Publicly-listed Tanduay Holdings Inc. controlled by tobacco magnate Lucio Tan has earmarked P1 billion for expansion this year.

In a statement, the company said the amount would be spent for upgrading the distillation capacity of its units Asian Alcohol Corp. and Absolut Chemicals Inc. The company also intends to channel some of the funds for the acquisition of additional fast lines for its Cabuyao and Cagayan de Oro plants to increase production capacity.

Tanduay recently completed the construction of a fourth plant in Cagayan de Oro, Misamis Oriental that cost about P600 million.

Sitting on a 10-hectare property beside the Asia Brewery complex, the new plant is equipped with an integrated washing and bottling line. It is expected to serve the requirements of the fast growing market of Mindanao, which accounts for 33 percent of total company sales.

In a related development, Tanduay has offered to buy the 10.66-percent stake of Miguel Ossorio Pension Foundation Inc. in Victorias Milling Co. (VMC), the country's largest sugar mill.

Newspaper reports said Tanduay would purchase the additional stake for P85.06 million.

Philippine National Bank, which is also controlled by Tan, owns 10.15 percent of VMC.

For the first quarter of 2008, Tanduay reported that its consolidated net income surged 106 percent to P191 million from P93 million in the same period last year.

The jump was attributed to a 26-percent rise in liquor sales volume across all its major brands, led by the traditional best seller, Tanduay Five Years Rhum.