Godrej Agrovet takes majority control in JV with Malay partner

Godrej Agrovet Ltd (GAVL), a part of the Rs 11,700-crore Godrej Group, has acquired 51 per cent stake in a joint venture company, Godrej IJM Ltd, from its Malaysian partner, IJM Plantations, at ringgit 9.8 million (Rs 11 crore).

Godrej IJM was set up as a JV between GAVL, a diversified agribusiness company, and IJM Plantations, Malaysia’s largest palm oil producer, in February 2008 to develop palm estates and crude palm oil mills in India. IJM Plantations was majority stakeholder in the JV, with 51 per cent, while the remaining 49 per cent was held by the Indian partner.

The JV was to provide planting material to farmers to develop palm plantations and buy the fruit bunches from them. The company also proposed to set up palm fruit processing mills.

“IJM Plantations was not keen on the joint venture to proceed further. So, we did not have an option but to acquire the majority stake held by IJM,” said Balram Yadav, managing director of GAVL. IJM could not be reached for comments.

“The acquisition is very small. And, we have not thought of changing the name. The acquisition, however, is set to strengthen GAVL’s presence in the palm oil business in India” Yadav said.

The JV had initiated planting of palm saplings in 3,000 hectares (ha) in Karnataka and Goa, with technology supplied from IJM.

GAVL, the parent firm, imports high-yielding palm saplings from Thailand. GAVL, incorporated in 1991, has plantations in several states, which contribute around 10 per cent of the company’s annual turnover of Rs 1,392 crore (2009-10). Its other business includes production of processed chicken, fruits, herbs, vegetables, and animal feeds. It is also engaged in compound animal feeds, agricultural inputs, integrated poultry business, plant biotech, retailing fresh farm produce in urban areas, and rural retailing.

The company also provides technical guidance, and soil and water testing services.

GAVL has 37,000 ha under plantation and about a third of this is giving produce at the moment. The potential area it had surveyed was 200,000 ha.

“Therefore, immense potential lies ahead of us,” S Varadaraj, chief financial officer, had said recently.

The company produces 20,000 tonnes of palm seed and crushes in its own units nearby, supplying 3,600 tonnes yearly of crude palm oil to vegetable oil refineries for processing.