FGV Annual Report 2018

46 REMAINED FOCUSED ON VALUE CREATION FGV HOLDINGS BERHAD MANAGEMENT DISCUSSION & ANALYSIS In order to strengthen our technology transfer capabilities, we adopted Pictorial Work Instructions to convert the conventional SOP into pictorials to overcome language limitations as 85% of our workers are foreign guest workers. Other R&D projects during the year include research on the production of lactic acid fromPalmKernel Cake for downstream commercialisation and to offer a higher value-added product. As the research programme is the first of its kind in the industry, we will file our patent for the programme in 2019. We also undertook the production of industrial margarine, mass blended oil and Palm Kernel Protein, which are expected to create a new revenue stream for the Downstream Cluster. As we seek to ensure we possess sufficient talent to continue our research journey, we have implemented our R&D talent retention and management programme. We also allocated an average investment of around RM40 million per year for R&D programme. In line with SDG 12: Ensure sustainable consumption and production patterns, we also took a significant step towards the sustainability of our Plantation Sector with the development of a Sustainability Index (SI) called ‘ i-Sustain ’ in collaboration with University Teknologi Malaysia. The system will measure the sustainability performance of our oil palm mills in a holistic manner and its development is in the final stage of completion. In response to the challenges faced in tracking the original FFB purchased from third parties, in January 2017 we successfully developed our own web-based system called Sustainability Palm Oil Management System (SPOMS). This system consist of FGV-ToP and FGV-AIMS, Product Traceability and Audit IntegratedSystem(DigitalDocumentationSystem) respectively. Around 10% of our seeds were exported to countries such as Indonesia, Sri Lanka, Papua New Guinea and Thailand. This has gained FGV a foothold in Southeast Asia’s seed market. In the fertiliser segment, we registered fertiliser sales of 0.60 million MT in 2018, a 17% reduction from 0.72 million MT in the preceding year. The decline in fertiliser sales was due to lower sales volume to key off-takers. Our rat bait business is represented by our product known as BUTIK. In the period under review, we recorded sales of 0.30 million boxes, an 11%growth compared to 0.27million boxes in 2017. This was mainly due to extensive marketing activities that were supported by our advisory team, as well as the replanting programme undertaken by the oil palm industry. We have successfully registered and commenced commercialisation of the rat bait to be used in paddy fields, making an expansion from its previous use in the oil palm plantation only. The R&D Cluster has continued efforts to develop FGV’s Intellectual Capital throughout the years, with an aim to enhance upstream yields. These efforts are coupled with the latest technology and premium planting materials, implementation of site-specific Good Agricultural Practices (GAP) and assigning dedicated agronomists for every zone in theplantation to improve theGroup’s operational performance. We work closely with the Upstream Cluster to improve the gap in yields and address issues to ensure our plantations perform according to the site-yield potential. As part of the effort to improve our yield, we have conducted multiple R&D advisory visits to the estates to facilitate technology transfer, enhance the Group’s R&D capability in the downstream segment and ensure all areas are standardised according to GAP. RAT BAIT SALES VOLUME (MILLION BOXES) 0.05 0.25 0.20 0.15 0.10 0.30 2016 2017 2018 0.24 0.27 0.30 RAMETS SALES VOLUME (MILLION UNITS) 0.2 0.8 0.6 0.4 1.0 2016 2017 2018 0.87 0.92 0.79 INTELLECTUAL CAPITAL