Dalda owner Bunge to double trade finance business in India

NEW DELHI - The US-based agro-business major Bunge, which bought the popular Dalda brand of vegetable oils in 2003, has targeted to double its trade finance business in India to $8 billion to capitalise on high lending rates and volatile food prices.

Trade finance helps fund cross-border imports and exports by providing credit against contracts. This also helps in reducing risks related to currency fluctuations, sudden price variations and deliveries.

“Last year, we made available over $4 billion trade finance. Our target is to increase it to $7-8 billion in 2011,” said Shrikant Bhasi, the head of business development with the $50 billion White Plains, New York-headquartered Bunge Group.

“Interest rates are rising globally. In India, it has risen very sharply during the last few months. This will boost the demand for trade finance at reasonable rates,” Bhasi, who works with the group’s financial services group, told IANS.

He said trade finance is available at 4-5 percent while lending rates in India are as high as 12-13 percent.

“Trade finance substantially reduces the cost of funds. It makes a difference of almost 5-6 percentage points,” Bhasi said, adding that Bunge Group’s trade finance was focussed on facilitating businesses and trade of agricultural commodities.

Bank lending rates have risen during the past six months because of a tight monetary policy of the Reserve Bank of India, which has tinkered with key policy rates seven times since January last year to tame inflation.

The Bunge financial services group started its India operations in 2001 and deals in trade finance, carbon credit and foreign exchange. “Today we are leaders in trade finance business in India. We are now doing $5 billion business here,” said the executive.

Bhasi, whose company acquired the Dalda brand from Hindustan Unilever, said rising cost of funds would hurt industrial growth in the country. He said his group has targeted 15-20 percent annual growth in India for the next three years.

“Dalda is one of the most trusted brands in India. Demand for vanaspati, or hydrogenated vegetable oils, will remain strong. We are looking at further consolidating our position in the market,” he said.

New York Stock Exchange-listed Bunge revamped the 75-year-old Dalda brand last year. The company targets to increase Dalda brand value to Rs.1,300 crore ($330 million) by the end of this year from Rs.550 crore ($125 million) in 2009.

The world’s largest crusher of oilseed has also started selling edible oils under the Dalda brand, which is basically known for hydrogenated vegetable oils.

Bhasi said the company — which has operations in over 30 countries — was bullish on its business in India because prices of food products were expected to remain high on the back of strong demand, pushing agri-business revenue and profit margins higher.

(Gyanendra Kumar Keshri can be reached at gyanendra.k@ians.in)