BS Regional Bureau in Ahmedabad | October 13, 2004 11:54 IST - Edible oilcompanies across the country are setting up their units in Kutch to availof the tax holiday announced by the Central government. Centre hadannounced the tax holiday after the region was hit by a devastatingearthquake in January 2001.

The government has exempted edible oil refining units from paying exciseduty of Rs 1,000 a tonne.

So far six edible oil majors -- Parakh Foods, Gokul Refinery, RuchiIndustries, Cargil India, Param Industries and Adani Wilmer -- has set upor are in the final stages of setting up their units in the region. Stillhalf-a-dozen edible oil companies are eyeing at the extension of taxholiday by another two years to start their operations.

"Edible oil companies are flocking Kutch to set up their units because ofthe tax incentives announced by the Central government after thedevastating earthquake of January 2001. Since these companies import palmoil and crude palm oil from the East Asian countries, proximity to Kandlaand Mundra ports is also is an added advantage," said, Mahesh S Tirthani,secretary, Gandhidham Chamber of Commerce and Industry.

According to industry estimates, Kutch is expected to have an annualedible oil refining capacity to the tune of 23.75 lakh tonne by the end ofthe current financial year, which would account to 37 per cent of theentire country's consumption. At Rs 50,000 per tonne, this would translateinto an annual turnover of Rs 11,875 crore (Rs 118.75 billion) for thedistrict.

By the end of 2004, it is expected that as many as six new big refinerieswould start its commercial production in Kutch and this will add anadditional refining capacity of 6,200 tonne per day.

Some of the big players setup up new refining facilities include CargillIndia with its Nature Fresh brand, Parakh Foods with Gemini brand, RuchiIndustries with Ruchi brand and Param Industries with Mahakosh, each onesetting up refineries with the capacity of 1,000 tonne per day, whileGokul RefOil with Gokul brand is setting up a refinery with capacity of800 tonne per day.

Adani Wilmar Ltd, has signed a memorandum of understanding during theVibrant Gujarat Global Investors Summit -2003, to set up an edible oilrefining at Mundra Special Economic Zone with investment of over Rs 150crore.

Proximity to Kandla and Mundra ports, which accounts for about 40 per centper of India's edible oil imports, is another important reason from theoil majors shifting their bases to Kutch.

The Indian arm of the US agri-business giant Cargill India has also signeda memorandum of understanding with Parakh Foods Ltd to set up unit foredible oil in Kutch since both companies have business interests inregion. Once finalised, the joint venture will be the largest in thecountry with a daily refining capacity of 5,000 tonne.

With the oil majors setting up units in Kutch, the import of refined oilfrom November 2003 to July 2004 has shown a sharp rise.

The import of crude oil from November 2003 to July 2004 stood at 2,207,656tonne against 3,753,825 tonne during the same period of last year.