The Nasdaq-listed Archer Daniels Midland Company (ADM) acquired two oilseeds processing facilities earlier this month from Geepee Agri Pvt Ltd at Kota, Rajasthan and Akola, Maharashtra.
These processing facilities are in addition to ADM's recent purchase of the entire stake in Tinna Oils that has facilities to process soyabean and sunflower in Latur (Maharashtra), soyabean and sunseed processing unit at Dharwad (Karnataka). The US-based firm also bought the processing facilities of Madhur Agro in Nagpur.
It is reported to be in an advanced stage of negotiations to acquire the processing facilities of Bhopal-based Bhaskar Group.
In March, Cargill Inc bought the premium sunflower brand Sweekar from Marico in a deal worth over Rs 200 crore. Last November, the US-based firm bought the Rath vanaspati brand from Agro-Tech, reportedly for Rs 120 crore.
Last week, another multinational and Swiss-based Glencore hit the headlines on the possible takeover of K.S. Oils, based at Morena, Madhya Pradesh.
“Looks like multinationals are taking over the Indian edible oil sector. It is not a good sign,” said an industry insider, who did not wish to be identified.
“Multinationals are making inroads into the edible oils industry and they are doing it aggressively,” said Mr Sandeep Bajoria, Chief Executive of Sunvin Group.
“Big multinationals are showing interest in Indian edible oil companies,” said an official of an Indian agri-biz firm.
The reason, according to the official, is that India imports eight million tonnes of vegetable oils a year with crude palm oil alone making six million tonnes of it. “This offers them scope in the Indian markets,” he said.
“I would term the recent developments in the edible oils industry as consolidation. India is a promising market,” said Mr Atul Chaturvedi, Chief Executive Officer of Adani Enterprises, that has a joint venture Adani Wilmar in league with Singapore's Wilmar International. The joint venture firm sells the Fortune brand of cooking oils.
“Basically, those who have money power will try to buy assets that have multiple effects,” said Mr N.K. Arora, Corporate Head (Palm Business) of Ruchi Soya Industries Ltd's Oil Palm Division.
Ruchi Soya itself saw its stakes worth Rs 300 crore being bought by Chennai-based Siva Group. “The (Siva) group invested Rs 300 crore and no share beyond that has been allotted,” said Mr Arora.
On the recent developments in the edible oil industry, the Siva Group CEO, Mr V. Srinivasan, said: “We do not expect any shake-up in the edible oils sector. The current market fluctuation is a one-off instance”.
“The buying depends on the health of the industry group and its capacity,” said Ruchi's Mr Arora
“Some Indian companies, too, are exiting if they are getting a good price in difficult circumstances,” Sunvin's Mr Bajoria said.