KS Oils buys palm plantation in Indonesia:

Mumbai, March 26 KS Oils, an integrated edible oil company, has acquired 50,000 acres of palm plantation in Indonesia with an investment of Rs 230 crore. The investment, spread over three years, will be routed through its wholly owned subsidiary in Singapore.
Mr Ramesh Chand Garg, Chairman, KS Oils, said, “With spiralling commodity and raw material prices, owning a raw material source is the right strategy to de-risk in the long term. This is another important step in our global ambitions.”
The plantation is expected to yield palm oil of about 80,000 tonnes annually, which is about 2.3 per cent of India’s current imports of 3.6 million tonnes per annum.Integrated player
KS Oils is the first Indian company which has invested in palm plantations in Indonesia. The palm oil will be transported to the various manufacturing plants of the company in India. Through the acquisition the company is shaping its strategy of an integrated agriculture player through backward and forward integration in the entire value chain, the company said. The investment will reduce the raw material costs significantly.
The company has set up operations there and the plantation will be developed over next three years. The investments will ensure best agricultural practices with the focus on scientific methods of plantation to increase productivity and yield.
Recently, the Indian government reduced the import duty on crude palm oil to 20 per cent from 45 per cent, while that on refined palm oil was trimmed to 27.5 per cent from 52.5 per cent to help curb inflation.
With the reduction in excise duty, India’s imports of palm oil are likely to increase from the earlier market estimate of 4.3 million tonnes.
“We think palm oil will now constitute more than 60 per cent of total edible oil imports,” said an analyst.

Business Line,
27th March 2008