Global Processing

Cargill invests in Indian food processing sector

January 7, 2013

U.S. agribusiness giant Cargill has announced plans to invest in India's fast-developing processed food sector by constructing a $73 million corn milling unit. The news was announced by the head of the company's India operations, Siraj Chaudhry, who revealed that the plan represented the company's biggest single investment in India to date.

The chairman of Cargill India also said that the corn milling unit is expected to be operating with a processing capacity of about 800 to 1,000 tons per day by 2014, First Post reported. For the construction, Cargill is looking for a suitable plot of land to buy at Davangere in Karnataka, the state with the highest level of corn production in India, which is in turn the second-largest producer of corn in Asia, following China.

It is estimated that the first phase of the processing unit at Davangere will be up and running by the third quarter of 2014. Chaudhry believes that the plant will provide production for the increasing demand for modified starch in the food processing sector.

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Modified starch is used as a sweetener and thickener in food processing and the demand for modified starch produced from corn has grown by 10 to 15 percent in India, as its processed food market blooms. It is also used by pharma companies for a variety of purposes.

In addition, the $134 billion U.S. company is injecting money to increase production capacity at its three existing edible oil plants in the Asian country, one each in Gujarat, Maharashtra and Orissa. Currently, Cargill India produces and sells vanaspati, hydrogenated vegetable fat commonly used as a substitute for butter, on the local market under the brands Rath, NatureFresh Purita and Gemini. Edible oil makes up about half of Cargill India's total revenue and the company wants to increase its daily refining capacity by some 25 percent to 5,000 tons a day.

Edible oil is extremely popular in India and this makes it the world's second-largest user of the product after China. However, it is the world's biggest palm oil importer, with almost half of the supplies on the Indian market coming from Indonesia and Malaysia. India's output of palm oil could barely meet half the household demand for the product, First Post noted.

Cargill India is planning to make the most of the booming sector, as it intends to expand its business to other food commodities like wheat flour, rice and pulses. According to Chaudhry, the company is looking into options for further acquisitions of businesses operating in the edible oil and wheat flour sectors. Earlier this month Cargill announced it was taking over Sunflower Vanaspati, a brand under consulting and outsourcing company Wipro.