a slowdown in demand triggered by economic woes, but weak fundamentals could work against cocoa.

Gold and copper suffered their biggest slump since the 2008 financial crisis as another brutal sell-off hit commodities on growing doubts Europe may be unable to prevent its debt crisis from dragging down the global economy But Sunny Verghese, Olam's chief executive officer, told Reuters growing demand for food, and shrinking supply, would support prices in the long run.

'Right now we are facing increasing economic pressures on all markets, and since all asset classes are now more correlated, it is impacting commodity prices as well,' Mr Verghese said in an interview.

'Cyclically we will see probably a correction but over the medium and long term we see commodity prices remaining firm as we see growing imbalances between supply and demand for food.'

Olam, a major global trading house which is the world's largest shipper of robusta coffee, is 14 per cent owned by Singapore state investor Temasek.

The company trades about 20 different commodities ranging from Australian almonds and African cashews to cocoa. It also operates coffee plantations in Laos and a rice business in Thailand. According to its website, Olam has some 10,000 customers.

Mr Verghese said the company was unlikely to raise any equities to support medium-term growth and to achieve a target US$1 billion profit by the financial year ending 2016.

'We have already considerably strengthened our capital base, even if the global capital market completely shuts down for the next couple of years, it does not matter for us because we have raised enough capital both on the debt and equities side,' Mr Verghese said.

'We will raise additional debt capital 2-3 years down the road but right now we don't need any... (and) we are unlikely to raise equity to support this growth,' Mr Verghese said referring the firm's 2016 financial year target.

Olam was bullish on coffee, where high-quality arabica beans rallied to their highest in more than 30 years this year on supply concerns, but the outlook for cocoa was shaky because of a global supply surplus in the 2010/11 crop year.

New York cocoa futures rallied to their highest in 32 years around US$3,800 a tonne in March after fighting in top producer Ivory Coast ignited fears of supply disruptions. Prices have since dropped to around US$2,600.

'So we believe cocoa prices, for example, are still over valued despite the sell-off that happened in the recent past. So we are bearish on cocoa. We see a significant surplus globally, and therefore we expect cocoa prices to trend lower,' Mr Verghese said.

'We expect a surplus, our internal estimates are closer to 450,000 tonnes. I think the market is pricing in now about between 350,000 and 400,000, but we expect a bigger surplus - between 425,00 and 450,000.'

Current global coffee consumption is expected to grow as high as 2.7 per cent, and there will be a lag in supply growth because of minor increases in top robusta producer Vietnam, the world's largest producer of the variety used in instant coffee.

'In the last 10 years, demand has grown by an average of 2.25 per cent per annum. We expect going forward, demand will grow at more like 2.5 to 2.7 per cent per annum. It's already started,' said Mr Verghese, adding that demand for specialty coffee is on the rise.

Olam pegs Vietnam's coffee crop at 1.2 to 1.25 million tonnes in the 2011/12 crop year, slightly higher from 1.15 million tonnes in the crop year to September 2011 because there is few new plantings.

Indonesia, the world's second-largest robusta producer, will see a recovery in production in the main growing island of Sumatra, but domestic consumption is also expected to increase to up to 180,000 tonnes in 2011.

'We estimate Indonesia's local consumption now to have grown to about 170,000-180,000 tonnes. This is this year. It is growing at about 10 per cent per annum for the last, I would say, 5 years,' he added.

Sumatra's production is estimated at 250,000 tonnes in the 2011/12 crop year due to better weather, from 160,000 tonnes in the 2010/11.

On sugar, Olam expects raw sugar futures to find a floor at 24 US cents a pound equivalent to domestic ethanol prices in main sugar producer Brazil, after high prices curbed demand for the sweetener.

Mr Verghese said Olam, which has a market capitalisation of US$4.5 billion, is looking to develop or buy sugar plantation assets in Indonesia or Brazil.

However, he said the company is not currently looking at Indonesia's Papua region where Singapore's Wilmar, the world's largest listed palm oil firm, is trying to set up 200,000 hectares of sugar plantations.

