Castor oil processing

It is common knowledge that India is the world's largest producer, consumer and exporter of castor oil, a versatile vegetable oil with varied industrial applications covering soaps, detergents, paints, varnish, cosmetics, plasticisers, lubricant and many more. Castor oil can partially replace aviation fuel.

In the global market, India enjoys a dominant position by virtue of its ability to meet over 80 per cent of the demand for castor oil. Exceedingly amenable to processing and value addition, several hundred derivative products can be prepared from castor oil. It is a biodegradable and renewable feedstock.

Numerous processed and value-added derivative products such as dehydrated castor oil, hydrogenated castor oil, sebacic acid, alkyl esters, ethoxylated castor oil, sulfonated castor oil, oxidised/ polymerised castor oil and so on in addition to fatty acids, methyl ricinoleate and more are possible that makes the oil truly versatile.

Interestingly, there are also medicinal applications including as laxative. There are an estimated 1,000 patented industrial applications.

India produces about four lakh tonnes of castor oil a year and in recent years, has exported more than three lakh tonnes a year valued at about Rs 1,800 crore. Total exports including derivatives are estimated at about Rs 3,000 crore (about $650 million) a year. The global castor derivatives market estimated at over $1,000 million is highly dependent on India as a source of supply.

While there are numerous castor oil producing plants (castor seed crushing plants) in the country located mainly in Gujarat and Andhra Pradesh, manufacturers of derivatives are limited in number. Producers of high-end derivatives are even fewer as investment in R&D is a key driver of business growth.

The extent of value addition and price benefit that derivatives bring can be gauged from the fact that while castor oil currently (February/March 2011) commands export price of $2,300 a tonne, some of the advanced derivatives fetch as much as $7,000 a tonne going up to $12,500 a tonne.

With enhanced interest in environment protection and use of renewable resources, castor fits well into the bio-energy concept. There is a strong positive correlation between industrial growth and castor oil consumption. Going forward, consumption in India is sure to expand. A medium size project – for instance 1,500 tonnes a month – would cost anything between Rs 3 crore and Rs 5 crore. It is important to locate the processing unit closer to feedstock production.

There are market opportunities for savvy manufacturers to enter castor oil processing. While cost of setting up facilities is not high, strong research back-up is important. The global market is dominated by a handful of trading houses. It may be prudent to start cultivating end-users directly.

Another word of caution relates to volatility in raw material prices. Unchecked speculation in castor seed market results in undue price volatility. As a result, derivatives producers are unable to make long-term commitments.