Sops for Ruchi Soya to be less than expected

Ruchi Soya Industries Ltd, which is executing its Rs 25 crore capacity expansion and oil refinery plan in its Shujalpur soya plant, has asked for tax concessions of up to 250 per cent on investment for a period of 10 years with effect from April 2004.

Being a soya plant investment, the MP government has rejected its demand of investment promotion incentives equivalent to the tax paid on purchase of raw material and sale of products up to a period of 10 years.

Ruchi Soya, according a government official, started production at the plant during September 2004 and expanded capacity last year by taking over a sick unit. As a result, the company has to apply for a special package for sick units.

"The company acquired the plant owned by Raj Enterprise in September 2004 at Rs 2.66 crore. Later it invested Rs 11 crore in the plant in a phased manner," said the government source, adding, "since it is a solvent extraction unit, it is not entitled to concessions. Soya and solvent extractions fall in the negative list in the state."

Ruchi also asked for exemption from entry tax for 11 years, exemption from mandi tax for soyabean seeds and other oilseeds for a period of 11 years, interest grant, power grants, etc.

However, the company may be granted exemption from mandi tax for five years. The Ruchi group has soya products like soya chunks, granules, soya oil, flavors and soya flour. Nutrela is the largest-selling soya brand of the group in the country today, while edible oil brands like soyumm (soyabean oil), Ruchi Gold (Palmolien Oil), Sunrich (Sunflower Oil) and Mandap (Mustard Oil) are leaders in the segment.

Though Madhya Pradesh grows 80 per cent of the soyabean of the country, the soya industry has been put on the negative list since investment is higher than the processing capacity.

"The state has put soya on the negative list since capacity is higher than the production. The state grows 2.5 crore tonnes of processing capacity while soya production has never crossed 45 lakh tones. Thus soya processing is bound to suffer," a soya industry expert said, adding, "the state government has increased agri-extension work to make industries profitable.

Soyameal exports swelled by 82.52 per cent to touch 550,362 tonnes during November as against 301,526 tones during the corresponding period of the previous year.

According to the Soyabean Processor Association of India (SOPA), exports of soyameal during April-November this year reached 2274,543 tonnes as against 1245,887 tonnes of the corresponding period of last year, showing a growth rate of 82.56 per cent.

Similarly exports during the oil year (October-September) showed a remarkable growth rate of 68 per cent from 500,293 tonnes to 840,516 tonnes.