New York sugar futures surged to their highest in more than three decades at around 36 US cents a pound in February after a massive cyclone struck Australia, one of the world's top exporters. Prices have slipped to around 24.80 cents.

'We're seeing for the first time a decline in consumption this year. It has never happened in history,' said Mr Verghese.

'We think 24 cents will provide a strong support. We also see sugar consumption growth being very strong, apart from this year's blip because of very high prices.' -- REUTERS

Olam in talks to acquire Indian spices firm: report

By MINDY TAN


COMMODITY player, Olam International is in talks to acquire privately held Indian spices company, Vallabhdas Kanji Ltd (VKL), The Times of India reported yesterday.

Olam - in which Temasek Holdings is a major shareholder - declined to comment when contacted, saying they do not have the practice of commenting on media reports.

The company is in advanced discussions to clinch a deal, said the report, after the Mariwala family mandated an investment bank for a stake sale, citing people aware of the matter.

Vallabhdas Kanji's managing director, Ajay Mariwala told the newspaper that the company has been running a process to bring a strategic investor, and would announce any developments when ready.

Olam has hit the acquisition trail hard since its commitment to double its FY2016 goal to US$1 billion profit after tax (PAT), announced during their FY2011 full year results briefing last week.

Last week, Olam announced the acquisition of an India-based 3,500 tonnes crush per day (TCD) sugar milling facility and a 20MW cogeneration facility by way of Hemarus Industries, with plans to enhance the sugar milling capacity to 5,000 TCD.

Some of the key acquisitions made by Olam to consolidate its position in the spices business have included California-based Key Food Ingredients (KFI) and Gilroy Foods.

In its financial statement, Olam said that the integration of the acquired companies in the spices and vegetable ingredients business (namely Gilroy, SK Foods, and KFI), had been successfully completed and 'they are now co-located together in Fresno, California, to better extract synergies'.

Separately, Olam subsidiary NZ Farming Systems Uruguay yesterday posted a net comprehensive loss for the year ended June 30 of US$ 1.59 million, performing better than the previous year's loss of US$11.29 million.

Turnover almost doubled year-on-year from US$22.54 million to US$43 million.

Olam's US$1b profit target realistic?

Several analysts offer differing views on the giant commodity player's ambitious 2016 goal. By Mindy Tan


COMMODITY player Olam International earlier this week unveiled ambitious new targets - notably, to double its previous goal to US$1 billion profit after tax (PAT) by FY2016.

Olam, which said it would undertake 65 initiatives over 2011- 2016 to achieve its PAT target, has been quick to put its plan in motion.

During the FY2011 full-year results briefing on Monday, Olam - in which Temasek Holdings is a major shareholder - said it was on track to hit its previous target of US$454 million at least two years ahead of schedule.

In a report released on Wednesday, Royal Bank of Scotland (RBS) analyst John Rachmat was the most bullish on Olam, maintaining a 'buy' recommendation, with a target price of $3.80.

'Olam has now demonstrated its ability to grow its earning in both up- and down-cycles in the commodity space. Its sales volume has grown 22 per cent compound annual growth rate (CAGR) over the 2005-11 period and its PAT has grown 37 per cent CAGR over the same period,' he said. 'In my opinion, it is very likely they will deliver on their PAT target. Of course, all this depends on commodity price swings between now and 2016.'

CIMB analyst Lee Wen Ching, however, disagrees. 'We think Olam's US$1 billion target appears slightly aggressive on a core net profit basis (stripping fair value gains on biological assets and negative goodwill), as that would imply a higher CAGR between FY11 and FY16 as compared to what it has achieved so far since listing,' she said.

'Furthermore, it is now growing from a higher base, implying that absolute growth will have to be much stronger to achieve that target.'

Separately, an analyst who declined to be named noted that Olam's PAT target is based on the assumption of potential mergers and acquisitions.

However, given that their palm oil and Gabon urea investments constitute a significant portion of their capital spending, their M&A pipeline might be less intensive than in the last few years. As such, while still positive on Olam's growth, he is less bullish than before.

