US company to buy edible oil maker Geepee

MUMBAI: US food processing giant Archers Daniels Midland Company (ADM) is set to acquire the Rs 650-crore edible oil maker Geepee Agri Private, said sources directly briefed on the matter. The move is part of the $61-billion Illinois-based company's strategy to bulk up production and secure grain procurement in times of rocketing food inflation.
Noida-based Geepee Agri is majority owned by Thailand's GP Group, a business conglomerate of India origin, and Rabo Private Equity.It has two plants at Kota in Rajasthan and Akola in Maharshtra. Geepee operates Parampara brand in the local edible oil market. Rabo owned 26% stake in the firm with 200 tonne soyabean and palm oil refining capacity per day. ADM has existing plants at Latur and Nagpur through recent acquisitions, and the latest buyout will see it almost doubling the crushing and refining capacities. Geepee Agri CEO Maneesh Mansingka could not be reached for comments despite repeated attempts.
GP Group and Rabo will offload their entire shareholding to ADM, said sources who did not divulge the acquisition cost. In 2009, GP had acquired this business from Hong Kong's Noble Resources, which operated it as joint venture with the Mansingka family. GP brought Rabo on board as minority investor to fund expansion plans subsequently. ADM has strategic ownership interest in Wilmar International, which in turn has an equal joint venture called Adani Wilmar in India. This JV is independent of ADM India business.
India's annual edible oil consumption is estimated at 15 million tons-valued at Rs 75,000 crore-and growing at 5-7%. The heavily fragmented branded segment accounts for just under 20% of the overall consumption but growing robust double digits. The domestic per capita consumption is estimated at 13 kg which is much below China's 23 kg. Soyabean and palm oil takes a large share of the domestic edible oil consumption even though mustard oil has gained traction in recent past.
Neilsen data suggests that Adani Wilmar (14.7%), Ruchi Soya (12.7%) and Cargill (8%) are the volume leaders of refined oil in consumer packs. Bunge, which made a big bang entry into India acquiring Dalda from Hindustan Unilever, is another significant player. Cargill has made a slew of acquisitions over the last one year. It first acquired Rath from Agro Tech Foods in November 2010, and then acquired Marico's Sweekar brand this year. Bunge and Cargill have been following a strategy of acquiring brands to grow their business in India.