CASTOR OIL EXPORT REPORT

PRACTICUM REPORT FOR THE

FULLFILMENT
OF
MBA-IB III SEMESTER

UNDER THE GUIDENCE OF

MR. VIJAY VEDANTAM

M.SAI KRISHNA
09031EIB40
MBA-IB SMS JNTUH

1
STARTING EXPORT BUSINESS
INTRODUCTION
How to Start Export is a fair question that every first time exporter wants to
ask. Export in itself is a very wide concept and lot of preparations is required by an
exporter before starting an export business.
A key success factor in starting any export company is clear understanding and
detail knowledge of products to be exported. In order to be a successful in exporting
one must fully research its foreign market rather than try to tackle every market at
once. The exporter should approach a market on a priority basis. Overseas design and
product must be studies properly and considered carefully. Because there are specific
laws dealing with International trade and foreign business, it is imperative that you
familiarize yourself with state, federal, and international laws before starting your
export business.
Price is also an important factor. So, before starting an export business an exporter must
considered the price offered to the buyers. As the selling price depends on sourcing price,
try to avoid unnecessary middlemen who only add cost but no value. It helps a lot on
cutting the transaction cost and improving the quality of the final products.
However, before we go deep into "How to export ?” let us discuss what an
export is and how the Government of Indian has defined it. In very simple terms,
export may be defined as the selling of goods to a foreign country. However, As per
Section 2 (e) of the India Foreign Trade Act (1992), the term export may be defined as
'an act of taking out of India any goods by land, sea or air and with proper transaction
of money”.
Exporting a product is a profitable method that helps to expand the business and reduces
the dependence in the local market. It also provides new ideas, management practices,
marketing techniques, and ways of competing, which is not

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possible in the domestic market. Even as an owner of a domestic market, an individual
businessman should think about exporting. Research shows that, on average, exporting
companies are more profitable than their non-exporting counterparts.

Why Need to Export

There are many good reasons for exporting:
The first and the primary reason for export is to earn foreign exchange. The foreign
exchange not only brings profit for the exporter but also improves the economic condition
of the country.
Secondly, companies that export their goods are believed to be more reliable than their
counterpart domestic companies assuming that exporting company has survive the test in
meeting international standards.
Thirdly, free exchange of ideas and cultural knowledge opens up immense business and
trade opportunities for a company.
Fourthly, as one starts visiting customers to sell one‟s goods, he has an opportunity to
start exploring for newer customers, state-of-the-art machines and vendors in foreign
lands.
Fifthly, by exporting goods, an exporter also becomes safe from offset lack of demand for
seasonal products.
Lastly, international trade keeps an exporter more competitive and less vulnerable to the
market as the exporter may have a business boom in one sector while simultaneously
witnessing a bust in a different sector.
No doubt that in the age of globalization and liberalizations, Export has became of the
most lucrative business in India. Government of India is also supporting exporters through
various incentives and schemes to promote Indian
export for meeting the much needed requirements for importing modern technology and
adopting new technology from MNCs through Joint ventures and collaboration.

3
EXPORT PLANNING

Introduction
Before starting an export, an individual should evaluate his company‟s “export
readiness”. Further planning for export should be done only, if the company‟s assets are
good enough for export.
There are several methods to evaluate the export potential of a company. The most
common method is to examine the success of a product in domestic market. It is believed
that if the products has survived in the domestic market, there is a good chance that it will
also be successful in international market, at least those where similar needs and
conditions exist.
One should also evaluate the unique features of a product. If those features are hard to
duplicate abroad, then it is likely that you will be successful overseas. A unique product
may have little competition and demand for it might be quite high.
Once a businessman decides to sell his products, the next step is to developing a proper
export plan. While planning an export strategy, it is always better to develop a simple,
practical and flexible export plan for profitable and sustainable export business. As the
planners learn more about exporting and your company's competitive position, the export
plan will become more detailed and complete.
Objective
The main objective of a typical export plan is to:
· Identifies what you want to achieve from exporting.
· Lists what activities you need to undertake to achieve those objectives.
· Includes mechanisms for reviewing and measuring progress.
· Helps you remain focused on your goals.
For a proper export planning following questions need to answered:
1. Which products are selected for export development?
2. What modifications, if any, must be made to adapt them for overseas markets?
3. Which countries are targeted for sales development?
4. In each country, what is the basic customer profile?
5. What marketing and distribution channels should be used to reach customers?
6. What special challenges pertain to each market (competition, cultural differences,
import controls, etc.), and what strategy will be used to address them?
7. How will the product's export sale price be determined?
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8. What specific operational steps must be taken and when?
9. What will be the time frame for implementing each element of the plan?
10. What personnel and company resources will be dedicated to exporting?
11. What will be the cost in time and money for each element?
12. How will results be evaluated and used to modify the plan?
From the start, the plan should be viewed and written as a management tool, not as a static
document. Objectives in the plan should be compared with actual results to measure the
success of different strategies. The company should not hesitate to modify the plan and
make it more specific as new information and experience are gained.
Some "Do's and Don'ts of Export Planning
DO ensure your key staff members are „signed on‟ to the Plan.
DO seek good advice – and test your Export Plan with advisers.
DON’T create a bulky document that remains static.
DO review the Export Plan regularly with your staff and advisers.
DO assign responsibility to staff for individual tasks.
DON’T use unrealistic timelines. Review them regularly – they often slip.
DO create scenarios for changed circumstances – look at the “what ifs” for changes in
the market environment from minor to major shifts in settings. e.g. changes of
government, new import taxes.
DO develop an integrated timeline that draws together the activities that make up the
Export Plan.
DO make sure that you have the human and financial resources necessary to execute
the Export Plan. Ensure existing customers are not neglected.

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KNOW YOUR PRODUCT

A key factor in any export business is clear understanding and detail knowledge of
products to be exported. The selected product must be in demand in the countries where it
is to be exported. Before making any selection, one should also consider the various
government policies associated with the export of a particular product.
Whether companies are exporting first time or have been in export trade for a long time -
it is better for both the groups to be methodical and systematic in identifying a right
product. It‟s not sufficient to have all necessary data 'in your mind' - but equally important
to put everything on paper and in a structured manner. Once this job is done, it becomes
easier to find the gaps in the collected information and take necessary corrective actions.
There are products that sell more often than other product in international market. It is not
very difficult to find them from various market research tools. However, such products
will invariably have more sellers and consequently more competition and fewer margins.
On the other hand - a niche product may have less competition and higher margin - but
there will be far less buyers.
Fact of the matter is - all products sell, though in varying degrees and there are positive as
well as flip sides in whatever decision you take - popular or niche product.
Key Factors in Product Selection
• The product should be manufactured or sourced with consistent standard quality,
comparable to your competitors. ISO or equivalent certification helps in selling the
product in the international market.
• If possible, avoid products which are monopoly of one or few suppliers. If you are the
manufacturer - make sure sufficient capacity is available in-house or you have the
wherewithal to outsource it at short notice. Timely supply is a key success factor in
export business

6
• The price of the exported product should not fluctuate very often - threatening
profitability to the export business.
• Strictly check the government policies related to the export of a particular product.
Though there are very few restrictions in export - it is better to check regulatory status of
your selected product.
• Carefully study the various government incentive schemes and tax exemption like duty
drawback and DEPB.
• Import regulation in overseas markets, specially tariff and non-tariff barriers. Though a
major non-tariff barrier (textile quota) has been abolished - there are still other tariff and
non-tariff barriers. If your product attracts higher duty in target country - demand
obviously falls.
• Registration/Special provision for your products in importing country. This is specially
applicable for processed food and beverages, drugs and chemicals.
• Seasonal vagaries of selected products as some products sell in summer, while others in
winter. Festive season is also important factor, for example certain products are more
sellable only during Christmas.
• Keep in mind special packaging and labeling requirements of perishable products like
processed food and dairy products.
• Special measures are required for transportation of certain products, which may be bulky
or fragile or hazardous or perishable.

7
Market Selection
Introduction
After evaluation of company‟s key capabilities, strengths and weaknesses, the next step is
to start evaluating opportunities in promising export markets. It involves the screening of
large lists of countries in order to arrive at a short list of four to five. The shorting method
should be done on the basis of various political, economic and cultural factors that will
potentially affect export operations in chosen market.
Some factors to consider include:
1. Geographical Factors
 Country, state, region,
 Time zones, Urban/rural location logistical considerations e.g. freight and distribution
channels
2. Economic, Political, and Legal Environmental Factors
 Regulations including quarantine,
 Labelling standards,
 Standards and consumer protection rules,
 Duties and taxes
3. Demographic Factors
 Age and gender,
 Income and family structure,
 Occupation,
 Cultural beliefs,
 Major competitors,
 Similar products,
 Key brands.
4. Market Characteristics
 Market size,
 Availability of domestic manufacturers,
 Agents, distributors and suppliers.
Foreign Market Research
Understanding a market‟s key characteristics requires gathering a broad range of primary
and secondary research, much of which you can source without cost from the internet.

