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Mumbai, 21st March 2008

K S Oils welcomes Government's move to reduce duties on edible oil prices

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  • The company will immediately pass on the benefit of about Rs. 2 per kg to the consumers; raw material prices will also come down proportionately
  • The above measure will increase consumption and hence increase the sales of K S Oils resulting in a higher top line
  • It will help the country in inflation control and bring certain amount of semblance in the spurt of vegetable oil prices in the last 12 months

Mumbai, 21st March 2008: K S Oils, one of India's leading integrated edible oil company and the leader in the Packaged Mustard Oils business, today welcomed the Government's move in reducing import duties of crude and refined edible oils. The company feels that this move will help provide relief and parity to Indian players from the impact of increase in the global vegetable oil prices in the last 12 months.

Congratulating the Central government on this visionary move, Ramesh Chand Garg, Chairman, K S Oils said, "The government's move of cutting duty is in the right direction. K S Oils had already requested the government to decrease duty of imported edible oils as the price increase was more than 50% in the last 12 months. Higher prices affect consumption of all edible oils and add to inflationary pressures. The consumption which was growing at 6% per annum was being affected."

"This move will greatly benefit the Indian edible oil industry and also result in increased buying by retail consumers. As a leader in the edible oil industry, we have decided to pass on the price benefit to the consumers with immediate effect; this will see increased off take of retail packs thus giving us higher volumes and better margins."

K S Oils will pass on the benefit of about Rs. 2/- per kg for mustard oil to the consumers with immediate effect; the company's procurement cost for mustard seeds will come down similarly and the company will see increased demand and consumption.



1. Customs duty on Crude palm oil and palmolein reduced to 20% and 27% without any changes in tariff values. This means that the effective duty which was 207 USD will now be 92.08 USD per metric ton. On the current import CNF price of about 1,150 USD it works out to 10% duty (approx.) Even the previous 45% duty was notional as government does not calculate on the actual CNF value which is USD 1,150 but on previous tariff values of 447 USD. Therefore even before the duty was reduced the actual rate was working out to only 20% which now becomes 10% duty. In real terms this will make Palm oil cheaper by at least Rs. 3 to Rs. 4 per kg. Similarly, Soya and Mustard oil prices will be cheaper by minimum Rs. 2 per kg. thus, completing the edible oil value proposition for the customers.

2. However import duty on soybean oil has been unchanged. Soybean oil is locally available at Rs.65 per kg and mustard oil is also available at the same price. This will come down by about Rs. 2 per kg. After the recent run up from Rs.55 to Rs.65 this is a welcome relief for consumers as well.

3. The duty cuts will favour palm oil consumption in Western and Southern India where palmolein consumption is high.

4. A 15 Kg canister which was earlier costing Rs. 850 for any refined oil increased up to Rs.1,250 at the retail level in the last 12 months. High prices affect consumption and growth of the Indian edible oil sector.

5. The export ban on edible oils will not have any affect due to the low export volumes of just Rs. 500 crores compared to the entire Indian edible oil market of Rs. 75,000 crores. Also, the majority of exports are coconut and groundnut oil.