Olam International

Olam International Limited
Type Public
Traded as SGX: O32
Industry Supply Chain Management of agricultural commodities [1]
Founded 1989
Headquarters Singapore
Key people Sunny George Verghese - Group Managing Director and CEO
Revenue

increase $15.7 billion SGD (2011) of Sales

2011 Annual Report
Net income increase $444.6 million (2011)
Employees 17,000(2011)
Website www.olamonline.com

Olam International Limited (SGX: o32) is a leading global integrated supply chain manager and processor of agricultural products and food ingredients, sourcing 20 products with a direct presence in 65 countries and supplying them to over 11,000 customers.

With direct sourcing and processing in most major producing countries for various products, Olam has built a global leadership position in many businesses, including cocoa, coffee, cashew, sesame, rice, cotton and wood products.

Headquartered in Singapore and listed on the SGX-ST in 2005, Olam currently ranks among the top 40 largest listed companies in Singapore in terms of market capitalisation and is a component stock in the Straits Times Index (STI), MSCI Singapore Free, S&P Agribusiness Index and the DAXglobal Agribusiness Index.


Contents

Salient Features

  • Global leader in 8 out of the 14 product platforms in its portfolio
  • World’s largest supplier of cashew, robusta coffee and sesame[citation needed]
  • Amongst the top 3 suppliers in cocoa, rice and spices[citation needed]
  • Amongst the top 5 suppliers in peanuts, cotton and tropical hardwoods[citation needed]


Heritage

Since its establishment in 1989, Olam has remained in a single commodity asset class – the agricultural complex. Olam have grown by taking advantage of adjacent opportunities in the agricultural complex and has evolved from a single-product, single-country company in 1989, to a multi-product, multi-national, integrated supply chain manager today.

The history and development can be categorised into the following distinct phases:


The Formative Years: 1989 to 1992

In 1989, the Kewalram Chanrai Group established Olam Nigeria Plc to set up a non-oil based export operation out of Nigeria to secure hard currency earnings to meet the foreign exchange requirements of the other Group Companies operating in Nigeria. The success of this operation resulted in Olam establishing an independent export operation and sourcing and exporting other agricultural products not related to the Group.

The Group's agribusiness was headquartered in London and operated under the name of Chanrai International Limited. The business began with the export of cashews from Nigeria and then expanded into exports of cotton, cocoa and sheanuts from Nigeria. This enabled Olam to develop its origination capabilities and expertise in the sourcing, processing and marketing of agricultural products. During this phase its business was a single-country, multiple-product operation.


Business Model Development: 1993 to 1995

By the start of 1993, Olam recognised patterns and similarities in the sourcing, storing, transporting and marketing of these agricultural products, in the skills and capabilities required to participate in these businesses and the tools and techniques required to manage the particular risks inherent across these product markets.

Olam saw it as the opportunity to transfer these skills and competencies across geographic boundaries into other developing countries and across product boundaries to other adjacent products. Between 1993 and 1995, the business grew from a single-country operation into multiple origins, first within West Africa (including Benin, Togo, Ghana, Cote d'Ivoire, Burkina Faso, Senegal, Guinea Bissau, Cameroon and Gabon), and then to East Africa (Tanzania, Kenya, Uganda, Mozambique and Madagascar) and then India. The move into multiple origin countries coincided with the deregulation of the agricultural commodity markets.

Olam International Limited was incorporated in Singapore on 4 July 1995 under the Company's Act as a public limited company. In 1996, at the invitation of the Singapore Trade Development Board (now International Enterprise Singapore), Olam relocated their entire operations from London to Singapore. Furthermore, the Singapore Government awarded Olam the Approved International Trader status (now called the Global Trader Programme) under which Olam was granted a concessionary tax rate of 10%, which was subsequently reduced, in 2004, to 5%. On relocation to Singapore, the Group's agri-business was reorganised to be wholly owned by Olam International Limited in Singapore.

During this phase, Olam established sourcing and marketing operations in Indonesia, Vietnam, Thailand, China, Papua New Guinea, Middle East, Central Asia and Brazil.


Rapid Expansion, Private Equity and IPO: 2002 to 2005

In 2002, Russell AIF Singapore Investments Limited (managed by AIF Capital limited), became the first external investor to take an equity stake in the company. In 2003, Temasek Holdings, through its wholly owned subsidiary, Seletar Investments, took a stake in Olam, followed by International Finance Corporation (IFC).

2005 marked a key point in Olam’s history. After nearly a decade as a highly successful private company, Olam International Limited was listed on the Main Board of the Singapore Exchange on 11 February 2005. The Kewalram Chanrai Group today has a 23% stake in the company while Temasek made a strategic investment in Olam in 2009 and now holds close to 14% of Olam. The Management Team of Olam has a significant shareholding in the company approximating 11% in the total issued share capital, which greatly aligns shareholder and management interests in creating value. Olam's free float owned by public shareholders accounts for approximately 53% of the total issued share capital.

Concurrently, Olam continued to expand its global footprint in the Middle East, North and South America, Eastern Europe and Russia.


Building a Global Leader: 2006 to Present

Olam today is active in the supply chain management of agricultural products and food ingredients. With operations across more than 60 countries, Olam source 20 products from over 45 origin countries and market them to over 11,000 customers with a global employee strength of more than 17,000 employees.


Unlocking Mutual Value - Corporate Responsibility and Sustainability

In 2011 Olam launched the Olam Livelihood Charter with the goal of ‘unlocking mutual value’ in the communities in which it operates. There are approximately 1.5 million farmers involved in over 110 Initiatives spanning 30 countries around the world with the aim being to link small-scale farmers to the global supply chain - improving economic prosperity and social welfare.

2011 Corporate Responsibility and Sustainability Report

Activities in African countries

Though an estimated one-third of world's raw cashew nuts are being produced in Africa, 80% of this is being exported to India or Vietnam for raw processing. Olam too was initially exporting cashew from Nigeria to India. From Nigeria, it went into other key producing countries in West Africa like Cote d'Ivoire, Burkina Faso, Mali, Guinea Bissau and East Africa, including Tanzania, Mozambique, Kenya and Madagascar, and finally expanded into Vietnam and Indonesia. It then expanded down the processing value chain by processing raw cashew nuts that it sourced from these origins into blanched kernels, first in India, then Vietnam and then Brazil. It is now scaling the cashew processing in the raw nut origins and have built a scalable model for this in Tanzania, Mozambique, Cote d’Ivoire and Nigeria. For instance, in Tanzania, with the help of the Government and funded by USAID, Olam along with Technoserve, is participating in activities to improve productivity of small farmers and increase yields and incomes in rural areas.

Competitors

See also

  • Commodity markets

References

External links


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