Govt to energise edible oil output, dampen its imports
4 Jan 2015 1:37 AM GMT
India is one of the world’s largest edible oil economies with 15,000 oil mills, 689 solvent extraction units, 251 Vanaspati plants and over 1,000 refineries employing more than one million people. The total market size is estimated to be Rs 6,00 billion and the import/export trade is worth Rs 1,30,billion. India — being deficit in oils — has to import 40 per cent of its consumption requirements.
With an annual consumption of about 11 million tonne, the per capita consumption is at 11.50 kg, which is very low compared to world average of 20 kg with China currently being at 17 kg. However, number of steps taken by the government, including raising minimum support price, providing assistance to farmers, have helped in improving the production of oilseeds. Despite all the efforts, India will continue dependence on imports to the extent of 40 per cent of its consumption requirements. The improvement in yields and the increase in requirements. area under cultivation will ensure that the domestic oilseed production is sufficient to meet 60 per cent of consumption.
India, being a leading producer of oilseeds, contributes about 8-10 per cent of world oilseed production and is estimated to account for around 6 per cent of the world’s production of edible oils.
Though it has the largest cultivated area under oilseeds in the world, crop yields are only 50-60 per cent of the world’s average. We are the fifth largest producer of oilseeds in the world behind USA, China, Brazil and Argentina. Currently India accounts for 7 per cent of world oilseeds output; 7 per cent of world oil meal production; 6 per cent of world oil meal export; 6 per cent of world vegetable oil production; 14 per cent of world vegetable oil import and 10 per cent of the world edible oil consumption. With steady growth in population and personal income, Indian per capita consumption of edible oil has been growing steadily. However, oilseeds output and in turn, vegetable oil production, have been trailing consumption growth – necessitating imports to meet supply shortfall.
As far as importance of edible oils in India’s economy is concerned, oilseeds and edible oils are two of the most sensitive essential commodities and India is one of the largest producers of oilseeds in the world and the sector occupies an important position in the agricultural economy by accounting for an estimated production of 24.88 million tonne of nine cultivated oilseeds during the year 2009-10 (November-October). India contributed about 6-7 per cent of the world oilseeds production and export of oilmeals, oilseeds and minor oils has increased from 5.06 million tonne in the financial year 2005-06 to 6.2 million tonnes in 2010-11. In terms of value, realization has gone up from Rs 5,514 crores to Rs 14,116 crore. India accounted for about 6.3 per cent of world oilmeal export.
In types of oils commonly used in India, we are fortunate in having a wide range of oilseed crops grown in its different agro-climatic zones. Groundnut, mustard/rapeseed, sesame, sunflower, linseed, nigerseed/castor, are the major traditionally-cultivated oilseeds, though soyabean and sunflower have also assumed importance in recent years. Coconut is the most important amongst the plantation crops. Among the non-conventional oils, rice bran oil and cottonseed oil are the most important.
In this context, NCML Industries Limited, one of the flagship companies of the Delhi-based NCML Group, entered the capital markets on December 29, 2014 — with offer for sale of 60,00,000 equity shares with face value of Rs 10 each by selling shareholders – that closed January 2, 2015. The price band was fixed at Rs 100 to Rs 120 per equity share of Rs 10 each, and the offer constituted 25.48 per cent of the post offer paid up equity share capital of the company.
NCML Industries Ltd CMD Manish Jain highlighted the company’s business of importing, manufacturing and marketing of edible oil in India with international presence, dealing in various edible oils from soya bean, cottonseed, palm (Palmolein), mustard, rapeseed etc. Total revenue of NCML Industries had risen from Rs 1,047 crore at March 31, 2011 to Rs 2,767 crore at March 31, 2014 and PAT increasing during the same period from Rs 13.80 crore to Rs 55.22 crore. Total revenue for first quarter of 2014-15 ending June 30, 2014 was Rs 881.69 crore and restated profit after tax at Rs 6.64 crore.
Jain noted that in 2008, global recession witnessed the prices of edible oils dropping and people defaulting on payments but NCML standing firmly through it all to finally bag an award in best ethics for its efforts. “That is when the company decided to set up its own refining facility and opened it in 2010 at Khasra in Pilkhua District of Hapur in UP with 350 tonnes daily production and total capacity utilization within three months to penetrate seven states. This was later enhanced in December 2013 to 600 tonnes per day while allotting a budget of Rs five crore for creating awareness alone about the project.”
“Our cash flow is positive after three fiscals due to no CAPEX incurred in the current financial year. Our plant has the capacity for refining even the worst type of oil and even the current capacity of production is 600 tonnes per day, where we can even go upto 750 tonnes per day. We have ventured into new states and we have to give a credit line to distributors there. We have to depend 70 per cent on imports including for edible oils in which the major imports are 90 per cent of Palm oil. In India, we depend on the soya bean crop which is harvested from November to October.”
