Sunday 14 Jul 2024
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For companies, changing their name can be both a bittersweet and complicated process.

For one as well-known and as long-tenured as Sime Darby Plantation Bhd, it can be all that, but more importantly for the plantation group now known as SD Guthrie Bhd, it would represent an opportunity to step away from the familiar and explore much more than it has in the past.

It will be on this that SD Guthrie will build on as it seeks to navigate the next phase of its growth. In order for companies to survive, the hard truth is that they need to evolve, and this is no different for SD Guthrie, whose roots can be traced back over two centuries. In a world where the global economic landscape is still not fully recovered from the Covid-19 pandemic, marred by geopolitical tension, some may question the timing.

But if you look at the land that we have, some of it can be better used — say, to go into renewable energy, industrial development or industrial parks. Given that we are now SD Guthrie, we can go into all that.”
— Haris Arshad, SD Guthrie

However, according to group chief operating officer Haris Arshad, this was the perfect time for the company to make the seismic shift and come out as a new version of itself. “It can be anytime, actually, but one of the realisations we had is that we want to move beyond having a name that has a descriptive, and that descriptive in this case is plantation.”

“I experienced that myself when I went out to speak to customers in the Americas, for example, and I say I’m from Sime Darby Plantation, immediately in their minds they picture a company that cultivates bananas, potatoes and pineapple. So why is he talking about oil?” he explains.

According to Haris Arshad, SD Guthrie had the revelation several years ago that the group could not remain in the upstream segment indefinitely. Upstream in the oil palm industry in this case means the harvesting of fresh fruit bunches and the production of crude palm oil (CPO), of which SD Guthrie is one of the largest in the world.

Along with the new name comes a new tagline, “Unlocking Nature’s Superpower”. With that also come two new verticals for the group: renewable energy and green industrial parks. Even at a glance, these segments make sense given SD Guthrie’s vast land bank and easy access to fuel that could go into biogas plants. The company has made public its intention to expand its involvement in large-scale solar (LSS) projects from just land lease agreements to owning and operating these green energy projects.

Group managing director Datuk Mohamad Helmy Othman Basha was quoted as saying that as part of SD Guthrie’s aspiration to hold its own generation assets, it was looking to invest some RM2.5 billion over the next three to five years. It had also announced on May 7, 2024, its plan to co-develop a green industrial park supported by solar energy spanning 1,000 acres in Kerian, Perak. All projects are clearly sustainable and are designed to benefit future generations.

Haris Arshad also feels that, with its new identity, the sky is basically the limit for the group. “Well, the possibilities are endless. Let’s start with, what is it that we have? We currently have 600,000 hectares of land within Malaysia, Indonesia and Papua New Guinea. What is it that we’re good at? We’re very good at agronomy and we’re good at plantation practices management; that is our bread and butter.

“But if you look at the land that we have, some of it can be better used — say, to go into renewable energy, industrial development or industrial parks. Given that we are now SD Guthrie, we can go into all that.”

On other possibilities of global expansion beyond just producing more CPO, Haris Arshad says SD Guthrie is also looking at going further downstream with its portfolio, stopping just short of competing outright with its customers. “I think we can do that if we remove the perception that we are only a plantation company. What we want is for the market to see us as an integrated player.”

SD Guthrie intends to remain innovative in its business

However, he adds that one business that SD Guthrie would be unlikely to touch is one where having a massive land bank would be an asset — namely property development. This is no surprise given the existence of Sime Darby Property Bhd.

Haris Arshad admits that it would take some time for investors and customers to see SD Guthrie as standing apart from its Sime Darby brethren, consisting of Sime Darby Property and Sime Darby Bhd, which is in the business of automotive and industrial.

It has been 17 years since the enlarged Sime Darby was born of one of the biggest mergers in the history of Corporate Malaysia. Three giants — Sime Darby, Kumpulan Guthrie Bhd and Golden Hope Plantations Bhd — merged and the new entity was named Sime Darby. When the individual units were eventually demerged and listed in another notable corporate exercise, it was always in the pipeline that all three would have their own identities.

