Faced with steady erosion in margins on sale of its flagship vanaspati (hydrogenated vegetable oil) products, Kolkata-headquartered Rasoi Ltd plans to shore up its edible oil production.
Vanaspati, at present, contributes nearly 80 per cent of the company’s sales, and the remaining 20 per cent comes from edible oils.
According to Shashi Mody, Vice-Chairperson of the company, attempts are being made to ensure that nearly 60 per cent of its turnover is from the edible oil segment. The remaining 40 per cent will be generated through its vanaspati business. She, however, did not mention the timeline for such a change.
Import-dependent
“Since the edible oil business is dependent on palm oil imports, volatility in the international market makes it difficult for us to mention a timeframe. Focus will, primarily, be on the edible oil segment,” Mody said.
During 2011-12, the company’s profit before tax (PBT) declined by 36 per cent to Rs 7 crore (against Rs 11 crore in 2010-11). The lower profits came despite an increase in turnover — Rs 165 crore (Rs 138 crore). The company’s shares are traded on the BSE.
Rasoi’s facilities are located in Banganagar at Falta in West Bengal’s South 24 Parganas district. The plant has an annual capacity of 30,000 tonnes of edible oil and 42,000 tonnes of vanaspati. According to Mody, the Falta unit, was running at a capacity of 30 per cent and there is scope to shore up edible oil production there.
Margin Pressure
Volatility in foreign exchange and procuring raw materials — crude palm oil and palmolein from Indonesia — has put pressure on its margins, in the vanaspati business, in particular.
Rasoi, however, will not hive off its vansapati division, as some of its competitors have done.
“The Rasoi brand of vanaspati still enjoys brand loyalty and it will be easier to use the brand name for pushing the edible oils segment in these regions,” Mody said.
Asked if the company was planning to acquire assets abroad to facilitate procurement of raw materials, Mody said that there were no such plans at the moment.