In talks with Indonesian, East African governments to take up palm plantations.
Hyderabad-based biodiesel company Naturol Bioenergy Limited is in talks with governments of Indonesia and East Africa to take up palm plantations.
The company plans to import the oil produced there to its biodiesel plant in Kakinada, and then export the finished product to Europe, US and other countries.
Speaking with Business Standard, Naturol managing director and chief operating officer Bhaskar Chalasani said land formalities were expected to be over in three months. Initially, the company will take on lease about 10,000 hectare (ha) in each place and gradually scale it up to 40,000 ha in Indonesia.
“The plantations will securitise the feedstock,” Bhaskar said, adding it was in line with the present business model of importing the raw materials. The lease rentals will be about $10 (Rs 450) per ha per annum.
Each ha of palm plantations needs an investment of about $4,000 (about Rs 1.76 lakh) over a period of four years. The company will raise $40 million (about Rs 176 crore) for its greenfield plantations in the first phase.
More From This Section
In the second phase, it will raise another $120 million (Rs 528 crore) for expansion activities. For this, Naturol is in talks with private equity companies and merchant bankers. “Investors in India are not ready to invest in biodiesel companies due to the absence of a biodiesel policy,” Bhaskar said.
The company will outsource farming and plans to develop a nursery to transplant the saplings. It will give about 15 per cent equity to local farmers for maintaining the farms. The land will be divided into blocks of 30 ha each and each block will create employment for 30 families.
The average life span of palm is about 20 years and the yield comes after 4 years of plantations. Typically, the oil from the pulp will be used for biodiesel while that from the kernel will be used other high-end industrial purposes.
Riding on the success of its export of 10,000 tonne biodiesel to Europe recently, Naturol is now readying to ship a similar consignment in a week to Europe. At present, a tonne of biodiesel is priced at $1,225 (about Rs 54,000) at Kakinada.
“Crude oil prices dropping below $103 a barrel and the subsequent fall in the prices of other raw materials by about 40 per cent will result in better margins,” he said.
Naturol has a 10,000-tonne capacity biodiesel plant at Kakinada, which it plans to double at an investment of about $20 million (about Rs 88 crore).
According to Bhaskar, biodiesel can substitute imports by 10 per cent. At present, India imports about 65 million tonne diesel a year.
The company is also planning to take up jatropha cultivation by providing seeds to farmers apart from having a buy-back arrangement.