8
Primary research, such as population figures, product compliance standards, statistics and
other facts can be obtained without any cost from international organizations like United
Nations (UN) and World Trade Organizations (WTO). Analysis of export statistics over a
period of several years helps an individual to determine whether the market for a
particular product is growing or shrinking.
Secondary research, such as periodicals, studies, market reports and surveys, can be found
through government websites, international organisations, and commercial market
intelligence firms.
Foreign Market Selection Process
Step 1: Gather Information on a Broad Range of Markets
Market selection process requires a broad range of informations depending upon the
products or services to be exported, which includes:
The demand for product/service.
o The size of the potential audience.
o Whether the target audience can affords product.
o What the regulatory issues are that impact on exports of product.
o Ease of access to this market – proximity/freight.

9
 o Are there appropriate distribution channels for product/service.
o The environment for doing business – language, culture, politics etc.
o Is it financially viable to export to selected market.
You can gather much of the first step information yourself from a variety of sources at
little or no cost. Sources of information include:
 Talking to colleagues and other exporters.
 Trade and Enterprise – web site, publications, call centre.
 The library.
 The Internet.
Step 2: Research a Selection of Markets In-Depth
 From the results of the first stage, narrow your selection down to three to
five markets and undertake some in-depth research relating specifically to
your product. While doing so, some of the questions that may arise at this
stage are:
 What similar products are in the marketplace (including products that may
not be similar but are used to achieve the same goal, e.g. the product in our
sample matrix at the end of this document is a hair removal cream. As well
as undertaking competitor research on other hair removal creams, we
would also need to consider other products that are used for hair removal,
i.e. razors, electrolysis, wax).
 What is your point of difference? What makes your product unique? What
are the key selling points for your product?
 How do people obtain/use these products?
 Who provides them?
 Are they imported? If so from which countries?
 Is there a local manufacturer or provider?
 Who would your major competitors be? What are the key brands or trade
names?
 What is the market‟s structure and shape?
 What is the market‟s size?
 Are there any niche markets, and if so how big are they?
 Who are the major importers/ stockists / distributors / agencies or
suppliers?

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  What are the other ways to obtain sales/representation?
 What are the prices or fees in different parts of the market?
 What are the mark-ups at different distribution levels?
 What are the import regulations, duties or taxes, including compliance and
professional registrations if these apply?
 How will you promote your product or service if there is a lot of
competition?
 Are there any significant trade fairs, professional gathers or other events
where you can promote your product or service?
 Packaging – do you need to change metric measures to imperial, do you
need to list ingredients?
 Will you need to translate promotional material and packaging?
 Is your branding – colours, imagery etc., culturally acceptable?
Foreign Market Selection Entry
Having completed the market selection process and chosen your target market, the next
step is to plan your entry strategy.
There are a number of options for entering your chosen market. Most exporters initially
choose to work through agents or distributors. In the longer term, however, you may
consider other options, such as taking more direct control of your market, more direct
selling or promotion, or seeking alliances or agreements.

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SWOT ANALYSIS
Introduction
SWOT analysis is a useful method of summaries all the information generated during the
export planning. SWOT stands for strengths, weakness, opportunities and threats, which
helps to isolate the strong and week areas within an export strategy. SWOT also indicates
the future opportunities or threats that may exist in the chosen markets and is instrumental
in strategy formulation and selection.
To apply your own SWOT analysis, start by creating a heading for each category –
„Strengths‟, „Weaknesses‟, „Opportunities‟, and „Threats‟. Under each of these, write a list
of five relevant aspects of your business and external market environment. Strengths and
weaknesses apply to internal aspects of your business; opportunities and threats relate to
external research.
Your final analysis should help you develop short and long term business goals and action
plans, and help guide your market selection process.
Environmental factors internal to the company can be classified as strengths or
weaknesses, and those external to the company can be classified as opportunities or
threats.
Strengths
Business strengths are its resources and capabilities that can be used as a basis for
developing a competitive-advantage. Examples of such strengths include:
· Patents
· Strong brand names.
· Good reputation among customers.
· Cost advantages from proprietary know-how.
· Exclusive access to high grade natural resources.
· Favorable access to distribution networks.

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Weaknesses
The absence of certain strengths may be viewed as a weakness. For example, each of the
following may be considered weaknesses:
· Lack of patent protection.
· A weak brand name.
· Poor reputation among customers.
· High cost structure.
· Lack of access to the best natural resources.
· Lack of access to key distribution channels.
Opportunities
The external environmental analysis may reveal certain new opportunities for profit and
growth. Some examples of such opportunities include:
· An unfulfilled customer need.
· Arrival of new technologies.
· Loosening of regulations.
· Removal of international trade barriers.
Threats
Changes in the external environmental also may present threats to the firm. Some
examples of such threats include:
· Shifts in consumer tastes away from the firm's products
· Emergence of substitute products.
· New regulations.
· Increased trade barriers
Successful SWOT Analysis
Simple rules for successful SWOT analysis:
Be realistic about the strengths and weaknesses of the organization.
 Analysis should distinguish between where the organization is today, and
where it could be in the future.
 Be specific.
 Always analyse in relation to your competition i.e. better than or worse
than your competition.
 Keep your SWOT short and simple.

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A SWOT analysis can be very subjective, and is an excellent tool for indicating the
negative factors first in order to turn them into positive factors.
Once all the research and analysis is done its time to get registered with the various
government authorities.
Registration with Reserve Bank of India (RBI)
Prior to 1997, it was necessary for every first time exporter to obtain IEC number from
Reserve Bank of India (RBI) before engaging in any kind of export operations. But now
this job is being done by DGFT.
Registration with Director General of Foreign Trade (DGFT)
For every first time exporter, it is necessary to get registered with the DGFT (Director
General of Foreign Trade), Ministry of Commerce, Government of India.
DGFT provide exporter a unique IEC Number. IEC Number is a ten digits code required
for the purpose of export as well as import. No exporter is allowed to export his good
abroad without IEC number.
However, if the goods are exported to Nepal, or to Myanmar through Indo-Myanmar
boarder or to China through Gunji, Namgaya, Shipkila or Nathula ports then it is not
necessary to obtain IEC number provided the CIF value of a single consignment does not
exceed Indian amount of Rs. 25, 000 /-.
Application for IEC number can be submitted to the nearest regional authority of
DGFT.
Application form which is known as "Aayaat Niryaat Form - ANF2A" can also be
submitted online at the DGFT web-site: www.dgft.gov.in.

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While submitting an application form for IEC number, an applicant is required to submit
his PAN account number. Only one IEC is issued against a single PAN number. Apart
from PAN number, an applicant is also required to submit his Current Bank Account
number and Bankers Certificate.
A amount of Rs 1000/- is required to submit with the application fee. This amount can be
submitted in the form of a Demand Draft or payment through EFT (Electronic Fund
Transfer by Nominated Bank by DGFT.
Registration with Export Promotion Council
Registered under the Indian Company Act, Export Promotion Councils or EPC is a non-
profit organisation for the promotion of various goods exported from India in
international market. EPC works in close association with the Ministry of Commerce and
Industry, Government of India and act as a platform for interaction between the exporting
community and the government.
So, it becomes important for an exporter to obtain a registration cum membership
certificate (RCMC) from the EPC. An application for registration should be accompanied
by a self certified copy of the IEC number. Membership fee should be paid in the form of
cheque or draft after ascertaining the amount from the concerned EPC.
The RCMC certificate is valid from 1st April of the licensing year in which it was issued
and shall be valid for five years ending 31st March of the licensing year, unless otherwise
specified.
Registration with Commodity Boards
Commodity Board is registered agency designated by the Ministry of Commerce,
Government of India for purposes of export-promotion and has offices in India and
abroad. At present, there are five statutory Commodity Boards under the Department of
Commerce. These Boards are responsible for production, development and export of tea,
coffee, rubber, spices and tobacco.
Registration with Income Tax Authorities
Goods exported out of the country are eligible for exemption from both Value Added Tax
and Central Sales Tax. So, to get the benefit of tax exemption it is important for an
exporter to get registered with the Tax Authorities.

15
EXPORT LICENSING
Introduction
An export license is a document issued by the appropriate licensing agency after which an
exporter is allowed to transport his product in a foreign market. The license is only issued
after a careful review of the facts surrounding the given export transaction. Export license
depends on the nature of goods to be transported as well as the destination port. So, being
an exporter it is necessary to determine whether the product or good to be exported
requires an export license or not. While making the determination one must consider the
following necessary points:
· What are you exporting?
· Where are you exporting?
· Who will receive your item?
· What will your items will be used?
Canalisation
Canalisation is an important feature of Export License under which certain goods can be
imported only by designated agencies. For an example, an item like gold, in bulk, can be
imported only by specified banks like SBI and some foreign banks or designated
agencies.
Application for an Export License
To determine whether a license is needed to export a particular commercial product or
service, an exporter must first classify the item by identifying what is called ITC (HS)
Classifications. Export license are only issued for the goods mentioned in the

Schedule 2 of ITC (HS) Classifications of Export and Import items. A proper application
can be submitted to the Director General of Foreign Trade (DGFT). The Export Licensing
Committee under the Chairmanship of Export Commissioner considers such applications
on merits for issue of export licenses.
Exports Free unless regulated
The Director General of Foreign Trade (DGFT) from time to time specifies through a
public notice according to which any goods, not included in the ITC (HS) Classifications

16
of Export and Import items may be exported without a license. Such terms and conditions
may include Minimum Export Price (MEP), registration with specified authorities,
quantitative ceilings and compliance with other laws, rules, regulations.

