It is People, Planet and Profit for Main Board-listed TDM Berhad.

“Some regard private enterprise as if it were a predatory tiger to be shot. Others look upon it as a cow that they can milk. Only a handful see it for what it really is – the strong horse that pulls the whole cart.” – Winston Churchill

It is not uncommon to have stakeholders shunning businesses for its irresponsible actions – especially those reaping in profits at the expense of others. Then, we have the opportunists. They cash in the latest industry trend while it lasts. Thankfully for Main Board-listed TDM Berhad (TDM), the company falls into neither of those categories.

If truth be told, TDM takes into consideration of its social and environmental responsibilities so that it could sustain its profits.

Says Badrul Hisham Mahari, TDM’s CEO: “Businesses today cannot purely focus on profit and forget about the other aspects of running one. If you do that, your business will not remain sustainable and your profit will disappear in the long run.”

With that notion in mind, TDM prides itself for practising the triple bottom line or the three pillars of business. “We want our profits to be sustainable. We have to focus on the triple bottom line – profit, people and planet. We want to make good profit through developing the society and protecting the environment,” Badrul remarks.

During my time in university, a Strategic Management professor never failed to remind us about the concept of triple bottom line. However, in reality I least expected a business to practise this theory, seeing as a business is all about profit.

So what is the triple bottom line? Essentially it means the business has to address the spectrum of values from all stakeholders, who are influenced directly and indirectly, from its course of business.

For TDM, it would have to add a little extra effort to balance all its stakeholders’ needs. After all, TDM is still answerable to the Terengganu State Government, seeing as it is a government-linked company (GLC).

Despite going through a rough patch pre-2004, TDM has come a long way to become what it is now. The company has divested a large number of its business segments, such as poultry, properties and logistics, as it decides to concentrate on two core businesses; palm oil and healthcare.

As Churchill once said: “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”

No Oily Situation Here

If you are a Malaysian, you will not have any trouble identifying a palm oil plantation. In fact, you could probably spot it a mile away while you cruise down the highway. These trees are no longer foreign to us as Malaysia has seen a growing number of plantations around due to the increased export of palm oil products for many years now.

One of TDM’s core businesses is the production of palm oil. Although Indonesia has overtaken Malaysia as the largest producer of palm oil, Badrul firmly believes that Malaysia is still the best at it – seeing as the country pioneered the research that sparked the palm oil industry many years ago.

TDM is also confident that with the increasing rate of the world’s population, the usage of palm oil will increase along with it. Both Badrul and Senator Datuk Roslan Awang Chik, Chaiman of TDM, agree that when compared to the other edible oils in the market, palm oil remains to be the more efficient and economic plant.

TDM has an opportunity to grow as the company can produce more but cheaper in cost. “Palm oil gives a better production yield per acre,” says Roslan. “The numbers of areas that have been planted within the equatorial region for palm oil, as compared to soya bean and corn oil, is far greater. (According to the Malaysian Palm Oil Board – MPOB) Malaysia is producing about 17% of the world’s planted area.

“If you see the usage of palm oil throughout the world, the benefits of palm oil are far greater in terms of health and the chemical composition. This is why palm oil is a never-ending story.”

Nonetheless, the industry is a competitive one with other bigger players in the country playing the same game as TDM. Despite all the competition, Badrul firmly states that TDM is not looking to compete, while Roslan pipes in: “We are doing a marathon, not a 100m dash race.”

To practice what it preaches, Badrul elaborates: “We have detailed activities that we want to do in this direction. It is a general philosophy of engaging our business. There are also activities that we embed in our operations.”

Going back to the first ‘P’ in the three pillars, TDM’s responsibility is not only to its shareholders and profits. The people involved in the whole operations are equally as important. TDM makes it a point in maintaining a good relationship with its contractors and suppliers. It tries to pay its invoices within two weeks of being presented.

Not to be left out in caring for its business ecosystem is TDM’s employees, where the company makes certain that the plantation employees receive the necessary training and comfortable living conditions.

Badrul adds: “We put a lot of money in the training of our own people so that they can go on and be successful. We upgrade the working environment for our workers as well as their accommodation. We also take care of their children. In some cases, we even give out scholarships to them.”

Next we have the planet coming into play. The planet or the environment can no longer be ignored. Time and time again, we hear Mother Nature is abused by irresponsible businesses. In the last few years, palm oil has gained the reputation of being destructive, especially from the West. There has been reports and media coverage on how palm oil plantations are destroying rainforests and its ecosystem.

Roslan opines the Westerners are exaggerating the actual facts due to their stakes in the edible oil industry. “It is all misinterpretations [from the media and other sources].” He believes they are actually fearful of the palm oil’s success as an edible oil in the market.

