Tata Chemicals Ltd, which has lined up a $1 billion (Rs4,100 crore) investment over the next two-three years, will foray into bio-diesel, fresh fruit and vegetable production and distribution as part of its expansion strategy.
Unveiling the company’s plans, Tata Chemicals’ managing director Homi R. Khusrokhan said it has set up jatropha cultivation in five regions of the country for production of bio-diesel.
Besides, it plans to cultivate sorghum for making ethanol. To begin with, the company would set up a plant at an investment of Rs40-50 crore in eastern Maharashtra, he said.
“Once it is successful, it will be replicated elsewhere in the country for large-scale manufacture of ethanol for blending with petrol,” Khusrokhan said.
“Each plant will take about 15-18 months to be set up,” he said, adding that the first unit should be ready by end-2008.
On bio-diesel, Khusrokhan said cultivating jatropha took at least four years and once the plants matured, an oil mill would be set up for extraction of jatropha oil. “Jatropha plants have a life cycle of 35-40 years after the initial four-year (growth) period and can be grown on wasteland. About 14% of India’s land mass is wasteland, which is enough to meet the requirements of bio-diesel for mixing up to 15% diesel,” he added.
On sorghum cultivation, Khusrokhan said it could be grown in those areas where jowar is cultivated and the advantage is that there could be three crops in a year.
“Sorghum can also be grown as a crop in between two major crops of foodgrain as it requires only a four-month cycle,” he added.
Elaborating on Tata Chemicals’ plans to enter fruit and vegetable distribution, Khusrokhan said initially the plan is to build a distribution chain in Punjab and West Bengal. This, would then gradually be extended to other states.
“In three-five years, we plan to have 30-40 such centres across the country,” he said, adding that the distribution chain includes setting up a cold-storage chain and entering into contract farming with farmers for assured supply of fruits and vegetables.
Ruling out the possibility of Tata Chemicals entering the retail business, Khusrokhan said the company would be only in the distribution network and was willing to sellto any retail major, including Reliance Industries Ltd.
It has already formed a 50:50 joint venture (JV) for this business with an Irish company, which is named Khetse Agri Produce India Pvt. Ltd.
Asked why the Tata name does not figure in the new business, Khusrokhan said the Tata name would be incorporated after a year or two as was the practice with most JVs.