MUMBAI: Madhya Pradesh-based edible oil manufacturing company, KS Oils has acquired an additional 35,000 acres of land in Indonesia for oil palm
plantations. With this acquisition, the total land acquired by the company stands at 85,000 acres and it plans to invest Rs 750 crore over a period of three year in palm plantations and production of crude palm oil there.
“The land is adjacent to KS Oils’ current plantation and has been acquired through a joint venture with a local partner who has a minority stake of 10%,” said a person close to the development. The company earlier acquired 50,000 acres in 2008 and has already invested Rs 90 crore in the plantation project. ET NOW first reported about KS Oil’s latest acquisition.
The investment outlay of Rs 750 crore will be met through KS Oil’s international subsidiary, KS Natural Resources (KSNR). The money will be used to acquire and develop palm plantations and assets like mills in South East Asia over the next three years. The company recently announced that it was raising Rs 450 crore through private equity funds and promoters. “The remaining Rs 300 crore will be raised through debt over a period of three years,” said a person close to the development.
Of the Rs 450 crore equity infusion expected from private players and promoters, Rs 375 crore will be used for developing palm oil plantation assets in Indonesia. The balance amount will go into doubling the capacity at the Haldia refinery from the current level of 500 tonnes per day.
The plantations in Indonesia will start producing crude palm oil in the next three years. Eventually, around 1.5 lakh tonnes of crude palm oil will be produced after five years, which will be exported to the Haldia refinery. The refined oil will be supplied to West Bengal, Bihar, Jharkhand, Orissa, North East and Uttar Pradesh.
There has been a significant fall in crude palm oil prices from $1,196 per tonne levels in June 2008 to current $630 per tonne. According to analysts, even if the prices fall to a level of $500 per tonne, it is still a profitable business since cost of crude palm oil production per tonne is $300. KS Oils clocked a turnover of Rs 3,144 crore in FY09.
The shares of the company closed up 3% at Rs 61.05 on Wednesday.
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