KS Oils expands Indonesian acquisition by 35,000 acres

Madhya Pradesh-based edible oil manufacturing company KS Oils has acquired 35,000 acres of palm plantation land in Indonesia for an undisclosed amount. In an announcement to the stock exchanges, the company said that its palm plantation land bank assets in Indonesia now stand at 85,000 acres, with 50,000 acres having been acquired earlier in 2008.

The land acquisition mkes KS Oils the first Indian company to join global food companies to develop sustainable palm plantation assets in Indonesia.

KS Oils, through its international subsidiary KS Natural Resources Pvt Ltd, Singapore, plans to invest Rs750 crore to acquire and develop palm plantations and related assets like cpo (crude palm oil) mills in South East Asia over the next three years. So far the company has invested Rs90 crore in its palm plantation assets in the region, the company statement said.

Recently, three private equity players, New Silk Route, Citi Venture Capital, and Barings Private Equity Asia, pumped in close to Rs450 crore in the company.

It has allocated Rs375 crore for buying and development of palm plantation and other assets in South East Asia. The balance of Rs75 crore will be used to double the refinery capacity of its Haldia refinery from 500 to 1,000 metric tonnes per day. The current purchase of 35,000 acres will be funded from the recent funds raised.

The plantations in Indonesia will start producing cpo in the next three years. Eventually, around 1.5 lakh tonne of cpo 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 UP.

With the current acquisition, KS Oils stands to gain greater self-sufficiency in cpo, its key raw material, for its Haldia refinery, with 50 per cent of its expanded refinery capacity being met by approximately 150,000 metric tonnes of cpo produced from its own plantations. The plantations will be productive by 2012.

The acquired land parcel is situated in Sumatra island of Indonesia, which has one of the most fertile lands for environmentally sustainable palm plantations in the world and has the highest yield of cpo.

 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 interest of 10 per cent.

Sumatra Island has significant palm plantation assets and investments from global edible oil and food companies like Cargill, Sime Darby Berhad, Golden Agri-Resources, IOI Corporation and other players.