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Monday, July 28, 2008

Higher oil prices, retail push help K S Oils profit


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MUMBAI, July 28 (Reuters) - K S Oils Ltd (KSOI.BO: Quote, Profile, Research) posted a 75% rise in quarterly net profit as sales nearly doubled, helped by the firm's entry into the organised retail sector, beefing up its presence in existing markets, a top official said.

Higher prices of its branded products also boosted profits, Managing Director Sanjay Agarwal told Reuters by phone.

The company posted a net profit of Rs. 410.2 million in April-June on a 90% rise in net sales of Rs. 6.93 billion.

"Every quarter, we are planning to get into new markets. Also, we are pushing ourselves more into the branded retail segment," Agarwal said.

K S Oils, which is pushing 'Kalash' as its premier brand in retail chains such as Big Bazaar, Spencers and More, entered the eastern state of Orissa in the quarter, strengthening its presence in the mustard oil segment.

Currently, it has presence across eastern and central India - West Bengal, Madhya Pradesh, Bihar, Uttar Pradesh, Rajasthan.

Agarwal hopes its focus on retail sales, which has led to better profit realisations in the quarter, will help the company show "consistent and strong growth" through the year.

The company has earmarked Rs.100 million for advertising for its 'Kalash' and 'Double Sher' brands in 2008/09, he added.

Shares in the company were trading 3% higher at 60.30 rupees. They have fallen 27% over the quarter compared with the CNX Midcap Index's 16% drop. The broader 30-share BSE index has shed 13.95% in the period.

MORE CAPACITY, NEW MARKETS

K S Oils has, since 2006, invested Rs. 3 billion to build three new plants and triple its oil mill capacity to 5,000 tonnes a day. These are expected to be operational by December 2008.

These mustard and solvent extraction plants and refineries will see further investments of around Rs. 3.5 billion in the year, Agarwal said.

"This is a new greenfield project in pipeline. It will help us a lot in sustaining this 90-100 percent growth... and in growing further," Agarwal said.

The company plans to enter Himachal Pradesh and Punjab in the next quarter, he said.

"We plan to expand our market share to 20% in two years in the mustard oil segment," Agarwal said. Currently, it has a market share of 7%. (Reporting by Swati Pandey; Editing by Ramya Venugopal)