Table of Contents
Introduction
The foreign customer may ask for product samples before placing a confirmed order. So, it
is essential that the samples are made from good quality raw materials and after getting an
order, the subsequent goods are made with the same quality product.
Extra care should be taken in order to avoid the risk associated in sending a costly product
sample for export. Secrecy is also an important factor while sending a sample, especially if
there is a risk of copying the original product during export.
Before exporting a product sample an exporter should also know the Government policy
and procedures for export of samples.
While sending a product sample to an importer, it is always advised to send samples by
air mail to avoid undue delay. However, if the time is not an issue then the product sample
can also be exported through proper postal channel, which is cheaper as compared to the
air mail.
Sending Export Samples from India
Samples having permanent marking as “sample not for sale” are allowed freely for export
without any limit. However, in such cases where indelible marking is not available, the
samples may be allowed for a value not exceeding US $ 10,000, per consignment.

17
 For export of sample products which are restricted for export as mentioned in the ITC
(HS) Code, an application may be made to the office of Director General of Foreign
Trade (DGFT).
Export of samples to be sent by post parcel or air freight is further divided into following
3 categories, and under each category an exporter is required to fulfill certain formalities
which are mentioned below :
1. Samples of value up to Rs.10, 000- It is necessary for the exporter to file a simple
declaration that the sample does not involve foreign exchange and its value is less than Rs.
10,000.
2. Samples of value less than Rs. 25,000- It is necessary for the exporter to obtain a value
certificate from the authorised dealer in foreign exchange (i.e. your bank). For this
purpose, an exporter should submit a commercial invoice certifying thereon that the
parcel does not involve foreign exchange and the aggregate value of the samples exported
by you does not exceed Rs. 25,000 in the current calendar year.
3. Samples of value more than Rs. 25,000- It becomes necessary for the exporter to obtain
GR/PP waiver from the Reserve Bank of India
Export Samples against Payment
A sample against which an overseas buyer agrees to make payment is exported in the
same manner as the normal goods are exported. Sample can also be carried personally by
you while travelling abroad provided these are otherwise permissible or cleared for export
as explained earlier. However, in case of precious jewellery or stone the necessary
information should be declared to the custom authorities while leaving the country and
obtain necessary endorsement on export certificate issued by the Jewelry Appraiser of the
Customs.
Export of Garment Samples
As per the special provision made for the export of garment samples, only those exporters
are allowed to send samples that are registered with the Apparel export Promotion Council
(AEPC). Similarly, for export of wool it is necessary for the exporter to have registration
with the Woolen Export Promotion Council.

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Export of Software
All kinds electronic and computer software product samples can only be exported abroad,
if the exporter dealing with these products is registered with the Electronics and Computer
Software Export Promotion Council (ESC)
Similarly samples of other export products can be exported abroad under the membership
of various Export Promotion Councils (EPC) of India.
Introduction
Pricing and costing are two different things and an exporter should not confuse between
the two. Price is what an exporter offer to a customer on particular products while cost is
what an exporter pay for manufacturing the same product.
Export pricing is the most important factor in for promoting export and facing
international trade competition. It is important for the exporter to keep the prices down
keeping in mind all export benefits and expenses. However, there is no fixed formula for
successful export pricing and is differ from exporter to exporter depending upon whether
the exporter is a merchant exporter or a manufacturer exporter or exporting through a
canalising agency.
Determining Export Pricing
Export Pricing can be determine by the following factors:
· Range of products offered.
· Prompt deliveries and continuity in supply.
· After-sales service in products like machine tools, consumer durables.
· Product differentiation and brand image.
· Frequency of purchase.
· Presumed relationship between quality and price.
· Specialty value goods and gift items.
· Credit offered.
· Preference or prejudice for products originating from a particular source.
· Aggressive marketing and sales promotion.
· Prompt acceptance and settlement of claims.
· Unique value goods and gift items.

Export Costing
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 Export Costing is basically Cost Accountant's job. It consists of fixed cost and variable
cost comprising various elements. It is advisable to prepare an export costing sheet for
every export product.
As regards quoting the prices to the overseas buyer, the same are quoted in the following
internationally accepted terms which are commonly known as Incoterm.
Introduction
An exporter without any commercial contract is completely exposed of foreign exchange
risks that arises due to the probability of an adverse change in exchange rates. Therefore,
it becomes important for the exporter to gain some knowledge about the foreign exchange
rates, quoting of exchange rates and various factors determining the exchange rates. In this
section, we have discussed various topics related to foreign exchange rates in detail.
Spot Exchange Rate
Also known as "benchmark rates", "straightforward rates" or "outright rates", spot rates
represent the price that a buyer expects to pay for a foreign currency in another currency.
Settlement in case of spot rate is normally done within one or two working days.
Forward Exchange Rate
The forward exchange rate refers to an exchange rate that is quoted and traded today but
for delivery and payment on a specific future date.
Method of Quoting Exchange Rates
There are two methods of quoting exchange rates:
· Direct Quotation: In this system, variable units of home currency equivalent to a fixed
unit of foreign currency are quoted.
For example: US $ 1= Rs. 42.75
· Indirect Quotation: In this system, variable units of foreign currency as equivalent to a
fixed unit of home currency are quoted.
For example: US $ 2.392= Rs. 100
Before 1993, banks were required to quote all the rates on indirect basis as foreign
currency equivalent to RS. 100 but after 1993 banks are quoting rates on direct basis only.
Exchange Rate Regime
The exchange rate regime is a method through which a country manages its currency in
respect to foreign currencies and the foreign exchange market.
· Fixed Exchange Rate
A fixed exchange rate is a type of exchange rate regime in which a currency's value is
20
 matched to the value of another single currency or any another measure of value, such as
gold. A fixed exchange rate is also known as pegged exchange rate. A currency that uses a
fixed exchange rate is known as a fixed currency. The opposite of a fixed exchange rate is
a floating exchange rate.
· Floating Exchange Rate
A Floating Exchange Rate is a type of exchange rate regime wherein a currency's value is
allowed to fluctuate according to the foreign exchange market. A currency that uses a
floating exchange rate is known as a floating currency. A Floating Exchange Rate or a
flexible exchange rate and is opposite to the fixed exchange rate.
· Linked Exchange Rate
A linked exchange rate system is used to equlise the exchange rate of a currency to
another. Linked Exchange Rate system is implemented in Hong Kong to stabilise the
exchange rate between the Hong Kong dollar (HKD) and the United States dollar (USD).
Forward Exchange Contracts.
A Forward Exchange Contract is a contract between two parties (the Bank and the
customer). One party contract to sell and the other party contracts to buy, one currency
for another, at an agreed future date, at a rate of exchange which is fixed at the time the
contract is entered into.
Benefits of Forward Exchange Contract
 Contracts can be arranged to either buy or sell a foreign currency
against your domestic currency, or against another foreign currency.
 Available in all major currencies.
 Available for any purpose such as trade, investment or other current
commitments.
 Forward exchange contracts must be completed by the customer. A
customer requiring more flexibility may wish to consider Foreign
Currency Options.
Foreign Currency Options
Foreign Currency Options is a hedging tool that gives the owner the right to buy or sell
the indicated amount of foreign currency at a specified price before a specific date. Like
forward contracts, foreign currency options also eliminate the spot market risk for future
transactions. A currency option is no different from a stock option except that the
underlying asset is foreign exchange. The basic premises remain the same: the buyer of
21
option has the right but no obligation to enter into a contract with the seller. Therefore the
buyer of a currency option has the right, to his advantage, to enter into the specified
contract.
Flexible Forwards
Flexible Forward is a part of foreign exchange that has been developed as an alternative
to forward exchange contracts and currency options. The agreement for flexible forwards
is always singed between two parties (the „buyer‟ of the flexible forward and the 'seller'
of the flexible forward) to exchange a specified amount (the „face value‟) of one currency
for another currency at a foreign exchange rate that is determined in accordance with the
mechanisms set out in the agreement at an agreed time and an agreed date (the „expiry
time‟ on the „expiry date‟). The exchange then takes place approximately two clear
business days later on the „delivery date‟).
Currency Swap
A currency swap which is also known as cross currency swap is a foreign exchange
agreement between two countries to exchange a given amount of one currency for
another and, after a specified period of time, to give back the original amounts swapped.
Foreign Exchange Markets
The foreign exchange markets are usually highly liquid as the world's main international
banks provide a market around-the-clock. The Bank for International Settlements
reported that global foreign exchange market turnover daily averages in April was $650
billion in 1998 (at constant exchange rates) and increased to $1.9 trillion in 2004 [1].
Trade in global currency markets has soared over the past three years and is now worth
more than $3.2 trillion a day. The biggest foreign exchange trading centre is London,
followed by New York and Tokyo.

