 "India should protect interests of local edible oil industry: Dinesh Shahra")
How do you buck the weakening sentiment in edible oil industry?
Improved branded sales, better realisation of oilseed extraction, effective control on costs and favourable business sentiments have helped us to get better profits for the third quarter. It underlines the fact that we are among the top five FMCG companies and it is a vindication of our strategy to create and sustain brands. We are making our efforts to have good performance on a sustained basis in future as well.
What is your strategy going forward?
We have evolved from a commodity company to a leading FMCG player with a strong focus on brands. This will continue to be our strategy. We have recently launched Premium table spread under Nutrela brand. We are targeting the West Bengal market with an aggressive marketing campaign for our premium brand, Nutrela Kacchi Ghani mustard oil. West Bengal alone accounts for over a third (around Rs 110 crore) of the Rs 300-crore mustard oil market in the country. In the next quarter we are confident of generating good revenue from the state.
Apart from that we are also focusing on strengthening internal controls and being system driven in our approach and actions. What once started as a family owned business has now grown to be a professionally managed business conglomerate. We shall continue to look for new opportunities in the field of oil palm plantations and non-conventional energy sector.
What is your take on rising imports of veg oil?
The veg oil imports have been rising consistently due to lower import duty. The committee headed by Dr Ashok K Lahiri, Chief Economic Adviser, Ministry of Finance, recommended the duty differential between crude and refined products to be maintained at 10%. Last month, when the government imposed import duty of 2.5% on CPO, the duty differential was reduced to 5% being the same on palmolein at 7.5%.
Government must protect the interest of domestic refineries with a duty rise on CPO and refined palmolein to 10% and 20% respectively. If this duty differential is not maintained then some industry players would prefer to import refined palmolein instead of CPO. This jeopardises the domestic palmolein refining industry which also competes with cheap imports. This is a double blow for the industry. The governments of Indonesia and Malaysia, the world’s two largest palm oil producers, adopt a policy suitable to the domestic palm oil sector. The Indian government also must follow a similar path.
Your forecast for edible oil price?
Looking at the huge stocks of crude palm oil in Indonesia and Malaysia, edible oil prices may go down further. Even if the government raises import duty, exporters would absorb it, making thereby no impact on consumers. In the past decade, edible oil is the only important food commodity that has not grown as rapidly as other commodities like pulses, wheat, rice, eggs and others have. Hence there would be a win-win situation for farmers, refiners and consumers in India.
The industry as a whole has invested over Rs 5,000 crore and employs over 5,00,000 people. How can an industry continue to make investments if it plans are upset by such sudden changes in policy?
These changes suddenly cause us to review our overall strategy. We have to go straight back to the drawing board and re-evaluate our business plans and suddenly many of these look unviable.