3/18/05 - Billionaire Robert Kuok has acquired KTV Oil Mills, a largeedible oil company in South India, to introduce imported oil under its owninternational brand name. The deal, worth around Rs 80-crore, is thesecond-largest in the sector, after Bunge took over HLL’s Dalda. But don’tthink of the buyers as barbarians at the gate.

Foreign capital is bringing with it the much-needed muscle and deeppockets that are vital for staying power in a fickle business like food.Asian tycoons are making strategic investments in India’s food industry asthey know it is the sure-fire money-spinner of the future.

Ranked 94th on the ’05 Forbes list, the Malaysian industrialist runs adiversified conglomerate whose business interests include trading,finance, property, media like the South China Morning Post newspaper,hotels like the Shangri-La chain, shipping, manufacturing, and retail.

The group’s businesses span Asia, Western Pacific Rim and Canada. It alsohas a Coca-Cola bottling franchise in mainland China, and a cigar companyin the Philippines.

Rising incomes have pushed India into depending heavily on importedcooking oil. India, which is one of the largest importer and consumer ofedible oils in the World, imports nearly 3m tons of palm oil annually(mainly from Malaysia, followed by Indonesia). This means that the countryis dependent on palm oil imports for over 25% of its annual consumption.

And the Kuok group comes well-prepared. It has already registered a slewof brands as trademarks in India for foods ranging from edible oils andmilk products, to biscuits, flour, packaged water, sugar, beverages, andvanaspati.

The Singapore-based group has already registered three brands - Simply K,and Blue Team - in India, through its subsidiary Kuok Oils and Grains.

Kuok Oils has now formed a new company in India - KOG KTV Food ProductsIndia, which has taken over the assets of KTV Oil Mills. MoU for theacquisition was signed earlier this week.

Though no firm decision has been taken yet, it is likely that the existingKTV management would also run the new company. KOG will now begin seekingnecessary permissions from the FIPB, sources said.

For KTV Oil the deal brings not just cash in the bank for the promoters,but the significant muscle and money of the Kuok group that would beenough to beat most local competition. As KTV has been importing crude oilfrom Kuok Foods for the last eight years, which has added to the"comfort-factor" in the relationship.

For Kuok, the attraction lies in acquiring two refineries with a capacityof 400-tpd each based in Chennai and Tuticorin, a 100-tpd vanaspati plantand an 50-tpd oilseed crushing plant, that would give the companyimmediate access to the Indian retail market. KTV also has two localrefined oil brands — Rubini and Sunland, which would now be the propertyof the new company.

The arrival of Kuok should change the market dynamics for other new MNCplayers like Cargill, Bunge, and Archer Daniel Midlands, who arestruggling to gain a toe-hold in the Indian packaged foods market. And thefight could well be to the finish as Kuok has deep pockets, wideexperience, and has just emerged as the top retailer of branded cookingoil in China.

Kuok’s investments include an integrated network of oil refineries,plantations and packaging factories. In India, it has informal alliancesas sole supplier for several local refineries and a formal JV company —Liberty Agri Products — in collaboration with the Mumbai-based Liberty OilMills.