Arjun Indo Agro Oils Ltd, the edible-oil making subsidiary of Kolhapur-based Arjun Refineries, will open an edible oil refining and packaging facility at Angre port in Jaigad located in Maharashtra’s Ratnagiri district. It plans to tap into a potential thrown up by the recent Central government ban on import of refined palm oil, targeting top suppliers Indonesia and Malaysia.
Arjun Indo Agro Oils will lease five acres of industrial backup land from the Chowgule Group-promoted Angre Port Pvt Ltd, which runs the Angre port, for 30 years to build the refinery and packaging unit with an investment of ₹30 crore, Santosh Vasant Shinde, the founder and owner of Arjun Indo Agro Oils told BusinessLine.
The facility will have a capacity of 50,000 tonnes per year and would be ramped up to 100,000 tonnes in Phase Two. It will also produce refined soya bean oil and sunflower oil.
India is the world’s top importer of edible oil and palm oil accounts for nearly two-thirds of the total imports, mainly purchased from Malaysia and Indonesia.
The government banned the import of refined palm oil from January 8 following intense lobbying by local edible oil refiners such as Liberty, Ruchi, Allana and Adani Wilmar.
They argued that the huge cost differential between refined palm oil and crude palm oil imports forced many refiners out of business due to losses as refined palm oil was available in the market at a lesser price to the consumers.
This was the main reason why Ruchi Soya went out of the market (and ultimately was bought by Patanjali under the IBC). In Chennai and Kandla, many smaller edible oil refineries shuttered because of this.
In January, the government decided that instead of refined oil, India will import crude palm oil.
The restriction placed on refined palm oil imports in January along with the earlier 45 per cent tax on such imports led importers to source the commodity without paying import duty through neighbours Nepal and Bangladesh with which India has signed the South Asian Free Trade Agreement (SAFTA).
The refined palm oil from Malaysia and Indonesia were first sent to Nepal and Bangladesh and from there to India, taking advantage of the free trade agreement.
But, earlier this week, this loophole for duty-free imports was plugged with the director-general of foreign trade (DGFT) suspending 39 permits given to import refined palm oil after seeing a big jump in imports through Nepal and Bangladesh, which are not big producers.
“Two days ago, the government banned his also, so that refined palm oil is not imported through Nepal and Bangladesh. Now, there is no option but to bring crude palm oil only,” Shinde said.
“If that is refined here, then our refineries will operate, and local people will get employment. Because of this, refineries will earn money, and the country will benefit. It is a very good decision of the government,” Shinde said.
“The first port-based oil refinery in the Konkan region is a win-win model for both parties, as it generates revenue and cargo for the port while providing logistics support and cost control for Arjun Indo Agro Oils,” said Eshaan Lazarus, Executive Director, Angré Port Private Limited.
The strategic leasing model will save land, and reduce start-up costs. Having a port based refinery significantly cut logistics costs for Arjun Indo Agro Oils, avoiding the first leg of transport from the port to a hinterland refinery altogether, and also gives the company access to new markets in Maharashtra, North Karnataka, and Goa.
Angré Port will support Arjun Indo Agro Oils in the import of raw materials, and the clearance and storage of cargo through a tank terminal which will have dedicated pipelines to the refinery.
The port, Lazarus said, owns 300 acres of industrial land as private backup land. It offers this land on competitive lease models to strategic businesses such as mega warehouses, port-based industries, logistics, tank terminals, and business parks.