KUALA LUMPUR: Sand Nisko Capital Bhd (SNC) is pursuing alternative revenue streams through potential mergers and acquisitions (M&As) in environmentally friendly enterprises engaged in the production of bio-fertiliser refined oil products.

Newly appointed executive directors Datuk Goh Soo Wee said the company targets environmentally friendly businesses due to its positive impact on the environment and preserves natural resources.

"The potential M&As in this space are also in line with our sustainability mission – prevent physical waste, improve resource productivity, improve profitability and enhance competitiveness," he said in a statement today.

According to Goh, SNC has targeted companies with vast experience and a strong track record in this area.

This will allow SNC to gain immediate exposure in an industry with a high entry barrier.

Bio fertiliser provides better efficiency and output for trees. At the same time, refined oil is a recycled oil product reproduced as a lubricant and addictive oil and biodiesel for the automotive industry.

Executive director Lee Ping Wei said one of the biggest challenges to gaining exposure in these businesses is technical expertise and know-how.

"The company we are looking for offers us the mechanics to move forward in the business as they have a strong team with strong credentials in the field.

"The company also has machinery in place for the bio fertilisers and refined-oil business. So instead of investing in the knowledge and building our capacity, these M&As put SNC on a fast track to expand into the business," he said.

Aside from that, the penetration into these businesses will target a new customer base for SNC as the bio fertiliser targets both plantation companies and government agencies.

Similarly, the refined-oil business will meet the demand in the automotive industry.

"We will explore new sales channels and customers under our expansion plan. Among the target customers are the plantation companies, private and government agencies, and those in the automotive industry.

"Based on our research, bio fertilisers are in strong demand, especially among plantation companies and government agencies looking for higher yields in the crops and reducing the fertiliser cost.

"Meanwhile, the refined oil is suitable for customers who need quality base oil to reproduce into final products," he said.

These M&As could be synergistic expansions for SNC as the company has a strong balance sheet position with net cash that meets the funding needs to grow the business.

According to Goh, the company will allocate up to RM50 million for capital expenditure (capex), which would involve investment into new or upgrading machinery to grow the business.

"Our strong balance sheet position is an advantage that can help grow the business. However, given the inflationary environment, we think it is important for the Group to put our money into better investing opportunities.

Lee said that the potential M&As put the company on a strong growth trajectory while allowing it to gain exposure to new business.

"Aside from that, these potential M&As are also in line with our company's ESG (environment, social and governance) mission," Lee said.