The Indian company will have a 51% stake in the JV, and J-Oil will take 26%. The joint venture company's board will have representatives from all the three companies.
“Ruchi will provide raw materials and necessary marketing and distribution assistance to the JV,” said Dinesh Shahra, the company’s founder. “J-Oil will provide technical assistance and TTC, with its rich global experience, will provide management assistance for internal control and access to international markets through its network.”
Made in India
Ruchi's board also approved the sale and transfer of its soya processing business, which are currently based out of its Madhya Pradesh plant, to the JV, which plans to start supplying products to institutional customers by the end of 2013. It will then look at launching consumer products on the Indian market in the second-half of 2014.
“The main purpose of this investment is to start our first-ever business activity overseas in a promising country like India,” explained Sumikazu Umeda, president and chief executive officer of J-Oil.
Last week, Ruchi reported more than a twofold jump in standalone net profit for the quarter ended March 31 to Rs78.6cr (US$13m). The company had posted a net profit of Rs28.3cr for the same quarter last year and cited lower financial costs, higher export realisation and increased sale of branded oils as reasons for this growth.
“Our net profit has improved substantially both during the fourth quarter and the entire 2012-13 fiscal due to efficient control on financial cost,” said Shahra at the time.
Increased sales of branded cooking oils and more realisation from the export of oilseed extract and other food products have improved the company’s overall performance, he added.
Move to tomatoes
This is the second allegiance between Ruchi and Japanese companies in a month. In May, the company announced it would diversify into the tomato processing market in collaboration with Kagome, a tomato products company, and Mitsui & Co., a trading and investing firm.
"Ruchi Soya will have a 40% stake in the joint venture while Kagome and Mitsui will jointly hold a 60% stake through the creation of a special purpose company," said Shahra.
The joint-venture, Ruchi Kagome, anticipates the launch of premium tomato puree, sauces, ketchup and other products in India from June 2014, and has its sights set on revenue of Rs340cr (US$59.8m) and operating profits worth 18% over the first five years.