Bernas ... Jul12

It is expected to finalize details of the extended rice concession agreement with the government by Aug 2012. The extended concession is expected to see an emphasis on policymakers’ benchmarks for the custodian of the national padi and rice industry to ensure food security in Malaysia .

Bernas’ ceoncession under a privatization agreement with the government since 1996 gives the company the right to manage Malaysia ’s rice imports, stockpile and distribution. In April 2011, the government extended Bernas’ concession agreement for another 10 years but its new terms and conditions have yet to be implemented as the company is finalizing the details with the government.

For now (June 2012), the terms and conditions spelled out in the privatization agreement are still in effect. Under the agreement, Bernas’ tasks include maintaining Malaysia ’s rick stockpile and being the buyer of last resort for padi farmers in Malaysia

Bernas is also required by the government to spearhead the Bumiputera Rice Millers Scheme and distribute padi price subsidies to farmers on behalf of the government. It is worth nothing that bernas pays farmers market price of between rm1000 to rm1220 for every tonne of padi, higher than the government’s fixed guaranteed minimum price of rm750 a tonne.

Costlier imports and padi have stifled Bernas’ profitability. The bulk of Malaysia rice imports are from Vietnam , Thailand and Pakistan and these purchases are deemed pivotal to ensure Malaysia ’s stockpile is adequate to ensure food security.

As at March 31, 2012 its debts stood at rm1.32 billion after taking account total borrowings of rm1.63 billion and cash of rm310 million. Bernas had set aside rm250 million in FY2012 ending Dec for capex.

Bernas has more than 400 commercial rice mills 32 of which are owned by Bernas.

Tradewinds Bhd is the largest shareholder of Bernas with 72.6% stake as at April 31, 2012.

It is setting aside rm250 million in FY2012 ending Dec 31 to acquire new mills and improve existing rice mills.

Rm100 million will be allocated for acquisition of mills while the balance of rm150 million will be set aside to improve existing mills.

It will finance the capex with its internal funds and borrowings.

Bernas has set aside rm180 million in FY2011 of which a total of rm70 million was used for acquisition while the balance was channeled to existing mills.