Introduction
Selling a product through an overseas agent is a very successful strategy. Sales agents are
available on commission basis for any sales they make. The key benefit of using an
overseas sales agent is that you get the advantage of their extensive knowledge of the
22
target market. Sales agent also provides support to an exporter in the matter of
transportation, reservation of accommodation, appointment with the government as and
when required. It is, therefore, essential that one should very carefully select overseas
agent.
Merits of Appointing a Sales Agent
There are various types of merits associated with appointed a sales agent for export
purpose are as follow:
 Sales agent avoids the recruitment, training, time and payroll costs of using
own employees to enter an overseas market.
 An agent is a better option to identify and exploit opportunities in overseas
export market.
 An agent already have solid relationships with potential buyers, hence it
saves the time of the exporter to build own contacts.
 An agent allows an exporter to maintain more control over matters such as
final price and brand image - compared with the other intermediary
option of using a distributor.
Demerits of Appointing a Sales Agent
There are also certain disadvantages associated with appointing a sales agent for export
purpose which are as follows:
 After-sales service can be difficult when selling through an
intermediary.
 There is a risk for exporter to lose some control over marketing and
brand image.
Important Points While Appointing a Sales Agent:
Appointing right sales agent not only enhance the profit of an exporter but also avoid any
of risks associated with a sales agent. So it becomes important for an exporter to take into
consideration following important points before selection an appropriate sales agent for
his product.
o Size of the agent's company.
o Date of foundation of the agent's company.
o Company's ownership and control.
o Company's capital, funds, available and liabilities.
o Name, age and experience of the company's senior executives.
23
 o Number, age and experience of the company's salesman.
o Other agencies that the company holds, including those of competing
products and turn-over of each.
o Length of company's association with other principal.
o New agencies that the company obtained or lost during the past year.
o Company's total annual sales and the trends in its sales in recent years.
o Company's sales coverage, overall and by area.
o Number of sales calls per month and per salesman by company staff.
o Any major obstacles expected in the company's sales growth.
o Agent's capability to provide sales promotion and advertising services
o Agent's transport facilities and warehousing capacity.
o Agent's rate of commission; payment terms required.
o References on the agents from banks, trade associations and major buyers.
Some source of Information on Agents is:
· Government Departments Trade Associations.
· Chambers of Commerce.
· Banks.
· Independent Consultants.
· Export Promotion Councils.
· Advertisement Abroad.
Agent v Distributor
There is a fundamental legal difference between agents and distributors and an exporter
should not confuse between the two. An agent negotiates on the behalf of an exporter and
may be entitled to create a legal relationship between exporter and the importer.
A distributor buys goods on its own account from exporter and resells those products to
customers. It is the distributor which has the sale contract with the customer not the
exporter. In the case of distributor, an exporter is free from any kinds of risks associated
with the finance.

24
Introduction
Export pricing is the most important factor in for promoting export and facing
international trade competition. It is important for the exporter to keep the prices down
keeping in mind all export benefits and expenses. However, there is no fixed formula for
successful export pricing and is differ from exporter to exporter depending upon whether
the exporter is a merchant exporter or a manufacturer exporter or exporting through a
canalising agency.
Like any business transaction, risk is also associated with good to be exported in an
overseas market. Export is risk in international trade is quite different from risks involve
in domestic trade. So, it becomes important to all the risks related to export in
international trade with an extra measure and with a proper risk management.
The various types of export risks involve in an international trade are as follow:
Credit Risk
Sometimes because of large distance, it becomes difficult for an exporter to verify the
creditworthiness and reputation of an importer or buyer. Any false buyer can increase the
risk of non-payment, late payment or even straightforward fraud. So, it is necessary for
an exporter to determine the creditworthiness of the foreign buyer. An exporter can seek
the help of commercial firms that can provide assistance in credit-checking of foreign
companies.
Poor Quality Risk
Exported goods can be rejected by an importer on the basis of poor quality. So it is
always recommended to properly check the goods to be exported. Sometimes buyer or
importer raises the quality issue just to put pressure on an exporter in order to try and
negotiate a lower price. So, it is better to allow an inspection procedure by an
independent inspection company before shipment. Such an inspection protects both the
importer and the exporter. Inspection is normally done at the request of importer and the
costs for the inspection are borne by the importer or it may be negotiated that they be
included in the contract price.
Alternatively, it may be a good idea to ship one or two samples of the goods being
produced to the importer by an international courier company. The final product
produced to the same standards is always difficult to reduce.
Transportation Risks

25
With the movement of goods from one continent to another, or even within the same
continent, goods face many hazards. There is the risk of theft, damage and possibly the
goods not even arriving at all.
Logistic Risk
The exporter must understand all aspects of international logistics, in particular the
contract of carriage. This contract is drawn up between a shipper and a carrier (transport
operator). For this an exporter may refer to Incoterms 2000, ICC publication.
Legal Risks
International laws and regulations change frequently. Therefore, it is important for an
exporter to drafts a contract in conjunction with a legal firm, thereby ensuring that the
exporter's interests are taken care of.
Political Risk
Political risk arises due to the changes in the government policies or instability in the
government sector. So it is important for an exporter to be constantly aware of the
policies of foreign governments so that they can change their marketing tactics
accordingly and take the necessary steps to prevent loss of business and investment.
Unforeseen Risks
Unforeseen risk such as terrorist attack or a natural disaster like an earthquake may cause
damage to exported products. It is therefore important that an exporter ensures a force
majeure clause in the export contract.
Exchange Rate Risks
Exchange rate risk is occurs due to the uncertainty in the future value of a currency.
Exchange risk can be avoided by adopting Hedging scheme.
Export Risk Management Plan
Risk management is a process of thinking analytically about all potential undesirable
outcomes before they happen and setting up measures that will avoid them. There are six
basic elements of the risk management process:
• Establishing the context
• Identifying the risks
• Assessing probability and possible consequences of risks
• Developing strategies to mitigate these risks
• Monitoring and reviewing the outcomes
• Communicating and consulting with the parties involved
26
 A risk management plan helps an exporter to broaden the risk profile for foreign market.
For a small export business, an exporter must keep his risk management analysis clear and
simple.
Export Risk Mitigation
Export risk mitigations are the various strategies that can be adopted by an exporter to
avoid the risks associated with the export of goods.
· Direct Credit: Export Credit Agencies support exports through the provision
of direct credits to either the importer or the exporter.
o Importer: a buyer credit is provided to the importer to purchase goods. o Exporter:
makes a deferred payment sale; insurance is used to protect the seller or bank.
Guarantee
 Bid bond (tender guarantee): protects against exporter‟s unrealistic bid or failure
to execute the contract after winning the bid.
 Performance bond: guarantees exporter‟s performance after a contract is signed.
 Advance payment guarantee (letter of indemnity): in the case where an importer
advances funds, guarantees a refund if exporter does not perform.
 Standby letter of credit: issuing bank promises to pay exporter on
 behalf of importer.
Insurance
o Transportation insurance: Covers goods during transport; degree of coverage varies.
 Credit Insurance: Protects against buyer insolvency or protracted defaults and/or
political risks.
 Seller non-compliance (credit insurance): Covers advance payment risk.
 Foreign exchange risk insurance: Provides a hedge against foreign exchange risk.
Hedging
Instruments used to Hedge Price Risk
 Stabilization programs and funds.
 Timing of purchase/sale.
 Fixed price long-term contracts.

27
 Introduction
An important stage after manufacturing of goods or their procurement is their preparation
for shipment which involves packaging and labelling of goods to be exported. Proper
packaging and labelling not only makes the final product look attractive but also save a
huge amount of money by saving the product from wrong handling the export process.
Packaging
The primary role of packaging is to contain, protect and preserve a product as well as aid
in its handling and final presentation. Packaging also refers to the process of design,
evaluation, and production of packages. The packaging can be done within the export
company or the job can be assigned to an outside packaging company. Packaging
provides following benefits to the goods to be exported:
Physical Protection – Packaging provides protection against shock, vibration,
temperature, moisture and dust.
· Containment or agglomeration – Packaging provides agglomeration of small
objects into one package for reason of efficiency and cost factor. For example
it is better to put 1000 pencils in one box rather than putting each pencil in
separate 1000 boxes.
· Marketing: Proper and attractive packaging play an important role in
encouraging a potential buyer.
• Convenience - Packages can have features which add convenience in distribution,
handling, display, sale, opening, use, and reuse.
· Security - Packaging can play an important role in reducing the security risks
of shipment. It also provides authentication seals to indicate that the package
and contents are not counterfeit. Packages also can include anti-theft devices,
such as dye-packs, RFID tags, or electronic article surveillance tags, that can
be activated or detected by devices at exit points and require specialized tools
to deactivate. Using packaging in this way is a means of loss prevention.
Labeling
Like packaging, labeling should also be done with extra care. It is also important for an
exporter to be familiar with all kinds of sign and symbols and should also maintain all the