The company started importing Vanaspati oil in FY 2003-04 and then ventured into manufacturing activity — where they established a refinery unit with 600 TPD within a span of three years, he said.
Noting that the industry is witnessing a shift in market share from the unorganized sector to the organized sector, he said the Indian edible oil sector — though largely fragmented and unorganized — is shifting to the organised sector owing to the tax reforms (VAT) and on account of preference for packaged and branded products. Increase in awareness regarding adulteration and increased health consciousness (Pam Oil and Soya Oil are considered healthy because they contain unsaturated fats) has further aided the growth of the organized sector. Edible oils such as soya oil and palm oil are such that they have a pan-India demand. Bearing this in mind, he said the company is planning to foray into newer markets and increase its customer base including widening its operations in Punjab, Haryana, Himachal Pradesh, Jammu and Kashmir, and Madhya Pradesh to increase its market share along with volumes.
The company is not only scouting for shelf space but also planning to set up manufacturing facilities in strategic locations to increase its presence in new markets Jain told Millennium Post that “going forward from next year, the company is planning to set up refinery units also at sea ports to cater to many states including Gujarat and Maharashtra where it is not logistically possible.” In order to reduce the cost of production of the entire value chain and to enhance sales margins, the company intends to go for value addition. In value addition, the company has decided to venture into interesterified fats for edible purpose and oleo-chemical division for production of oleo chemicals as the high end niche product line for industrial applications.
As per the final estimates of agriculture for 2010-11 (November-Octpber), estimated oilseeds production was about 324.79 lakh tonnes, which is 75.96 lakh tonnes higher than 2009-10 (increase of 30.5 per cent). Production of oils from these oilseeds in 2010-11 was about 76.27 lakh tonnes, higher by 17.39 lakh tonnes compared to 58.88 lakh tonnes during 2009-10 (an increase of 29.5 per cent). As per the second advance estimates of Ministry of Agriculture released on 3 for 2011-12 (November-October), estimated oilseeds production is about 305.29 lakh tonnes – that is 19.5 lakh tonnes lower than 2010-11 (decrease of 6 per cent).
Since there has been a continuous demand in excess of over domestic supply of edible oils, import of edible oils has been resorted to for more than two decades to make this item of mass consumption easily available to consumers at reasonable prices. About 50 per cent of domestic demand of edible oils is met through imports, out of which CPO and RBD palmolein constitute about 77 per cent and soyabean oil about 11 per cent. During the oil year 2010-11 (Nov-Oct), 83.71 lakh tonnes of edible oils have been imported as against 88.23 lakh tonnes during the corresponding period of 2009-10 (i.e. decrease of 5.1 per cent). This may be attributed to better prospects of oilseeds production in Oil year 2011-12 (Nov-Oct) which has facilitated sizeable increase in domestic availability of edible oils..
The oil-wise import of edible oils during the last few years has been: (From Nov-Oct 2006-07): refined oils like RBD Palmolein (115,142 lakh tonnes), Soya oil (11,120), and crude oils like crude palm oil(29,94,225), crude palmolein (53,440), sunflower oil (1,95,245), soyaben oil ((13,22,920), coconut Oil (12,996) and palm ker. Whereas exports of oilseeds, minor oils and fats and oil meals during the last five years were: (From April-March 2006-07): oilseeds (5.32 lakh tonnes worth Rs 1845. 52 crores), minor oils and fats (1.89 worth Rs 668.96 crores), oilcakes/extraction (51.80 worth Rs 4094.33 crores); to (2010-11) oil seeds (6.53 worth Rs 3427.00 crores).
Increased support from the government which included minimum support price (MSP) per metric tonne was: Rs 11,000 (FY 2001) to Rs 17,250 (FY 2006). The government is now increasing its focus on the edible oil industry – given that it has the second largest import bill after crude petroleum. The supported price of mustard seed, which was Rs 11,000 per MT in 2001, was increased to Rs 17,250 per Mt by 2006. Consequently, mustard seed cultivation also increased from 5 Mt to 7 MT in 2006.
The main emphasis of the government is on reducing the import bill, and this step has helped to a certain extent. The prices of the major edible oils in the international market have shown considerable upward trend during the last one year. However, domestic prices have been more or less stable because of various measures adopted by the government. As on January 18, 2012, over the last one year, the wholesale prices of coconut oil, sunflower oil and vanaspati declined by 17.4 per cent, 1.1 per cent and 14 per cent respectively, whereas the prices of sesame oil remained steady. The prices of soyabean oil, mustard oil, groundnut oil, cotton seed oil, rice bran oil and RBDZ palmolein have increased by 12.17 per cent, 30.68 per cent, 10.58 per cent, 10 per cent and 1.21 per cent respectively.
