Financial Daily from THE HINDU group of publications
Saturday, Jun 12, 2004
Agri-Biz & Commodities - Oilseeds & Edible Oil
Shanthi group to foray into coconut oil production
Coimbatore , June 11
HAVING established a niche for itself in the poultry feed and broiler birds segment, Shanthi Group of Companies has diversified into an unrelated product line, with the production of the `Shanthi' brand coconut oil.
The product is expected to hit the shelves across the country within the next couple of months.
Speaking to Business Line, the Group's Managing Director, Mr R. Krishnamurthi, said the decision to foray into a totally new line of business was in keeping with the market demand and the number of organised players in this space.
According to him, unorganised players dominated this segment of the market, as only about 20 per cent of the consumers looked for branded products.
"Here too, VVD and Parachute are the predominant brands. So there is enormous potential to be tapped," Mr Krishnamurthi said.
The installed capacity of the plant, located at Kangeyam in Erode District is100 tonnes of copra per day.
The company, according to Mr Krishnamurthi, has invested Rs 5 crore on this project.
Commercial crushing has commenced only this fiscal, but Mr Krishnamurthi is hoping to reach a turnover of Rs 30 crore even in the first year of operation.
"We are confident of achieving Rs 100 crore in three years," he said.
The company is contemplating to utilise its poultry dealer network for quick penetration. Before end July, Shanthi Oils, according to its MD, will have established the market across 10 states.
To a query on copra rates, he said that there was a sharp increase in the copra price levels since May 2003.
The company, which procures the raw material from the regulated markets in the Kangeyam oil crushing belt, sourced copra at Rs 37/kg in May last (during the trial period). This has, in the last twelve months risen to touch a high of Rs 44.18 in May 2004. Mr Krishnamurthi is anticipating a further increase in copra rates because of the drought and low yield.
Replying to another question, he said that the tax structure in Tamil Nadu was complex and high, forcing crushers to establish units in the neighbouring State of Kerala or the Union Territory of Pondicherry.
"We have to pay a 4 per cent tax on crushing and a like percentage as sales tax, apart from one per cent surcharge, one per cent cess and incur another 4 per cent on oil cake sale. Over and above this, oil attracts a resale tax too," he said and added that the Government should intervene and announce a tax holiday for some time to give the crushing units a breather.
According to him, there was flight of capital to Kerala and Pondicherry because of the State's taxation structure.
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