28
nationally and internationally standers while using these symbols. Labelling should be in
English, and words indicating country of origin should be as large and as prominent as
any other English wording on the package or label.
Labelling on product provides the following important information:
• Shipper's mark
• Country of origin
• Weight marking (in pounds and in kilograms)
• Number of packages and size of cases (in inches and centimeters)
. Handling marks (international pictorial symbols)
• Cautionary markings, such as "This Side Up."
• Port of entry
• Labels for hazardous materials
Labelling of a product also provides information like how to use, transport, recycle, or
dispose of the package or product. With pharmaceuticals, foods, medical, and chemical
products, some types of information are required by governments.
It is better to choose a fast dyes for labelling purpose. Only fast dyes should be used for
labeling. Essential data should be in black and subsidiary data in a less conspicuous
colour; red and orange and so on. For food packed in sacks, only harmless dyes should be
employed, and the dye should not come through the packing in such a way as to affect the
goods.
Inspection Certificates and Quality Control.
Introduction
An important aspect about the goods to be exported is compulsory quality control and pre-
shipment inspection. For this purpose, Export Inspection Council (EIC) was set up by the
Government of India under Section 3 of the Export (Quality Control and Inspection) Act,
1963. It includes more than 1000 commodities which are organized into various groups
for a compulsory pre-shipment inspection. It includes Food and Agriculture, Fishery,
Minerals, Organic and Inorganic Chemicals, Rubber Products, Refractoriness, Ceramic
Products, Pesticides, Light Engineering, Steel Products, Jute Products, Coir and Coir
Products, Footwear and Footwear Products.
An important aspect about the goods to be exported is compulsory quality control and pre-
shipment inspection. For this purpose, Export Inspection Council (EIC) was set up by the
Government of India under Section 3 of the Export (Quality Control and Inspection) Act,

29
1963. It includes more than 1000 commodities which are organized into various groups
for a compulsory pre-shipment inspection. It includes Food and Agriculture, Fishery,
Minerals, Organic and Inorganic Chemicals, Rubber Products, Refractoriness, Ceramic
Products, Pesticides, Light Engineering, Steel Products, Jute Products, Coir and Coir
Products, Footwear and Footwear Products.
ISI Certification
Indian Standards Institute now known as Bureau of Indian Standard (BIS) is a registered
society under a Government of India. BIS main functions include the development of
technical standards, product quality and management system certifications and consumer
affairs. Founded by Professor P.C. Mahalanobis in Kolkata on 17th December, 1931, the
institute gained the status of an Institution of National Importance by an act of the Indian
Parliament in 1959.
AgMmark Certification
AgMark is an acronym for Agricultural Marketing and is used to certify the food
products for quality control. Agmark has been dominated by other quality standards
including the non manufacturing standard ISO 9000.
Benefits of ISI and Agmark Certification
Products having ISI Certification mark or Agmark are not required to be inspected by
any agency. These products do not fall within the purview of the export inspection
agencies network. The Customs Authorities allow export of such goods even if not
accompanied by any pre-shipment inspection certificate, provided they are otherwise
satisfied that the goods carry ISI Certification or the Agmark.
In-Process Quality Control (IPQC)
In-Process Quality Control (IPQC) inspection is mainly done for engineering products and
is applied at the various stages of production. Units approved under IPQC system of in-
process quality control may themselves issue the certificate of inspection, but only for the
products for which they have been granted IPQC facilities. The final certificate of
inspection on the end-products is then given without in-depth study at the shipment stage.
Self Certification Scheme
Under the self Certification Scheme, large exporters and manufacturers are allowed to
inspect their product without involving any other party. The facility is available to
manufacturers of engineering products, chemical and allied products and marine
products. Self-Certification is given on the basis that the exporter himself is the best

30
judge of the quality of his products and will not allow his reputation to be spoiled in the
international market by compromising on quality. Self-Certification Scheme is granted to
the exporter for the period of one year. Exporters with proven reputation can obtain the
permission for self certification by submitting an application to the Director (Inspection
and Quality Control), Export Inspection Council of India, 11th Floor, Pragati Tower, 26
Rajendra Place, New Delhi.
ISO 9000
The discussion on inspection certificate and quality control is incomplete without ISO-
9000. Established in 1987, ISO 9000 is a series of international standards that has been
accepted worldwide as the norm assuring high quality of goods. The current version of
ISO 9000 is ISO 9000:2000.

31
 Introduction
An exporter without any commercial contract is completely exposed of foreign exchange
risks that arises due to the probability of an adverse change in exchange rates. Therefore,
it becomes important for the exporter to gain some knowledge about the foreign exchange
rates, quoting of exchange rates and various factors determining the exchange rates. In this
section, we have discussed various topics related to foreign exchange rates in detail.
Export from India required special document depending upon the type of product and
destination to be exported. Export Documents not only gives detail about the product and
its destination port but are also used for the purpose of taxation and quality control
inspection certification.
Shipping Bill / Bill of Export
Shipping Bill/ Bill of Export is the main document required by the Customs Authority for
allowing shipment. A shipping bill is issued by the shipping agent and represents some
kind of certificate for all parties, included ship's owner, seller, buyer and some other
parties. For each one represents a kind of certificate document.
Documents Required for Post Parcel Customs Clearance
In case of Post Parcel, no Shipping Bill is required. The relevant documents are
mentioned below:
· Customs Declaration Form - It is prescribed by the Universal Postal Union
(UPU) and international apex body coordinating activities of national postal
administration. It is known by the code number CP2/ CP3 and to be prepared
in quadruplicate, signed by the sender.
· Despatch Note- It is filled by the exporter to specify the action to be taken by
the postal department at the destination in case the address is non-traceable or
the parcel is refused to be accepted.
· Commercial Invoice - Issued by the exporter for the full realisable amount of
goods as per trade term.
· Consular Invoice - Mainly needed for the countries like Kenya, Uganda,
Tanzania, Mauritius, New Zealand, Burma, Iraq, Ausatralia, Fiji, Cyprus,
Nigeria, Ghana, Zanzibar etc. It is prepared in the prescribed format and is
signed/ certified by the counsel of the importing country located in the country
of export.

32
· Customs Invoice - Mainly needed for the countries like USA, Canada, etc. It
is prepared on a special form being presented by the Customs authorities of the importing
country. It facilitates entry of goods in the importing country at preferential tariff rate.
Legalised / Visaed Invoice - This shows the seller's genuineness before the appropriate
consulate or chamber or commerce/ embassy.
Certified Invoice - It is required when the exporter needs to certify on the invoice that
the goods are of a particular origin or manufactured/ packed at a particular place and in
accordance with specific contract. Sight Draft and Usance Draft are available for this.
Sight Draft is required when the exporter expects immediate payment and Usance Draft
is required for credit delivery.
Packing List - It shows the details of goods contained in each parcel / shipment.
Certificate of Inspection – It is a type of document describing the condition of goods
and confirming that they have been inspected.
Black List Certificate - It is required for countries which have strained political relation.
It certifies that the ship or the aircraft carrying the goods has not touched those country(s).
Manufacturer's Certificate - It is required in addition to the Certificate of Origin for
few countries to show that the goods shipped have actually been manufactured and is
available.
Certificate of Chemical Analysis - It is required to ensure the quality and grade of
certain items such as metallic ores, pigments, etc.
Certificate of Shipment - It signifies that a certain lot of goods have been shipped.
Health/ Veterinary/ Sanitary Certification - Required for export of foodstuffs, marine
products, hides, livestock etc.
Certificate of Conditioning - It is issued by the competent office to certify compliance
of humidity factor, dry weight, etc.
Antiquity Measurement – It is issued by Archaeological Survey of India in case of
antiques.
Shipping Order - Issued by the Shipping (Conference) Line which intimates the exporter
about the reservation of space of shipment of cargo through the specific vessel from a
specified port and on a specified date.
· Cart/ Lorry Ticket - It is prepared for admittance of the cargo through the
port gate and includes the shipper's name, cart/ lorry No., marks on packages,
quantity, etc.

33
· Shut Out Advice - It is a statement of packages which are shut out by a ship
and is prepared by the concerned shed and is sent to the exporter.
· Short Shipment Form - It is an application to the customs authorities at port
which advises short shipment of goods and required for claiming the return.
In India custom clearance is a complex and time taking procedure that every export face
in his export business. Physical control is still the basis of custom clearance in India
where each consignment is manually examined in order to impose various types of export
duties. High import tariffs and multiplicity of exemptions and export promotion schemes
also contribute in complicating the documentation and procedures. So, a proper
knowledge of the custom rules and regulation becomes important for the exporter. For
clearance of export goods, the exporter or export agent has to undertake the following
formalities:
Registration
Any exporter who wants to export his good need to obtain PAN based Business
Identification Number (BIN) from the Directorate General of Foreign Trade prior to
filing of shipping bill for clearance of export goods. The exporters must also register
themselves to the authorised foreign exchange dealer code and open a current account in
the designated bank for credit of any drawback incentive.
Registration in the case of export under export promotion schemes:
All the exporters intending to export under the export promotion scheme need to get their
licences / DEEC book etc.
Processing of Shipping Bill - Non-EDI:
In case of Non-EDI, the shipping bills or bills of export are required to be filled in the
format as prescribed in the Shipping Bill and Bill of Export (Form) regulations, 1991. An
exporter need to apply different forms of shipping bill/ bill of export for export of duty
free goods, export of dutiable goods and export under drawback etc.
Processing of Shipping Bill - EDI:
Under EDI System, declarations in prescribed format are to be filed through the Service
Centers of Customs. A checklist is generated for verification of data by the
exporter/CHA. After verification, the data is submitted to the System by the Service
Center operator and the System generates a Shipping Bill Number, which is endorsed on
the printed checklist and returned to the exporter/CHA. For export items which are subject
to export cess, the TR-6 challans for cess is printed and given by the Service Center to

