MUMBAI (Commodity Online ) : K S Oils, one of India’s leading integrated edible oil food companies Wednesday announced further acquisition of 53,000 acres of land for palm oil plantations in Indonesia.
This is the third tranche of land parcel acquired by the company; it has previously acquired 85,000 acres in two deals in 2008 and 2009. After this acquisition, the company’s land bank in Indonesia stands at 1, 38,000 acres [56,000 ha], the largest owned by any Indian company.
The total development cost of the project will be Rs.380 crore spread over three years. The funding will be done through the wholly owned subsidiary K S Natural Resources, Singapore.
KSNR has recently tied-up for an equity infusion of Rs.375 crore from its parent, K S Oils Ltd., India which in turn raised Rs.450 crore through PE Investors and promoter group. Thus, there would be no fund infusion or equity dilution required in K S Oils, India.
Commenting on the acquisition, Sanjay Agarwal, MD, K S Oils Ltd. and Director, KSNR Singapore Pte. Ltd., said, “We are following the footsteps of global agri-companies in building self-owned palm plantations in Indonesia, the lowest cost producer of crude palm oil in the world.
In the long term, this will complement our front end strategy of a refinery in East India to reinforce our market leadership in East and other parts of India. With significant cost efficiencies and value offerings to our quality conscious consumers, this strategy will create predictability and visibility for the company’s business in the long term.
K S Oils will continue to re-invest globally with specific focus on South East Asia, in agri-asset opportunities to strengthen its integrated supply chain strategy. ”
The company with this acquisition has ventured into the highly fertile land at Kalimantan island of Indonesia where the majority of the new plantations are coming up.
Kalimantan has the most fertile land enjoying the world's highest yield for palm oil. The land lies on the equator of the earth thus enjoying rains every second day and bright sunshine throughout the year.
In the future, K S Oils will also look for similar acquisitions in Kalimantan Island. Indonesia currently has the lowest per hectare cost of production for palm, and its production of palm oil is highest in the world.
The acquisition is part of K S Oils’ long term strategy to build an integrated backed supply chain of raw materials like crude palm oil (CPO).
The current acquisitions will help the company become self sufficient in the long term in its raw material requirements for palm oil.
Substantial cost reduction, enhanced quality of inputs and control over the raw material supply chain will help the company build predictability in its business model, and also meet the increased demand for palm oil from consumers in India.
K S Oils is the first Indian company to join the list of international food companies to develop sustainable backend assets of raw materials like palm plantations in Indonesia, to ensure steady and reliable product supply for its Indian consumers.