The group, which said it would undertake 65 initiatives over the next five years to achieve its PAT target, has been quick to put its plan in motion. On Wednesday, Olam announced the acquisition of an India-based 3,500 tonnes crush per day (TCD) sugar milling facility and a 20MW cogeneration facility by way of Hemarus Industries, with plans to enhance the sugar milling capacity to 5,000 TCD.

Following its FY11 full-year results briefing, Olam's shares surged more than 11 per cent on Wednesday. Yesterday, Olam's shares, which have been in the top 20 volume list since Wednesday, saw 9.6 million shares change hands. The stock hit a high of $2.51 in morning trading, before slumping to $2.40. Olam closed eight cents down at $2.41 yesterday.

Commenting on the stock price movement, CIMB's Ms Lee said: 'We believe the stock surged on the first day on strong headline numbers. However, excluding non-core gains, core net profit of $302 million was below both ours and consensus expectations.'

On Monday, Olam posted a 38 per cent gain in fourth quarter net profit to $127.4 million, and revenue of $4.62 billion - a 46 per cent surge from the same period last year

Olam buys sugar mill at US$73.8m, EBITDA accretive in yr 1

By TEO SI JIA


Agricultural company Olam International Limited on Wednesday announced that it has bought 100 per cent of the shares in Hemarus Industries Limited (HIL) of India and its accompanying assets for US$73.8 million.

It will acquire a sugar mill that produces 3,500 tons crush per day and a 20 MW co-generation facility in the purchase.

Olam will be injecting US$6.6 million to bring the sugar mill's capacity to 5,000 TCD, following the transaction.

The sale will be fulfilled in part by US$8 million in cash and US$66 million in debt assumption.

'This acquisition strengthens our position in the Indian sugar industry and is in line with our stated strategic objective of building an annual sugarcane crush capacity of between 2 to 2.5 million tons over the course of the next 5 years,' said Sanjay Sacheti, Olam's India and SAARC regional head.

HIL, which has a book value of US$70 million, is expected to contribute US$90-100 million in turnover and a 32 per cent return in equity.

The acquisition is expected to be Ebitda accretive in its first year and earnings accretive in the next.

Olam closes US$1.25 bln syndicated term loan

SINGAPORE - Singapore commodities trader Olam International said on Friday it has successfully closed a $1.25 billion syndicated term loan facility.
The facility comprises a US$625 million three-year tranche and a US$625 million five-year tranche. Olam said it represents the largest syndicated financing for the firm to date.

The proceeds will be used for refinancing of existing debts, as well as for working capital and general corporate funding requirements, including capital expenditure and expansion of Olam's supply chain management business. -- REUTERS

Olam International gets best CEO award

SINGAPORE: The Singapore Corporate Awards (SCA) held on Thursday went to 30 companies and six individuals for leading the way in corporate governance and shareholder communication.


The SCA comprises five categories, including Best Managed Board Award and Best Chief Executive Officer Award.

Corporate winners such as Olam International, Keppel, CapitaLand and Singapore Airlines walked away with several awards.

Singapore Airlines was recognised in three out of five awards, including that for Best Investor Relations.

Olam International clinched two awards, with its CEO Mr Sunny Verghese taking the title of Best CEO.

Deputy Prime Minister Teo Chee Hean, who was the guest of honour at the event, said it was important that corporate governance framework and practices keep pace with international developments.

"We cannot sssume that companies operating in Singapore will benefit from the greater inflow of capital to Asia," he said.

Companies would need to invest in building strong corporate governance. This will engender investor confidence and signal to their investors their ability to sustain performance, said Mr Teo.

- CNA/ck

Olam Preferential Offering Shares

Preferential Offering Shares available under the Preferential Offering will be listed and quoted on the Official List of the SGX-ST on or about 6 July 2011, and trading of such Preferential Offering Shares will commence with effect from 9.00 a.m. on the same date

Olam's strategy: Long-term sustainability

Acquisitions, capital raising necessary for growth: CEO


By FELDA CHAY

THE market has yet to give its stamp of approval to Olam International's recent acquisitions and capital raising - done in the name of expanding the business - but chief executive Sunny Verghese is unfazed.

