Cofco Agri plans to expand branded edible oils portfolio in India next year

Could launch premium cotton seed, mustard and sunflower oils; expects 30 per cent rise in turnover

The Indian arm of Cofco Agri, which recently entered the premium branded edible oil segment, plans to expand its portfolio by launching cotton seed, mustard and sunflower oils in the coming financial year.

Cofco India, which is the fully-owned subsidiary of global agro-major Cofco Agri, also plans to enter the branded wheat flour and maida segments, but only after it gets a strong foothold in the highly fragmented edible oils market, its managing director Samir Desai told Business Standard.

Cofco globally acquired the agriculture business of Noble Group for $750 million in 2015, which also brought the Indian arm within its ambit.  

Prior to the acquisition, Noble Agri had a strong presence in the Indian agriculture trade market and was one of biggest bulk importers of edible oils, importing over a million tonnes of edible oil annually in the country. It also established 1,400 metric tonnes edible oils refining plant in Kandla, in Gujarat, in 2013.

After Cofco’s acquisition of Noble Agri, the company is planning to expand its presence in the branded edible oils market in India in line with its global strategy where Cofco is present in the branded segment of many commodities.

"For other oils like mustard, cotton seed and sunflower oil, we plan to get the oilseed extraction, processing and packaging done through third parties,” Desai said.

He said that identifying them is taking time because of the strict quality parameters and also because of problems related to scale as most regional players don’t have the scale to undertake large processing and also their quality standards are not up to the mark.

"This strategy also makes sense as there are a lot of logistical problems involved in transporting unrefined oil from one point to another," Desai added.

India’s branded edible oil market is highly fragmented, with major players like Bungee, ITC, Adani Wilmar and Ruchi Soya cornering a bulk of the market. That apart, there is a host of local and regional players, who have their own small but dedicated markets.

Together, the big players sell around 1-1.2 million tonnes of edible oils annually, while Cofco has managed to sell around 60,000-70,000 tonnes of oils every year since 2014, when it launched its first mass segment edible oils brand 'Nutrilive'.

Haldiram Sweets, Parle, Britannia are the companies to which Cofco sells edible oils in bulk.

In the 2015-16 financial year, Cofco India recorded a turnover of Rs 2,300 crore, which is expected to increase by almost 30 per cent in 2016-17.

Apart from importing edible oils and selling through its dedicated brands, the company also imported around 0.5 million tonnes of other commodities in 2016-17, which included 0.3 million tonnes of wheat and 0.1 million tonnes of maize.

In 2015-16, the Company’s imported 0.2 million tonnes of other commodities.

"This part of our business is opportunity based and not regular unlike edible oils, where we every year import around 1.2 million tonnes of edible oils into India — 0.2 million tonnes for refining and selling through our brands, while the remaining is meant for institutional and bulk buyers," Desai said.

Regarding the Indian agriculture product market, Desai said that Indian private traders would continue to import wheat in the next financial year as well despite hopes of a good harvest this rabi season as there pipelines are bone dry.

"So far, around 4.5 million tonnes of wheat has been imported by private traders in the country and till the end of March 31, 2017, another 0.5 million tonnes will be imported. But, I feel that in 2017-18, private traders would import another 2 million tonnes of wheat as stocks with them are still low," Desai said.

He said that total edible oil imports in the 2016-17 oil year, which started from November, is expected to fall marginally to around 14.9 million tonnes due to good mustard seed production in the current rabi season.