Press Release

K S Oils continues its South East Asia foray of adding palm oil plantations

• Acquires an additional 53,000 acres of land for palm oil plantations in Indonesia, owning a total land bank of 1,38,000 acres
• The company will entail an investment of Rs. 380 crores to develop this plantation over the next three years
• The acquisition and funding has been done through K S Oils fully owned subsidiary KSNR Pte. Singapore and there would be no fund infusion or equity dilution in K S Oils, India.

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K S Oils acquires additional 35,000 acres land for oil palm plantations in Indonesia, owning a total of 85,000 acres

The company reinforces its backward integration strategy by acquiring the second tranche of land; the company had already acquired 50,000 acres in 2008

• The company's oil palm plantation asset purchases program in Indonesia will envisage a total fund outlay of Rs. 750 crores over a period of 3 years to develop 85,000 acres of palm plantation. The expansion will be through a mix of equity and debt; till date, the company has spent about Rs.90 crores in the palm plantation project.
• From the recent Rs.450 crore equity infusion, which the company is receiving from three private equity players and promoters, Rs. 375 crores will be used for developing oil palm plantation assets in Indonesia. The current acquisition shall be done from funds of this tranche. The balance Rs. 75 crores will be used in expanding capacity for the Haldia refinery from 500 to 1,000 metric tonnes per day.
• With the current acquisition, K S stands to gain self-sufficiency in its key raw material, crude palm oil (CPO) for its Haldia refinery with 50% of its expanded refinery capacity being met by approximately 1,50,000 metric tonnes of CPO produced from its own plantations. The plantations will be ready by 2012.
• The self-sufficiency in CPO will ensure substantial savings for K S Oils, which will increase the company's EBIDTA significantly; from the current buying price of CPO at 700 USD per metric tonne from the open market, it will be able to produce its own CPO at a cost of USD 300 per MT ex-Indonesia.

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K S Oils announces the acquisition of edible oil refinery at Haldia Port for Rs. 125 crores

• Company's first refinery in East India; thus giving easy access and logistics efficiencies in one of its key markets of North East, WB, Bihar, Jharkhand, Orissa and UP
• The refinery will give a boost to the company's current refined oil strategy by adding additional capacity of 500 metric tonnes per day; with six plants in Central and North India, this refinery will compliment the East India market
• Will give a boost to the company's refined oils product strategy - the refinery will produce KS Refined and KS Gold Refined oils for the eastern markets

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Acquisition of agri-assets in South East Asia

Introduction

As part of K S Oils strategy to create an integrated raw material supply chain, the Company has recently acquired two palm plantations in Indonesia and Malaysia. These palm plantations will add significant value by lowering inputs costs and ensuring steady supply for the Company.

K S Oils will continuously look for similar plantation assets in South East Asia. Indonesia currently has the lowest cost of per hectare production for palm and its production of palm oil is highest in the world.

While K S Oils is the first Indian company to venture into palm plantations in Indonesia and Malaysia, global agri-companies already have significant palm plantation assets in both the countries.

Details of the plantations

K S Oils acquired 50,000 acres (20,000 ha.) of palm plantation in Indonesia with an estimated investment of about Rs.2300 million over three years. This acquisition is K S Oil’s second in South East Asia. K S Oils is India’s first edible oil company to acquire palm plantations in Indonesia.

K S Oils plans to supply 80,000 tonnes of oil to its manufacturing and refining plants in India from its new plantation in Indonesia. These acquisitions are a part of K S Oil’s strategy to secure its raw material supplies and insulate itself against price fluctuations. The acquisitions will also strengthen K S Oils’ position in the Indian palm oil segment - the largest in edible oils market in India.

India relies heavily on imports for meeting the demand for palm oil. Of the approx. 4.7mt of oil imported in India last year, 3.2mt was palm oil. K S Oils, through its Indonesian palm plantation acquisition aims at reducing its dependence on market players and securing a high productivity raw material supply base.

The acquisitions are an important step in the Company’s strategy to create forward and backward linkages in the entire value chain.