34
the exporter/CHA immediately after submission of shipping bill. The cess can be paid on
the strength of the challan at the designated bank. No copy of shipping bill is made
available to exporter/CHA at this stage.
Quota Allocation
The quota allocation label is required to be pasted on the export invoice. The allocation
number of AEPC (Apparel Export Promotion Council) is to be entered in the system at
the time of shipping bill entry. The quota certification of export invoice needs to be
submitted to Customs along-with other original documents at the time of examination of
the export cargo. For determining the validity date of the quota, the relevant date needs to
be the date on which the full consignment is presented to the Customs for examination
and duly recorded in the Computer System.
Arrival of Goods at Docks:
On the basis of examination and inspection goods are allowed enter into the Dock. At this
stage the port authorities check the quantity of the goods with the documents.
System Appraisal of Shipping Bills:
In most of the cases, a Shipping Bill is processed by the system on the basis of
declarations made by the exporters without any human intervention. Sometimes the
Shipping Bill is also processed on screen by the Customs Officer.
Customs Examination of Export Cargo:
Customs Officer may verify the quantity of the goods actually received and enter into the
system and thereafter mark the Electronic Shipping Bill and also hand over all original
documents to the Dock Appraiser of the Dock who many assign a Customs Officer for
the examination and intimate the officers‟ name and the packages to be examined, if any,
on the check list and return it to the exporter or his agent. The Customs Officer may
inspect/examine the shipment along with the Dock Appraiser. The Customs Officer enters
the examination report in the system. He then marks the Electronic Bill along with all
original documents and check list to the Dock Appraiser. If the Dock Appraiser is
satisfied that the particulars entered in the system conform to the description given in the
original documents and as seen in the physical examination, he may proceed to allow "let
export" for the shipment and inform the exporter or his agent.
Stuffing / Loading of Goods in Containers
The exporter or export agent hand over the exporter‟s copy of the shipping bill signed by
the Appraiser “Let Export" to the steamer agent. The agent then approaches the proper

35
officer for allowing the shipment. The Customs Preventive Officer supervising the
loading of container and general cargo in to the vessel may give "Shipped on Board"
approval on the exporter‟s copy of the shipping bill.
Amendments:
Any correction/amendments in the check list generated after filing of declaration can be
made at the service center, if the documents have not yet been submitted in the system
and the shipping bill number has not been generated. In situations, where corrections are
required to be made after the generation of the shipping bill number or after the goods
have been brought into the Export Dock, amendments is carried out in the following
manners.
Drawal of Samples:
Where the Appraiser Dock (export) orders for samples to be drawn and tested, the
Customs Officer may proceed to draw two samples from the consignment and enter the
particulars thereof along with details of the testing agency in the ICES/E system. There is
no separate register for recording dates of samples drawn. Three copies of the test memo
are prepared by the Customs Officer and are signed by the Customs Officer and
Appraising Officer on behalf of Customs and the exporter or his agent. The disposal of
the three copies of the test memo is as follows:-· Original – to be sent along with the
sample to the test agency.
· Duplicate – Customs copy to be retained with the 2nd sample.
· Triplicate – Exporter‟s copy.
The Assistant Commissioner/Deputy Commissioner if he considers necessary, may also
order for sample to be drawn for purpose other than testing such as visual inspection and
verification of description, market value inquiry, etc.

1. The goods have not yet been allowed "let export" amendments may be
permitted by the Assistant Commissioner (Exports).
2. Where the "Let Export" order has already been given, amendments may be
permitted only by the Additional/Joint Commissioner, Custom House, in
charge of export section.
In both the cases, after the permission for amendments has been granted, the Assistant
Commissioner / Deputy Commissioner (Export) may approve the amendments on the
system on behalf of the Additional /Joint Commissioner. Where the print out of the

36
Shipping Bill has already been generated, the exporter may first surrender all copies of
the shipping bill to the Dock Appraiser for cancellation before amendment is approved
on the system.
Export of Goods under Claim for Drawback:
After actual export of the goods, the Drawback claim is processed through EDI system
by the officers of Drawback Branch on first come first served basis without feeling any
separate form.
Generation of Shipping Bills:
The Shipping Bill is generated by the system in two copies- one as Custom copy and one
as exporter copy. Both the copies are then signed by the Custom officer and the Custom
House Agent.

INVISIBLE EXPORT
Invisible export is the part of international trade that does not involve the transfer of goods
or tangible objects, which mostly include service sectors like banking, advertising,
copyrights, insurance, consultancy etc. invisible export also known as invisible trade is
basically associated with the person‟s own skill and knowledge is what is 'sold' rather
than a piece of software or books.
Invisible trade is composed of invisible imports and invisible exports. Since nothing
tangible is transferred, the importer is defined as the person, group or country that
receives the service. The exporter is defined as the supplier of the service. The net total
of a country's invisible imports and invisible exports is called the invisible balance of
trade and is a part of the country's balance of trade. For countries that rely on service
exports or on tourism, the invisible balance is particularly important.

Export Performance of the Indian service Industry

An analysis of the consultancy contracts secured by Indian project in the foreign market
has been carried out by Exim Bank of India. As per the analysis, done during 1995-96 to
2000-01 indicates that consultancy contracts were secured largely in West Asia which
accounted for 39% number wise and 46% value wise followed by South East Asia and
Pacific & South Asia.
South East Asia constituted 22% both by number and by value whereas South Asia was
18% number wise and 16% value wise. According to the 2002 data of the Federation of

37
 Indian Export Organizations (FIEO), India's share in global trade in services was about
1.3%. India‟s share of consultancy exports is about 0.5% of global trade in services.

Government Initiatives
In the recent years the Government of India has take some important step for the
improvement of service based export. The Foreign Trade Policy, 2004 – 09 is one of
them, which has announced the setting up of Services Export Promotion Council for
promoting the Indian service sector in the foreign market. Government of India has also
introduced Market Development Assistance (MDA), Market Access Initiative (MAI)
scheme, proactive EXIM Policy and EXIM Bank schemes. Government also provides
exemption on service tax for export of consultancy services. However due to lack of
clarity in the provisions in the present notification, consultancy export may be affected.
Strengths and Weaknesses of Indian Consulting Industry
· The major strengths of Indian invisible export or invisible trade include
professional competence, low cost structure, diverse capabilities, high
adaptability and quick learning capability of Indian consultants.
· The major weaknesses of Indian invisible trade or invisible export include low
quality assurance, low local presence overseas, low equity base, lack of market
intelligence and low level of R&D.

38
EXPORT PROMOTION COUNCILS/ ORGANISATIONS.
Introduction
In India there are a number of organisation and agencies that provides various types of
support to the exporters from time to time. These export organisations provides market
research in the area of foreign trade, dissemination of information arising from its
activities relating to research and market studies. So, exporter should contact them for the
necessary assistance.
Export Promotion Councils (EPC)
Export Promotion Councils are registered as non -profit organisations under the Indian
Companies Act. At present there are eleven Export Promotion Councils under the
administrative control of the Department of Commerce and nine export promotion
councils related to textile sector under the administrative control of Ministry of Textiles.
The Export Promotion Councils perform both advisory and executive functions. These
Councils are also the registering authorities under the Export Import Policy, 2002-2007.
Commodity Boards
Commodity Board is registered agency designated by the Ministry of Commerce,
Government of India for purposes of export-promotion and has offices in India and
abroad. There are five statutory Commodity Boards, which are responsible for
production, development and export of tea, coffee, rubber, spices and tobacco.
Federation of Indian Export Organisations (FIEO)
FIEO was set up jointly by the Ministry of Commerce, Government of India and private
trade and industry in the year 1965. FIEO is thus a partner of the Government of India in
promoting India‟s exports.
Address: Niryaat Bhawan, Rao Tula Ram Marg, Opp. Army Hospital. Research &
Referral, New Delhi 110057

39
Indian Institute of Foreign Trade (IIFT)
The Indian Institute of Foreign Trade (IIFT) was set up in 1963 by the Government of India as an
autonomous organisation to help Indian exporters in foreign trade management and increase
exports by developing human resources, generating, analysing and disseminating data and
conducting research. Address: B-21 Kutub Institutional Area, Mehrauli Road, New Delhi-110016
Indian Institution of Packaging (IIP)
The Indian Institute of Packaging or IIP in short was established in 1966 under the Societies
Registration Act (1860). Headquartered in Mumbai, IIP also has testing and development
laboratories at Calcutta, New Delhi and Chennai. The Institute is closely linked with international
organisations and is recognized by the UNIDO (United Nations Industrial Development
Organisation) and the ITC (International Trading Centre) for consultancy and training. The IIP is
a member of the Asian Packaging Federation (APF), the Institute of Packaging Professionals
(IOPP) USA, the Insitute of Packaging (IOP) UK, Technical Association of PULP AND Paper
Industry (TAPPI), USA and the World Packaging Organisation (WPO). Address: B-2, MIDC
Area, P.B. 9432, Andheri (E), Mumbai 400096.
Export Inspection Council (EIC)
The Export Inspection Council or EIC in short, was set up by the Government of India
under Section 3 of the Export (Quality Control and Inspection) Act, 1963 in order to
ensure sound development of export trade of India through Quality Control and
Inspection.
Address: 3rd Floor, ND YMCA, Cultural Centre Bldg., 1, Jai Singh Road, New
Delhi-110001.

