Angelite Food Corp

I. Company Background

It was 1900. Mr. Alfredo Salas was planning to enter the food business, but why sardines? The canning of sardines was an old and mature industry. There were several competitors which could keep marginal profits to a minimum, if not at a loss. The leader in the industry, Youngstown, only shares 18 to 19 percent of the market. Still, everybody eats sardines. Hence, to establish a pipeline to reach the masses, AFC was formed with sardines as its initial product.

Having in mind the production of products other than sardines, Mr. Salas had the plant designed with enough flexibility to process other goods like meat, fruits, and vegetables. The result was a sophisticated, highly-mechanized, and hygienic canning plant with a fully integrated production line. This is two to three times more efficient than most sardines plants in the Philippines. With an estimated capacity of about 150,000 cans per day with one shift and with all its modern features, the plant was not without cost. Large capital outlays were required to finance the construction. Mr. Salas invited two other friends to finance the venture. One of these two was Mr. Rey Chang. Subsequently, Mr. Salas and Mr. Chang bought out the shares of the other stockholder and sold the shares to the Retirement and Separation Benefits System (RSBS) of the Armed Forces of the Philippines (AFP)

Mr. Salas and Mr. Chang are both prominent businessmen. Mr. Salas belong to a group of companies with different lines of businesses like construction, lumber, aluminum manufacturing, realty, insurance, and banking. Mr. Salas is a president of five companies from this group and sits as a member of the board of directors in seven other companies. Mr. Chang, on the other hand, is also a president and director of about 17 companies. Both were educated abroad.

AFC is managed professionally. The key positions were handled by people...