Financial Times

Indian company to establish edible oil mills

An Indian company plans to set up two plants in Sri Lanka for processing and exporting palm oil and other edible oils at a total cost of around Rs. 2.5 billion.

The Bhaskar Group, based in Bhopal, Madya Pradesh, last week signed a memorandum of understanding with the Board of Investment to put up a mill in the Koggala investment zone in Galle to refine crude palm oil (CPO) imported from Indonesia and Malaysia.

The refined palm oil would be turned into a product called Indian Vanaspati or margarine that is used mainly for bakery shortening or food industry purposes and exported to markets in India, Pakistan and elsewhere.

The company has several oil seed crushing mills in India and is also into newspapers, information technology and textiles.

"This is their first plant abroad," said Shamindra Iriyagama, the local representative of the Bhaskar Group. "They want to set up a plant here to take advantage of the free trade agreement between India and Sri Lanka."

The project will cost Rs. 990 million and provide jobs to around 150-300 people.

The value addition is in form of refining CPO and converting refined oil into Vanaspathi or hydrogenated fats, said Ravi Sethi, Bhaskar, group director of strategic development and planning.

The company will also build storage tanks and other cargo handling facilities in the Galle port. Bhaskar Group also wants to set up an oil seed crushing plant in the Trincomalee harbour at a cost of Rs. 1.5 billion, Iriyagama said.

"In the first stage of the project 1,000 MT of seed will be crushed each day," he said.

Raw material such as soya or sunflower seeds will be brought in bulk carriers from Argentina, Brazil and the US - depending on the season - for crushing, oil extraction and export.

"The seeds produce 20-40 percent of oil," said Sethi. "The rest is oil meal, rich in protein, and used for animal feed."

The company is to hold talks with the Sri Lanka Ports Authority to identify a suitable location for the project, which is expected to generate 500-600 jobs.

A third, much smaller project is also in the pipeline to import butter oil and convert it into saturated fats or ghee, an expensive product that is much in demand in India.

"Unlike butter, which has a shelf life of 3-4 weeks, ghee can be kept for 6-8 months without refrigeration," said Sethi. The plant is to be set up in the Seethawaka industrial park.

The Bhaskar Group is one of the largest Hindi newspaper groups in India that prints newspapers in at least six states, has 150 million readers and 22 full editions.

Iriyagama said Mineka Wickramasinghe, chairman, southern regional economic development commission, and chairman of Ceylon Biscuits, had helped cut through bureaucratic red tape and helped expedite the project.