With an annual consumption of about 11 million tonne, the per capita consumption is at 11.50 kg, which is very low compared to world average of 20 kg with China currently being at 17 kg. However, number of steps taken by the government, including raising minimum support price, providing assistance to farmers, have helped in improving the production of oilseeds. Despite all the efforts, India will continue dependence on imports to the extent of 40 per cent of its consumption requirements. The improvement in yields and the increase in requirements. area under cultivation will ensure that the domestic oilseed production is sufficient to meet 60 per cent of consumption.
India, being a leading producer of oilseeds, contributes about 8-10 per cent of world oilseed production and is estimated to account for around 6 per cent of the world’s production of edible oils.
Though it has the largest cultivated area under oilseeds in the world, crop yields are only 50-60 per cent of the world’s average. We are the fifth largest producer of oilseeds in the world behind USA, China, Brazil and Argentina. Currently India accounts for 7 per cent of world oilseeds output; 7 per cent of world oil meal production; 6 per cent of world oil meal export; 6 per cent of world vegetable oil production; 14 per cent of world vegetable oil import and 10 per cent of the world edible oil consumption. With steady growth in population and personal income, Indian per capita consumption of edible oil has been growing steadily. However, oilseeds output and in turn, vegetable oil production, have been trailing consumption growth – necessitating imports to meet supply shortfall.
As far as importance of edible oils in India’s economy is concerned, oilseeds and edible oils are two of the most sensitive essential commodities and India is one of the largest producers of oilseeds in the world and the sector occupies an important position in the agricultural economy by accounting for an estimated production of 24.88 million tonne of nine cultivated oilseeds during the year 2009-10 (November-October). India contributed about 6-7 per cent of the world oilseeds production and export of oilmeals, oilseeds and minor oils has increased from 5.06 million tonne in the financial year 2005-06 to 6.2 million tonnes in 2010-11. In terms of value, realization has gone up from Rs 5,514 crores to Rs 14,116 crore. India accounted for about 6.3 per cent of world oilmeal export.
In types of oils commonly used in India, we are fortunate in having a wide range of oilseed crops grown in its different agro-climatic zones. Groundnut, mustard/rapeseed, sesame, sunflower, linseed, nigerseed/castor, are the major traditionally-cultivated oilseeds, though soyabean and sunflower have also assumed importance in recent years. Coconut is the most important amongst the plantation crops. Among the non-conventional oils, rice bran oil and cottonseed oil are the most important.
In this context, NCML Industries Limited, one of the flagship companies of the Delhi-based NCML Group, entered the capital markets on December 29, 2014 — with offer for sale of 60,00,000 equity shares with face value of Rs 10 each by selling shareholders – that closed January 2, 2015. The price band was fixed at Rs 100 to Rs 120 per equity share of Rs 10 each, and the offer constituted 25.48 per cent of the post offer paid up equity share capital of the company.
NCML Industries Ltd CMD Manish Jain highlighted the company’s business of importing, manufacturing and marketing of edible oil in India with international presence, dealing in various edible oils from soya bean, cottonseed, palm (Palmolein), mustard, rapeseed etc. Total revenue of NCML Industries had risen from Rs 1,047 crore at March 31, 2011 to Rs 2,767 crore at March 31, 2014 and PAT increasing during the same period from Rs 13.80 crore to Rs 55.22 crore. Total revenue for first quarter of 2014-15 ending June 30, 2014 was Rs 881.69 crore and restated profit after tax at Rs 6.64 crore.
Jain noted that in 2008, global recession witnessed the prices of edible oils dropping and people defaulting on payments but NCML standing firmly through it all to finally bag an award in best ethics for its efforts. “That is when the company decided to set up its own refining facility and opened it in 2010 at Khasra in Pilkhua District of Hapur in UP with 350 tonnes daily production and total capacity utilization within three months to penetrate seven states. This was later enhanced in December 2013 to 600 tonnes per day while allotting a budget of Rs five crore for creating awareness alone about the project.”
“Our cash flow is positive after three fiscals due to no CAPEX incurred in the current financial year. Our plant has the capacity for refining even the worst type of oil and even the current capacity of production is 600 tonnes per day, where we can even go upto 750 tonnes per day. We have ventured into new states and we have to give a credit line to distributors there. We have to depend 70 per cent on imports including for edible oils in which the major imports are 90 per cent of Palm oil. In India, we depend on the soya bean crop which is harvested from November to October.”