Indian Council of Arbitration (ICA)

The Indian Council for Arbitration (ICA) was established on April 15, 1965. ICA provides
arbitration facilities for all types of Indian and international commercial disputes through its
international panel of arbitrators with eminent and experienced persons from different lines of
trade and professions. Address: Federation House, Tansen Marg, New Delhi-110001

India Trade Promotion Organisation (ITPO)

ITPO is a government organisation for promoting the country‟s external trade. Its promotional
tools include organizing of fairs and exhibitions in India and abroad, Buyer-Seller Meets, Contact
Promotion Programmes, Product Promotion Programmes, Promotion through Overseas
Department Stores, Market Surveys and Information Dissemination. Address: Pragati Bhawan
Pragati Maidan, New Delhi-10001
40
Chamber of Commerce & Industry (CII)
CII play an active role in issuing certificate of origin and taking up specific cases of exporters to
the Govt.
Federation of Indian Chamber of Commerce & Industry (FICCI)
Federation of Indian Chambers of Commerce and Industry or FICCI is an association of business
organisations in India. FICCI acts as the proactive business solution provider through research,
interactions at the highest political level and global networking.
Address: Federation House, Tansen Marg, New Delhi-110001
Bureau of Indian Standards (BIS)
The Bureau of Indian Standards (BIS), the National Standards Body of India, is a statutory body
set up under the Bureau of Indian Standards Act, 1986. BIS is engaged in standard formulation,
certification marking and laboratory testing.
Address: 9, Manak Bhavan, Bahadur Shah Zafar Marg, New Delhi-110002
Textile Committee
Textile Committee carries pre-shipment inspection of textiles and market research for textile yarns,
textile machines etc.
Address: Textile Centre, second Floor, 34 PD, Mello Road, Wadi Bandar, Bombay-400009

Marine Products Export Development Authority (MPEDA)

The Marine Products Export Development Authority (MPEDA) was constituted in
1972 under the Marine Products Export Development Authority Act 1972 and plays
an active role in the development of marine products meant for export with special
reference to processing, packaging, storage and marketing etc.
Address: P.B No.4272 MPEDA House, pannampilly Avenue, Parampily Nagar,
Cochin-682036

India Investment Centre (IIC)

Indian Investment Center (IIC) was set up in 1960 as an independent organization, which is under
the Ministry of Finance, Government of India. The main objective behind the setting up of IIC
was to encourage foreign private investment in the country. IIC also assist Indian Businessmen for
setting up of Industrial or other Joint ventures abroad. Address: Jeevan Vihar, 4th Floor,
Parliament Street, New Delhi-110001
Directorate General of Foreign Trade (DGFT)
DGFT or Directorate General of Foreign Trade is a government organisation in India
41
responsible for the formulation of guidelines and principles for importers and
exporters of country.
Address: Udyog Bhawan, H-Wing, Gate No.2, Maulana Azad Road, New Delhi
-110011
Director General of Commercial Intelligence Statistics (DGCIS)
DGCIS is the Primary agency for the collection, compilation and the publication of the foreign
inland and ancillary trade statistics and dissemination of various types of commercial informations.
Address: I, Council House Street Calcutta-700001,

Key Manufacturing Processes for Castor Oil & Derivatives

Castor Oil Production – Overall Concept
Castor plant grows wild in many tropical countries wher it is considered native. It is grown
commercially in plantations for oil, in countries like India, China and Brazil. The seeds contain about
48-50 percent oil by weight.

42
To extract the oil they must be crushed and pressed.
The oil thus extracted is purified, and the purified oil is further refined.
Modification of the refined oil to produce various grades and derivatives is achieved by a variety of
chemical processes including oxidation, hydrogenation and thermal treatments to produce derivatives for
specific applications.
The four main stages thus in the production of castor oil, castor oil grades and derivatives are:
a. Extraction of oil
b. Purification of the extracted oil
c. Refining the purified oil
d. Performing chemical reactions on the refined oil to produce various grades and
derivatives
This chapter dwells into each of the above four in depth.
Castor Oil Manufacturing Processes - Summary
This section provides a summary of each of the four processes, viz., Extraction, Filtration/Purification,
Refining, and Grades & Derivatives Production. The following section provides extensive details on
each of the four.
Castor Oil Extraction - Summary
Extraction of oil from castor seeds is done in a manner similar to that for most other oil seeds.
The ripe seeds are allowed to dry, when they split open and discharge the seeds.
The seeds are dehulled after harvesting. Dehulling can be done by hand (laborious) or, more commonly,
by machine. Small-scale hand-operated dehullers are also available. The dehulled seeds are cleaned,
cooked and dried prior to oil extraction. Cooking is done to coagulate protein (necessary to permit
efficient extraction), and for efficient pressing.
The first stage of oil extraction is pre-pressing, normally using a high pressure continuous screw press –
called the expeller. Extracted oil is filtered, and the material removed from
the oil is fed back into the stream along with fresh material. Material finally discharged from the
press, called castor cake, contains 8-10% oil. It is crushed into a coarse meal, and subjected to
solvent extraction with heptane to extract further oil.

Castor Oil Filtration & Purification - Summary

Once the oil has been extracted from the seed, it is necessary to remove impurities present in the
oil. The filtration systems are designed to remove particulates, water, dissolved gases, and acids.
The equipment that is normally used for filtration is a filter press.
Castor Oil Refining - Summary

43
The filtered oil (called the crude or unrefined oil) is sent to the oil refinery. The steps to refine the
crude oil include:
. Settling and Degumming of the Oil - Done to remove the aqueous phase from the lipids, and to
remove phospholipids from the oil.
. Neutralization - The neutralization step is necessary to remove free fatty acids from the oil.
. Bleaching - Bleaching results in the removal of coloring materials, phospholipids and
oxidation products.
. Deodorization of the oil - Deodorization results in the removal of odour from the oil
Typical Processes & Equipments of Castor Oil Refinery Plants

Process Methods Involved Equipments Used

Degumming . Single stage Phosphoric acid Gums tank
treatment • Single stage hot water
treatment
Neutralization • Alkali/ Chemical method Neutralizer
• Steam Stripping Soap/gums tank
Water/oil/gravity separator
Lye/brine/hot water tank
Neutralized oil tank
Oil pump
Dewaxing . Removal of high melting point waxes Crystallizers
Soap stock pump
Rotary drum
Hot water vacuum filter Filter
pump
presses made out of
polypropylene plate Frame

Bleaching . Removal of pigments from fats and filters

Bleacher
oils Barometric condenser Earth
dozer Bleached oil tank Filter
press Filter pump Vacuum
pump

Deodorization . Steam distillation under high vacuum Falling film deodorizer

Storage tank
Cooler
Polish filter
Pump
Vacuum system
44
Castor Oil Grades & Derivatives Production
While castor oil by itself is used in diverse applications, chemical derivatives of castor oil find
numerous uses in industrial applications and their domains of use are increasing rapidly.
The global market for generation II castor oil derivatives, which include sebacic acid,
undecyclenic acid, heptaldehyde, polyols and dimer acid, is estimated at about $300 million. For
generation III derivatives, where half of the generation II derivatives are converted, the estimated
market worth is close to $350 million.
Generation III derivatives include the esters and salts of generation II derivatives as well as
derivatives such as methyl-12-hydroxystearate while generation I derivatives include
hydrogenated castor oil, 12-hydroxy stearic acid, dehydrated castor oil acid, and ethoxylated
castor oil among others.
Quite naturally, the prices and profit margins of higher generation castor derivatives are
significantly higher than the basic grades. The generation I derivatives such as HCO and 12-HSA
respectively cost about 20% and 50% more than the basic castor oil grades.
Key Derivatives of Castor Oil, Starting Products & Methods of Production

Product Name Starting Product Method of Production

Commercial Castor Oil Castor Seed Crushing & Expelling
First pressed Degummed Grade Commercial Castor Oil Degumming
Castor Oil
Refined Castor Oil Commercial Castor Oil Bleaching
(F.S.G./B.S.S.)
Refined Castor Oil (Extra Pale Commercial Castor Oil Bleaching
Grade)
Refined Castor Oil (Pale Commercial Castor Oil Neutralization and Bleaching
Pressed Grade)
Neutralized Castor Oil Commercial Castor Oil Neutralization and Bleaching
Refined Castor Oil (DAB-10) Commercial Castor Oil Neutralization and Bleaching