“It was decided at one point that the three companies would be free to choose the name they wanted to be known by, so the time has come for us.

“While we still have friends at both Sime Darby and Sime Darby Property, many of whom were our colleagues once, the only thing we have in common now is that we have the same substantial shareholders. But for all intents and purposes, we are three separate entities,” says Haris Arshad.

The integrated plantation player also has no intention to be kacang lupakan kulit — as the saying goes in Bahasa Malaysia — hence “SD” is still a part of its name. But Haris Arshad is also unflinchingly honest about the limitations that its previous name had when it came to branding. To clarify, SD Guthrie was allowed to use the Sime Darby name from its parent, under licence. This placed restrictions on how it could present itself to its business partners, similar to how a franchise agreement would work.

SD Guthrie honouring its past in musical form

“When you don’t own the brand and you pay a fee, no matter how nominal that fee is, at the end of the day, you don’t own it. You will need to go back to the brand owner to ask, ‘Hey, can I do this? Can I do that?’. It means your hands are tied.

“We also understand the importance of goodwill. As the company grows, there’s the goodwill that you attach to the brand. Today, we are at around RM32 billion in market capitalisation and I don’t see why we can’t eventually reach RM60 billion. But if you don’t own the name, all that goodwill that comes with the brand will not be ascribed to you. The only way to ensure it will be is to have a new name,” he says.

What’s in a name?

Choosing a new name for a company is not one that is made overnight. After all, there is a reason why intellectual property and branding are important to organisations and are fiercely guarded to the point of litigation. There have been more than a handful of stories about how bad branding could tank a brand, even for a short while.

When it came to choosing a new name for Sime Darby Plantation, it took a specially put together task force to decide it, composed of the organisation’s most senior personnel, known internally as Pentagon Six, according to Haris Arshad.

While the name may have been given half in jest, the team knew what was actually at stake. As he puts it, beyond just changing the logos and branding, it would also put a stamp on what would be their identity and purpose going forward.

It was eventually revealed on a star-studded night in front of more than a thousand guests. With interlocking symbols reflecting the colour of the palm fruit, SD Guthrie finally stepped into the spotlight.

In order to determine their future, the team decided to mine their past, going back to the very beginning, back to Singapore in the 1800s when a Scotsman named Alexander Guthrie first appeared on those shores.

“I’m not sure many people know this but the name Guthrie is a lot older than Sime Darby. For some quarters, this idea of a change may be a very difficult one to accept. Especially if you’ve been a Sime Darby person since the first day you joined.

“But others may be more accepting knowing that the decision to use SD Guthrie rests on this lineage and signifies our history — that we have been here for over 200 years. It is a name that is strong and one that is not alien to Malaysians,” Haris Arshad explains.

Contemplatively, he adds, “Then, of course, there is the dawn raid.”

A new dawn breaks

While it is a story that may prove new to a younger generation of Malaysians, for those in Corporate Malaysia, it has taken on an almost legendary status. In investing terms, a dawn raid is a tactic where an investor acquires a substantial number of shares in the target company the minute the opening bell is rung. By the time the target realises that it is under siege, it is already too late to pull up the drawbridge.

Of course, in this day and age, a dawn raid is almost impossible to pull off given how rapidly information is being disseminated. But it wasn’t the case back in September of 1981, when with tactical precision, a group of Malaysians wrested back control of Kumpulan Guthrie from British ownership by executing a dawn raid on the London Stock Exchange.

Led by former Bank Negara Governor Tun Ismail Ali and assisted by a doggedly determined young man who eventually became Selangor’s menteri besar, Tan Sri Abdul Khalid Ibrahim, they, along with a few others, brought the ownership of the group home to Permodalan Nasional Bhd in under four hours.

