Firm to import 80,000 tonnes of oil extracted there; move to help it beat rising prices, bridge deficit in India

Ajayan

Kochi: Edible oils producer KS Oils Ltd has bought 50,000 acres (20,500ha) of palm plantation in Indonesia with an estimated investment of about Rs230 crore over three years, as it plans to import 80,000 tonnes of the oil into India from there.

The Morena, Madhya Pradesh-based company, which is a leader in the packaged mustard oil business in India, had bought a three-year-old 800-acre palm plantation in that country just four months ago.

KS Oils managing director Sanjay Agarwal said the palm trees in the new plantation it bought will start bearing fruits in three years.

The oil extracted from Indonesia will be transported to manufacturing and refining plants in India. It will help KS Oils save on raw material costs and insulate the company against volatilities in price and availability of the commodity, Agarwal said.

Palm oil leads the list of edible oils consumed in India, followed by soya, rapeseed and coconut oils. Annual consumption of edible oils in the country is 13 million tonnes (mt), while total domestic production is 8.5mt.

About 5.3mt of palm oil is consumed in India every year, of which domestic production is 1.5mt from 65,000ha. The remaining 3.8mt of palm oil has to be imported.

This has forced firms such as KS Oils to seek plantations in East Asian countries, both to bridge the deficit and beat the rise in prices caused by demand and high import duties.

Last week, the Union government had slashed the import duty on crude palm oil to 20% from 45% and on refined palm oil to 27.5% from 52.5%.

As a result, the price of refined palm oil has dropped by about Rs4 per kg to Rs62-64, bringing it on par with international prices.

Agarwal said KS Oils was in discussions to buy the 50,000 acres of palm plantation in Indonesia before the duty cut was announced.

Indonesia is the biggest palm oil producer with its production roughly at 17mt a year. The country has a high level of productivity at 25 tonnes per ha, compared with 17 tonnes per ha in India.

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This entry was posted on Monday, March 31st, 2008 at 11:47 am and is filed under India. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.