Thoroughly enjoying it

Managing the investment portfolios of diverse entities is a task to be relished for Tan Sri Lodin Wok Kamaruddin

I suppose we may want to see whether there are opportunities for us to participate in the economic activities of the region, especially with its opening up under AFTA (Asean Free Trade Area). Through Boustead, we have investments in Indonesia, Singapore, and Myanmar, but they are small.I personally believe Malaysia still offers a lot of opportunities for investment funds like us to invest in the economic development of the country, especially with the Economic Transformation Programme (ETP) to expand the economy and make it grow in line with Vision 2020.A few years back, there were claims that Pharmaniaga was overcharging the government...We are not in a hurry to reduce our stakes; perhaps over two years would be good. At present, both are giving good returns to LTAT. Boustead is giving 7%-8% yield and pays dividend on a quarterly basis, and it has also recently announced a dividend policy of paying out 70% of its net cashflow based on income received from its investments.TAN Sri Lodin Wok Kamaruddin has been at the helm of Lembaga Tabung Angkatan Tentera (LTAT) since 1982, and subsequently also Boustead Holdings Bhd, when the fund took over majority control of the company.Part of the Government Transformation Programme (GTP) is to see more liquidity of government-linked investment companies (GLICs) in the market. Boustead and Affin Holdings are two of the listed entities majority-owned by LTAT.We also believe there are two ways for Pharmaniaga to expand its operations - halal drugs and herb-based supplements. If we can expand on our R&D (research and development) activities to focus more on these two areas, we believe the potential for Pharmaniaga will be tremendous, not only in Malaysia but the region and other Islamic countries as well.For LTAT, negligible. Only one so far, in the Islamic International Infrastructure Fund based in Bahrain. Returns from this fund are very good. As to whether we will invest more overseas, it depends on the viability and opportunity.`Except maybe my cucu (grandchildren),' he adds with a laugh, and genuine affection. Following are excerpts of the interview.Are you currently looking at any other acquisitions? There was talk you were interested in Esso.LTAT will probably pare down its interest in Boustead to 51% or so over some period of time from the current 59%. In the case of Affin, LTAT owns direct and indirect stakes of about 56%. Over a certain period, we can reduce our interest by 4%-5%.Pharmaceutical is not a new business for us. Boustead has two plants - in Sungai Petani and Bandar Iskandar near Lumut, under Idaman Pharma (Sdn Bhd) - manufacturing drugs and penicillin, and has been a supplier to Pharmaniaga for the last five years.Also, we won't be keeping all the companies we have now. We will continue to identify non-core companies with a view to disposing of them for the right consideration. In fact, we're talking to a few interested parties.Later on, maybe. Some of this came about through mergers and acquisitions (M&As). Some of the shareholding structures are quite confusing. Sometimes I get confused too! There will be some rationalisation later on, but we'll have to complete some of the (M&A) exercises first.The newly appointed managing director for Pharmaniaga, Datuk Farshila Emran, was Idaman Pharma's MD. She's very enterprising, hardworking and a no-nonsense lady who knows the business and has lots of networking. Under her management, Idaman Pharma has been giving us good returns.The bottomline is the one that drives me. That is what I monitor very closely. If a company doesn't do well, then there is no reason for it to be in the group. We have constant reviews and assessment of all our investments. We cannot be sentimental. Just because we have had a company for over 20 years is no reason to continue holding on to it.How much of your investments are overseas?We believe Pharmaniaga has tremendous potential to expand not only in Malaysia but also regionally. For a start, it has got a 10- year government contract to supply government hospitals with various types of drugs. We believe it has not fully exhausted its capacity to do business locally. There are still some areas of government business that are not being attended to. There is also room to grow on the private sector side.We're always looking at opportunities to expand in every business sector we are in. BH Petrol is giving us good returns. Our partnership with Vitol has been very positive. If an opportunity comes for us to expand either organically, which will take time, or via acquisition, we will certainly take it. We do want to grow BH Petrol but it is a question of how we approach it.In plantations, for example, we own about 17,000 hectares, half of them planted, in Sumatra. But that is in the process of being sold. For the time being, we want to confine ourselves to Malaysia. When you operate plantations overseas, there are a lot of challenges such as local laws and requirements and labour. We are currently talking to one potential buyer.Pharmaniaga may be a bigger ship (than Idaman Pharma) to manage but the components are the same. Very importantly, she'll be getting a lot of support from the Boustead group of companies. And I'll be watching very closely the activities and performance of PharmaniagaManaging and growing the diverse portfolios of both the Armed Forces' superannuation fund and a corporate conglomerate is certainly no easy task. A lesser man would have buckled under the pressure long ago, but Lodin had remained calm and steadfast as he strives to do his best for `the soldier boys'.We're almost there in Boustead's acquisition of (Indonesian bank) PT Bank Ina Perdana. The only outstanding issue is approvals from the regulators.I cannot comment on that as we were not involved then. Whatever it is, under our group, we believe in operating our companies in the most transparent way. We make sure our companies operate on good corporate governance practices. Only in this way can we win the confidence and trust of the public and our customers.The genial and down-to-earth Lodin frequently expresses gratitude for the good fortune of having capable, dedicated and loyal lieutenants to make his job easier. Being `blessed with good health, good family and good support' gives him the peace of mind, he says. Thus, when asked what keeps him up at night, Lodin, 61, is quick to say: `Nothing.'The presence of Bank of East Asia as a major shareholder also adds value to the banking group in the form of various forms of business relationships, and not only within Malaysia, as we're looking forward to expanding our operations especially in Islamic banking to places like China. We hope to achieve some positive development this year.What are your plans for the recently acquired Pharmaniaga Bhd?There are a lot of companies under LTAT and Boustead and many cross shareholdings. Are there plans to make it all more streamlined?Affin is also a strong group now. Even though it is one of the smallest local banking groups, it has done a lot in the last seven years. It is enjoying a deposit and loan growth of about 16%-17%. Its NPLs (non- performing loans) had come down tremendously to about 1.7%, slightly lower than the industry average.In fact, he admits to thoroughly enjoying it! `If you asked me to go on until I dropped dead, I would do it,' he discloses to Malaysian Business in an interview.You mentioned that LTAT wants to pare down its stake in Boustead Holdings Bhd to increase the liquidity of the stock. Could you elaborate?On property, we're looking at a few plots of prime land within the Klang Valley with a view to participating in their development. One is at Jalan Cochrane, which is owned by the government. LTAT is looking at establishing a similar type of development as Mutiara Damansara (in Selangor) there.

In plantations, for example, we own about 17,000 hectares, half of them planted, in Sumatra. But that is in the process of being sold. For the time being, we want to confine ourselves to Malaysia. When you operate plantations overseas, there are a lot of challenges such as local laws and requirements and labour. We are currently talking to one potential buyer.