SD Guthrie chairman Tan Sri Dr Nik Norzrul Thani Nik Hassan Thani (sixth from left), group managing director Datuk Mohamad Helmy Othman Basha (fifth from left) and board of directors pose for a group photo after unveiling SD Guthrie’s new logo design.

It was a gutsy move by an upstart developing nation, and it is this spirit that Haris Arshad hopes is stitched into the fabric of SD Guthrie’s banner.

“It was bold and it was brave. I suppose you can call it the embodiment of that entrepreneurial spirit, because you need to be an entrepreneur in order to stomach that kind of risk. The whole idea is to bring that out again, and that by renaming Sime Darby Plantation to SD Guthrie, it reminds all of us of where we were and how we came to be today.”

He adds that it was also a lesson to constantly strive to be a trailblazer. “In terms of business, we are now in far-flung places. Papua New Guinea, for example, or the whole archipelago of Indonesia. That trailblazer spirit is indeed very much alive.”

Haris Arshad is also aware, however, that this kind of change will not come overnight and that communicating it to not only the market but also to its customers, who may have become more familiar with doing business with its previous incarnation, is important.

“Sime Darby Plantation is well-known within the oil palm industry — among the largest, a true integrated CPO player. So yes, it will require us to be a bit more measured and to deliberate on how we communicate this change, but it will not necessarily change our customers’ view of us. I don’t think it will. Because, at the end of the day, it is not just the name. It is the ability to deliver the products that you want in the right quantity, quality, and so forth.

“That won’t change one bit. That human interaction between the buyers and the sellers is not going to deteriorate. In fact, it will be stronger than ever. The relationship they will have with SD Guthrie will be both a better and a stronger relationship. Hence why we want to grow with a name that belongs to us,” he says.

Making nature your superpower

However, now that the confetti has been swept up and the silverware put away, the hard work truly begins. Although physically it will take a few more months for the entire overhaul to be completed, from inside the organisation, the staff members have already been imbued with a new sense of purpose, Haris Arshad says.

Diving deeper into the new tagline, he says the main purpose of the company, boiled down, is to leave something that will not only outlast him, but for an organisation that may last another century. He says the important thing to remember is that, while the superficial may change or may evolve to rise and meet the changing tide, SD Guthrie will never forget its roots.

“Deep inside us, we are basically people that work with nature and that will never change. There may be iterations of it, but [we are] at the essence of it. Yes, we started off with a plantation company, but that comes with a lot of responsibilities, [such as] looking after the land that we own and the people that work for us. There are whole communities that are involved in our activities, and that is never going to change. That is who we are,” he says.

Along with the rest of SD Guthrie’s management team, he is not under any illusion that it will be all easy going in the coming years. Reports and worries over the sustainability of CPO and allegations of the environmental scars that it leaves are a complicated issue that SD Guthrie will always have to deal with but Haris Arshad is heartened that there are bright pinpricks outlining the horizon, backed by a sense of purpose.

“The notion of sustainability goes beyond the fact that we are RSPO-certified. That is just one part of it, right? What we are concentrating on is ensuring that everybody who is involved in the supply chain benefits from it.

“We will continue to educate the children who live on the plantations and continue to help and reach out to the communities that surround us. We will continue to help look after the environment as well, leaving the space much better for those who will inherit it, our grandchildren and future generations.”

When asked what SD Guthrie will look like five years down the line, Haris Arshad says he hopes for investors to find a truly sustainable company. He says the new energy sector that the group is going into will create new revenue streams from what was previously considered wasteful and put it on a good trajectory, which he hopes will appeal to new talent looking for their next place of employment.

He also believes that SD Guthrie is on the right path to reach net zero by 2050, which he says is ambitious but achievable, as they have an approved pathway towards achieving that. “I admit, the plantation industry is not the sexiest business to be in. But if you believe in creating a better future, if you believe in actually helping preserve this precious earth that we have, we want to be one of the guys who try to do that.”

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