Feb 8 - Fitch Ratings has today said, in a just publishedSpecial Report, that the outlook for India's Edible Oil sectoris stable, due to continuing improvement in demand, fuelled byIndia's growing per capita GDP. Companies with conservativehedging and inventory policies, strong raw material sourcingarrangements, and geographically dispersed plants (which keeplogistical costs optimal), are likely to have stable creditprofiles in 2010. However, many are entering the branded edibleoil segment, where margins will be lower during the entry phasedue to the associated sales and marketing expenses. This entrycould also result in higher working capital requirements. Someoperators, anticipating higher prices, are believed to havebuilt up inventories, which could constrain liquidity and couldbe adversely impacted should edible oil prices decline.Aggressive inventory strategies would remain a rating concern.
The oil seed deficit in the Indian market will likelycontinue, since production remains short of the strong growthin demand. To meet this increased demand, the government hasreduced duties on crude edible oils - a trend that the agencybelieves will be sustained. Fitch believes that the higherduties on refined oils (in the range of 7.3% to 7.75%) relativeto crude oil (nil import duties) will continue to support themargins of edible oil refiners. Profile , Research ) (KSO,'BBB+(ind)'/Stable/'F2+(ind)') will eventually have theflexible capacity to process both palm and soya oils which,together with mustard oil, accounts for around 70% of India'sedible oil consumption.
Full Story: TEXT-Fitch: India Edible Oil outlook stable in 2010 - Reuters India
The oil seed deficit in the Indian market will likelycontinue, since production remains short of the strong growthin demand. To meet this increased demand, the government hasreduced duties on crude edible oils - a trend that the agencybelieves will be sustained. Fitch believes that the higherduties on refined oils (in the range of 7.3% to 7.75%) relativeto crude oil (nil import duties) will continue to support themargins of edible oil refiners. Profile , Research ) (KSO,'BBB+(ind)'/Stable/'F2+(ind)') will eventually have theflexible capacity to process both palm and soya oils which,together with mustard oil, accounts for around 70% of India'sedible oil consumption.
Full Story: TEXT-Fitch: India Edible Oil outlook stable in 2010 - Reuters India
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