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Agri-Biz & Commodities - Oilseeds & Edible Oil
Corporate - Alliances & Joint Ventures


Cargill in pact with Parakh Foods to expand edible oil business

G. Chandrashekhar

Mumbai , July 13

THE Indian arm of the US agri-business giant Cargill India is set to considerably expand its edible oil business in the country. As a prelude, the multinational has signed a memorandum of understanding with Parakh Foods Ltd, owners of Gemini, one of the fastest growing edible oil brands in India.

Once due diligence is completed, a joint venture company is expected to be floated with Cargill and Parakh Foods sharing 50:50 stake.

The Pune-based Parakh Foods has two large refineries with an aggregate refining capacity of 2,500 tonnes a day, including one at Kurkumbh in Maharashtra. In last two years, the company has expanded its presence in the highly competitive domestic market with aggressive marketing of various edible oils under the brand name Gemini.

Cargill India is into various foods including grains and edible oils. The company has established a large (said to be 1,500 tonnes a day) modern refinery in Paradeep (Orissa), but the factory is yet to commence commercial production.

Both the companies have business interests in Kutch region, where the government has exempted edible oil refining units from paying excise duty of Rs 1,000 a tonne.

Once finalised, the joint venture company will be the largest in the country's edible oil business with around 5,000 tonnes of refining capacity per day.

The joint venture will help leverage the strengths of both companies - international trading expertise of Cargill and domestic market knowledge of Parakh Foods.

The highly fragmented edible oil refining industry has in the last three years witnessed an explosion of new refining capacities (units with 1,000 tonnes a day and above), mostly concentrated near port towns such as Kakinada and Kandla. All these units are almost entirely dependent on crude oil imports.

India already has a couple of successful joint ventures in the edible oil sector including the Mundhra-based Adani-Wilmar combine.

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