The company started importing Vanaspati oil in FY 2003-04 and then ventured into manufacturing activity — where they established a refinery unit with 600 TPD within a span of three years, he said.
Noting that the industry is witnessing a shift in market share from the unorganized sector to the organized sector, he said the Indian edible oil sector — though largely fragmented and unorganized — is shifting to the organised sector owing to the tax reforms (VAT) and on account of preference for packaged and branded products. Increase in awareness regarding adulteration and increased health consciousness (Pam Oil and Soya Oil are considered healthy because they contain unsaturated fats) has further aided the growth of the organized sector. Edible oils such as soya oil and palm oil are such that they have a pan-India demand. Bearing this in mind, he said the company is planning to foray into newer markets and increase its customer base including widening its operations in Punjab, Haryana, Himachal Pradesh, Jammu and Kashmir, and Madhya Pradesh to increase its market share along with volumes.
The company is not only scouting for shelf space but also planning to set up manufacturing facilities in strategic locations to increase its presence in new markets Jain told Millennium Post that “going forward from next year, the company is planning to set up refinery units also at sea ports to cater to many states including Gujarat and Maharashtra where it is not logistically possible.” In order to reduce the cost of production of the entire value chain and to enhance sales margins, the company intends to go for value addition. In value addition, the company has decided to venture into interesterified fats for edible purpose and oleo-chemical division for production of oleo chemicals as the high end niche product line for industrial applications.
As per the final estimates of agriculture for 2010-11 (November-Octpber), estimated oilseeds production was about 324.79 lakh tonnes, which is 75.96 lakh tonnes higher than 2009-10 (increase of 30.5 per cent). Production of oils from these oilseeds in 2010-11 was about 76.27 lakh tonnes, higher by 17.39 lakh tonnes compared to 58.88 lakh tonnes during 2009-10 (an increase of 29.5 per cent). As per the second advance estimates of Ministry of Agriculture released on 3 for 2011-12 (November-October), estimated oilseeds production is about 305.29 lakh tonnes – that is 19.5 lakh tonnes lower than 2010-11 (decrease of 6 per cent).
Since there has been a continuous demand in excess of over domestic supply of edible oils, import of edible oils has been resorted to for more than two decades to make this item of mass consumption easily available to consumers at reasonable prices. About 50 per cent of domestic demand of edible oils is met through imports, out of which CPO and RBD palmolein constitute about 77 per cent and soyabean oil about 11 per cent. During the oil year 2010-11 (Nov-Oct), 83.71 lakh tonnes of edible oils have been imported as against 88.23 lakh tonnes during the corresponding period of 2009-10 (i.e. decrease of 5.1 per cent). This may be attributed to better prospects of oilseeds production in Oil year 2011-12 (Nov-Oct) which has facilitated sizeable increase in domestic availability of edible oils..
The oil-wise import of edible oils during the last few years has been: (From Nov-Oct 2006-07): refined oils like RBD Palmolein (115,142 lakh tonnes), Soya oil (11,120), and crude oils like crude palm oil(29,94,225), crude palmolein (53,440), sunflower oil (1,95,245), soyaben oil ((13,22,920), coconut Oil (12,996) and palm ker. Whereas exports of oilseeds, minor oils and fats and oil meals during the last five years were: (From April-March 2006-07): oilseeds (5.32 lakh tonnes worth Rs 1845. 52 crores), minor oils and fats (1.89 worth Rs 668.96 crores), oilcakes/extraction (51.80 worth Rs 4094.33 crores); to (2010-11) oil seeds (6.53 worth Rs 3427.00 crores).
Increased support from the government which included minimum support price (MSP) per metric tonne was: Rs 11,000 (FY 2001) to Rs 17,250 (FY 2006). The government is now increasing its focus on the edible oil industry – given that it has the second largest import bill after crude petroleum. The supported price of mustard seed, which was Rs 11,000 per MT in 2001, was increased to Rs 17,250 per Mt by 2006. Consequently, mustard seed cultivation also increased from 5 Mt to 7 MT in 2006.
The main emphasis of the government is on reducing the import bill, and this step has helped to a certain extent. The prices of the major edible oils in the international market have shown considerable upward trend during the last one year. However, domestic prices have been more or less stable because of various measures adopted by the government. As on January 18, 2012, over the last one year, the wholesale prices of coconut oil, sunflower oil and vanaspati declined by 17.4 per cent, 1.1 per cent and 14 per cent respectively, whereas the prices of sesame oil remained steady. The prices of soyabean oil, mustard oil, groundnut oil, cotton seed oil, rice bran oil and RBDZ palmolein have increased by 12.17 per cent, 30.68 per cent, 10.58 per cent, 10 per cent and 1.21 per cent respectively.
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