Mr Verghese: Argument will be won when the results start showing

During an interview with BT last week, Mr Verghese acknowledged that ventures such as its mega US$1.5 billion project in the Republic of Gabon have a long gestation period, and will not be earnings accretive in the near horizon. The company's recent move to raise funds through a share placement is also dilutive, he conceded.

But he is convinced that such moves are essential to keep the commodity supplier growing over the longer term, and that the argument will be won when the results start showing.

'Now as a CEO, and also as the owner of a business and a substantial shareholder, I have to make capital choices and investment decisions based on the vantage point of view of a continuing shareholder. Olam cannot just be driven by analyst or stock market pressures to deliver in the short term. We have to deliver sustainably over the long term.

'We have to believe that somebody is going to own this business forever, and think of what is in the best interest of that owner, how we can develop a strategy and make capital choices and investment decisions that will allow us to maximise the long-term intrinsic value of this continuing shareholder.'

Since Olam announced its Gabon fertiliser plant and palm plantation projects, its shares have fallen from the $3.25 they closed at before the deal was announced, to $2.59 last Friday - a whopping 20.3 per cent drop.

While the project is just one of the reasons why Olam's shares have tumbled - other reasons include an analyst report that raised questions on Olam's accounting restatements, and macroeconomic fears - investors are clearly unwilling to invest in the firm given that the project, Olam's largest to date, will only yield earnings in its financial year 2014.

The company's recent share placement has not helped. Since announcing its $740 million fund raising two weeks ago, its shares have tumbled 24 cents amid fears that earnings per share (EPS) will be diluted.

This could well be true, but Mr Verghese is quick to point that the group's EPS remains on track to double every three years. Under Olam's six-year plan that spans the financial years 2010-2015, the group set itself the target of earning US$480 million by FY2015 - quadruple the US$120 million that it earned in FY 2009. According to Mr Verghese, this means that earnings should grow at about 25-26 per cent each year. And so far, Olam has 'significantly exceeded this target of 26 per cent earnings growth'.

'So while we have raised additional equity and we will get diluted, we are hoping that on an EPS basis, growth over this period will be at 25-26 per cent. Which means our actual earnings growth could be 30 per cent, but because of dilution, we will still grow at 25-26 per cent.

'If you grow at such rates, you are doubling every three years. And we have developed a strategy and a pathway to be able to do that over the next few years.'

Of the funds raised from its recent fund raising exercises - which includes a US$1.25 billion syndicated-term loan facility and the $740 million equity placement - 40 per cent will go towards expanding its upstream business.

Another 45 per cent will go into its mid-stream manufacturing and processing division, while 10 per cent will be allocated to the group's supply chain core. The remaining 5 per cent will be reserved for Olam's downstream business.

The group's expansion upstream will see it invest in more coffee plantations, and Mr Verghese said it is looking to invest in plantations in Tanzania. Olam already has coffee plantations in Laos.

Olam is also going to expand its dairy farming activities in Uruguay - an initiative that has seen the firm launch its second offer for all of the shares of New Zealand Farming Systems Uruguay. 'Similarly we are going to invest in almond plantations in the US, palm and rubber plantations in Africa, rice farming, peanut cultivation, soyabean cultivation. We are also looking at getting more hard wood and teak forest concessions,' said Mr Verghese.

Plans for its mid-stream business include further investments in sugar milling, soluble coffee manufacturing, cashew processing, cocoa processing, industrial chocolate manufacturing, the packaged foods business - where a few acquisitions are in the pipeline, said Mr Verghese. Olam will make these investments using its tested approach: by making acquisitions that are bite-sized, taking up just 3-4 per cent of its market value. This amounts to some US$200-300 million per acquisition.

'We generally don't do large, company transformation deals. We follow a string of pearls kind of approach so that if one of those transactions or acquisitions go wrong, we are not risking the whole company. And that has been the track record. It has been a very successful model.'

Still, he left the door open to large transformation mergers and acquisitions. Referring to Olam's merger talks with French commodities firm Louis Dreyfus Commodities (LDC) that ultimately petered out, Mr Verghese said: 'While we considered the Louis Dreyfus merger, that is an exception. That is not the norm.