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Sindhu J. Bhattacharya
Ambarish Mukherjee

New Delhi , Jan. 13

THE US agri-business giant, Cargill, is set to considerably expand its edible oils business in the country. After several months of negotiations, Cargill Mauritius Ltd - the holding company of Cargill India Pvt Ltd - is planning to forge a joint venture with two Pune-based companies - Parakh Foods Ltd (PFL) and Global Oils and Fats Ltd (GOFL).

PFL is the owner of Gemini brand of edible oil and has two large refineries with an aggregate refining capacity of 2,500 tonnes a day.

Once finalised, the proposed joint venture company could become the largest in the country's edible oil business with around 5,000 tonnes of refining capacity per day. The JV will help leverage the strengths of both the companies involved - the international trading expertise of Cargill and the domestic market knowledge of Parakh Foods.

As per plans, Cargill Mauritius will first acquire 51 per cent stake in both PFL and GOFL from their respective Indian shareholders. Thereafter, it will conduct a restructuring at Cargill India, PFL as well as GOFL, sources said here. In all, Cargill Mauritius plans to purchase 1,05,060 shares of Rs 100 each of PFL and 25,500 equity shares of Rs 10 each of GOFL.

In its proposal seeking permission from the Foreign Investment Promotion Board, Cargill Mauritius stated that provisions of Press Note 18 get attracted since it wants to enter the edible oils business - which is also conducted by the holding company, Cargill India.

Last week, FIPB gave its permission for Cargill Mauritius to go ahead with the JV.

While both, the Parakh Foods chief, Mr Prakash Parakh, as well as the Cargill Country Head in India, Mr Hardeep Singh, were not available for comment, it remains to be seen under which brand would the JV sell its edible oils.

Sources said that while Cargill may supply raw material (oil), PFL could use its extensive distribution and brand building muscle to market it.

And while PFL's strength is its penetration in retail outlets in the west and south of the country, Cargill - as the country's largest processor - brings with it reduced input costs.

While Cargill sells Nature Fresh and Purita brands of edible oils, PFL owns Samrat filtered groundnut oil, Cardiol kardi oil, Dosti palm oil and Shubh refined soya oil, besides the Gemini franchise.

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