TDM believes a sound business practice must also include being environmentally-responsible. “We changed our estate practices to become more sustainable and environmental-friendly.  We recycle our organic materials back to the estate and we review our practices of disposing waste. We also integrate nature as much as possible in our standard practices,” says Badrul.

For example, its plantations are using barn owls as a natural solution to get rid of rodents. In addition, TDM is using buffalos to pull the palm fruit bunches during harvest season – cutting down the need for machinery. “We are also using a lot of beneficial plants like Yellow Alamanda to attract insects to pollinate the palm trees,” Badrul adds.

When asked to comment about the allegations of destroying the ecosystem, TDM assures that the company avoids virgin jungles during expansion. Even with its newest plantation project in Kalimantan, the company is developing on marshlands. Roslan and Badrul jokingly add that there were no orang utans, elephants and rhinos harmed in the process.

Badrul elaborates on its move to expand in Kalimantan: “Currently we are only located in Terengganu. We become exposed to risk that localise in the area like disease attacks and natural calamities.  Our cash flow and assets will be wiped out if such incidents were to happen. Going to Kalimantan is a part of our risk management plan.”

To this end, TDM has acquired 25,000 hectares out of a total package of 40,000 hectares land in the Indonesian region of Kalimantan. Currently, the company has already planted on 700 hectares. It aims to reach 2,500 to 3,000 hectares by the end of the year. Badrul adds: “We plan to steadily plant between 3,000 to 5,000 hectares per year in Kalimantan.”

By the time the business uses up the acquired land, Roslan predicts TDM’s capital expenditure (capex) will be RM700 million. “We expect to be self-sufficient. If need be, we will only borrow 5 to 10% from that amount. Nevertheless, it should suffice to reinvest back into new investments or projects.”

The company expects the project to be fully developed within eight to 10 years. Roslan shares even before the land on hand is fully planted, the first 30% will be able to generate and contribute profit.

Running a Healthy Business

Although TDM has divested a number of its business segments, the company decides to maintain two core businesses and healthcare is one of them. Currently the company’s healthcare facilities are Kuala Terengganu Medical Centre (KTMC), Kuantan Medical Centre (KMC) and Kelana Jaya Medical Centre (KJMC).

In relation to Malaysia’s aim of becoming a medical tourism hub, Badrul informs that TDM is not heading towards that direction.  “We focus on the secondary community hospitals. We serve immediate communities within the range of 50 to 70 kilometres. Furthermore, building a hospital for the community and for tourism requires different competencies and setup of assets.”

Both Badrul and Roslan agree that these hospitals are a way for TDM to be closer to the surrounding community, especially in Kuala Terengganu – where the company is based.

According to TDM’s 2010 first quarter results, its healthcare division is flourishing with 23% increase in revenues from all three facilities. This is made possible due to the rising number of patients.

TDM is expanding its hospitals laterally within the next few years to address increasing demands. In fact, the company is in the midst of building a new hospital in Kuantan. Roslan says: “It is a totally new hospital – a new site, building and facilities. But the management is still the same.”

Its current hospital in Kuantan, KMC, lacks expansion space and has become congested, shares Badrul. Therefore, the new hospital will be able to cope with growing demands as it is expected to be fully operational by 2013.

In addition, TDM intends to add the first cardiac unit in Kuantan through its latest project. “So far, cardiac units are only available in Kuala Lumpur. Within the East Coast, I believe there is none yet. We want to be one of the first hospitals here to do so,” shares Roslan.

Roslan adds that the new hospital will have a new approach. “We are located near the UIA Medical faculty. This will benefit the medical students by inviting them to train at our hospitals. We partner with the university’s professors (as a middle person) to gain network with its students.”

With the shortage of nursing professionals in the country, the company engages with nursing schools to address the issue. “We offer placements to nursing students and every year we award scholarships to potential nursing students. In return, they will be bonded to work in our hospitals,” says Badrul.

Moreover, TDM plans to fully furnish the new hospital with the latest technology – from billing, patient management to its facilities. In the environmental front, it will also integrate green technologies in its daily activities.

KTMC and KJMC will also go through incremental expansion, but with more concentration on the former.  Badrul shares that it expects the hospitals to outgrow its premise within the next three years. He concludes that TDM is always looking for opportunities to expand, especially in the East Coast region.

What’s Next?

Compared to its first quarter results last year, TDM’s revenue went up 33% with profits before tax barrelling up 313% from RM6.5 million to RM26.8 million. The company believes that it is well-positioned for growth due to its strong financial position.  Barring unforeseen circumstances, it anticipates to continue recording satisfactory performances in 2010.

TDM plans to continue its investment for core business expansions, especially in Kalimantan and the new hospitals as mentioned. Nonetheless, the company will still be investing in its existing assets to continuously improve efficiency and contribute positively to its whole Triple P formula.