Castor Oil Pharmaceutical Commercial Castor Oil Neutralization

(I.P/B.P./U.S.P.)
Turkey Red Oil Commercial Castor Oil Sulphonation and
Neutralization
Blown Castor Oil (10 to 250 Poise) Refined Castor Oil Oxidation
(F.S.G./B.S.S.)
Ricinoleic Acid Refined Castor Oil Saponification and
(F.S.G./B.S.S.) Acidification
45
Methyl Ricinoleate Refined Castor Oil Esterification
(F.S.G./B.S.S.)
Hydrogenated Castor Oil Refined Castor Oil Hydrogenation
(Flakes/Powder/Granules) (F.S.G./B.S.S.)
12-Hydroxy Stearic Acid (12- Hydrogenated Castor Oil Liquid Saponification and
H.S.A.) (Flakes/Powder/Granules) Acidification
Methyl-12-Hydroxy Stearate Methyl Ricinoleate Hydrogenation
(Flakes)
Urethane Modified Castor Oil Refined Castor Oil Urethane Reaction
(UMCO) (F.S.G./B.S.S.)
Glyceryl-Tri-(12-Acetyl Refined Castor Oil Acetylation
Ricinoleate) (F.S.G./B.S.S.)
Dehydrated Castor Oil Commercial Castor Oil Dehydration
(Commercial)
Glycerin Spent Glycerin Lye Treatment, Evaporation and
Distillation
Generic Chemical Reactions of Castor Oil for Manufacture of Various Grades & Derivatives

Reaction Type Nature of Reaction Added Reactants Type of Products

Ester Linkage Hydrolysis Acid, enzyme or Fatty acids, glycerol
Twitchell reagent
Esterification catalyst
Monohydric alcohols Esters

Alcoholysis Glycerol, glycols, Mono- and

pentaerythritol, and diglycerides,
Saponification other compounds
Alkalies, alkalies plus monoglycols,
Soluble etc.soaps,
metallic salts insoluble soaps
Reduction Na reduction Alcohols
Amidation Alkyl amines, Amine salts, amides
alkanolamines, and other
Double Bond Oxidation, compounds
Heat, oxygen, Polymerized oils
polymerization crosslink agent
Hydrogenation Hydrogen Hydroxystearates
(moderate
pressure)

Epoxidation Hydrogen peroxide Epoxidized oils

Halogenation Cl2, Br2, I2 Halogenated oils

46
 Addition reactions S, maleic acid Polymerized oils,
factice
Sulphonation H2SO4 Sulphonated oils
Hydroxyl Group Dehydration, Catalyst (plus heat) Dehydrated castor oil,
hydrolysis, octadecadienoic acid
distillation
Caustic fusion NaOH Sebacic acid, capryl
alcohol
Pyrolysis High heat Undecylenic acid,
heptaldehyde
Halogenation PCl5, POCl3 Halogenated castor oils

Alkoxylation Ethylene and/or Alkoxylated castor oils

propylene oxide
Esterification Acetic-, phosphoric, Alkyl and alkylaryl
maleic-, phthalic esters, phosphate esters

Urethane reactions anhydrides

Isocyanates Urethane polymers
Sulphation H2SO4 Sulphated castor oil
(Turkey red oil)

Indicative Costs for Setting up Small and Medium Scale Castor Oil & Derivatives
Manufacturing Plants
The earlier section provided detailed inputs on equipments and processes required in the manufacture of
castor oil and derivatives. We provide brief inputs here on the cost of setting up a castor oil and castor
oil derivatives plant. Please note that these are indicative costs based on experiences of setting up similar
plants in India. All costs are based on inputs provided in the year 2009.
Typical cost structures for castor oil plants are provided below. These are only indicative numbers
provided solely for completeness. A detailed costing of castor oil plant details is beyond the scope of
this report.

47
Name Capacity TCI Cost - US $ Mill

Castor Oil 1 TPD 0.05-0.06

Castor Oil 2 TPD 0.10
Castor Oil 10 TPD 1.0
Commercial
Castor Oil 30 TPD 2.75
Commercial
Hydrogenated Castor 10 TPD 0.7
Oil
Sebacic Acid from 0.5 TPD 0.1
Castor Oil
Dehydrated Castor Oil 1 TPD 0.08

Castor Oil Emulsifier 0.2 TPD 0.03

Notes: TPD = Tons per Day, TCI is Total Capital Investment = Plant, Machinery & Factory
Infrastructure + Working Capital

Sources for data:

. Internal databases of eSource India comprising past quotations and commercial data .
Government of India and State Government of Gujarat Investment data
Assumptions & observations for the above cost table:
. Starting products will be procured from the best prices from outside and need not be prepared
internally.
. The reason behind TCI increasing disproportionately between 1 TPD and 10 TPD is owing to the
fact that a large part of work for a 1 TPD plant is done manually, which requires less capital
expenses. For higher production volumes, there are increased expenses on machinery and
automation that leads to a disproportionate increase in capital expenses and hence TCI.
.Capital Investment Costs include factory costs and cost of real estate

48
Value Chain for the Castor Industry
The following figure shows the value chain of the castor industry with different layers in the market
structure. The chart clearly indicates that the value chain involves many intermediaries. These
intermediaries prevent efficient price discovery and price dissemination.
Value Chain for Castor Industry

The Castor Oil Market

The world production of castor oil crop is concentrated in the hands of few countries and that is why
there are just a few exporters of castor oil fulfilling a large level of demand of the world.
The major exporters of castor oil are the leading producing countries of it namely India, China and
Brazil of which only India has been successfully meeting the domestic and the world requirements. The
country holds a share of 70% in the total exports. The other two countries have experienced an increase
in their domestic demand and hence are not capable of exporting a high quantity of oil. In Nov
2009, the Nigerian government announced that it was paying special attention to castor cultivation.
It announced that the Raw Materials Research and Development Council of Nigeria would
collaborate with farmers to boost castor production, while urging government to establish castor

49
seed plantation in the different states. Nigeria has a lot of castor seed which has great market
potential but the challenge is need of a factory to produce castor oil1.
Characteristics of Castor Seed and Oil Market
. Castor Seed Production - The world castor seed production is over 1 million tons per annum.
India is major producer with about 70% share, followed by China and Brazil with about 20% and
10 % respectively.
. Minor Players - Some of the other countries that are minor players in the castor oil market are:
Ecuador, Mexico, Paraguay, Pakistan, Philippines, Sudan, Indonesia, Thailand & Russia
. Increasing Demand - Castor oil has a demand worldwide that is constantly rising at 3 to 5 % per
annum.
. American Imports - America imports over 90% of their consumption. Castor plants have not
been farmed on a commercial scale in the United States since the early 1970s. (During the 1950s
and 1960s, approximately 85,000 acres of castor were grown annually in the United States. Since
then domestic production decreased and was abandoned in 1972).
. Uncertain Supply - The world castor seed production has fluctuated between 1.2 and 1.5 million
tons in the period of 2001 to 2007. India's production ranged between 0.8 and 1.1 million tons
during the same period.
. Substitutes - Recent developments of artificial substitutes of castor oil in the world market has
subjected the demand to large fluctuations. As castor seed production presents some problems
(toxicity of the seed, allergic reactions), Lesquerella species were proposed as a valuable source in
the USA (up to 70% in the oil) of ricinoleic acid and also of lesquerolic acid, the C20 homologue
of ricinoleic acid. It must be noted however that this species is still in the preliminary stage of use.
. Hoarding & Long Storing Period - It is a common practice for the castor seed growers and
crushers to hoard the commodity before selling in expectation for better prices
• Spot Market - There is a well-developed and organized spot market in India Volatile
•
Prices in the Indian Castor Oil Market - Castor seed and castor oil prices are highly
volatile with wide price fluctuations, and the uncertain market conditions discourage buyers from
making long-term commitments. Indian prices are not only unsteady, but there is also no way
overseas buyers can take a view of the market beyond the short-term. There is excessive
speculation rampant in the futures market which finds a ready reflection in the spot market.
Unless buyers are assured of steady and foreseeable prices, the dependence on India as a source of
castor oil supply could be diluted over time, according to some experts.

Brazil and China - traditional producers of castor seed and the only competitors to India - the two
countries have started to show signs of expanding their production base. Brazil has a National
50
Biodiesel Strategy which proposes castor as one of the feedstocks for biodiesel production.
Planting of Mamona (castor bean plant) is being promoted especially in the northeast and the
country has launched a biodiesel blending obligation program which proposes 2% by 2007 (800
M l/y), 5% by 2013 (2 B l/y), and goal of 20% by 2020 (12 B l/y). A total of 23 companies were
chosen by auction as biodiesel suppliers. Analyzing the raw materials used by the companies,
castor oil is used by 8 companies.
. European Market Consumers - Servicing the fastidious European market - mainly coating
industry - is not easy. Most buyers were highly demanding in terms of very specific, tailor-made
quality and delivery schedule including the time at which the lorry must enter the factory premises
and unload goods. This is not easy for Indian castor oil suppliers.
. India’s Lack of Castor Oil R &D - There is a distinct lack of investment in research and
development of castor oil in India. Experts feel that much of research and development work for
newer application of castor oil is mainly taking place in Europe and elsewhere.
. Major Castor Growing Countries in the Future - While it is currently just three countries - India,
Brazil & China - that are the top producers of castor seeds and oil, there are a few countries that
could become significant players in future. These include Ethiopia, Vietnam, Thailand,
Philippines, Sri Lanka and Tanzania.
. Because of widely fluctuating world supplies and the structure of the world market, prices for
castor oil vary considerably. This affects cash flow, makes corporate planning difficult, and
discourages investment in new products for many companies. These factors have encouraged
many companies to start finding substitutes for castor oil. For instance, in the USA, commercial
production of transgenic canola containing 15% ricinoleic acid has been explored.
• Market Influencing Factors in Castor Trade
. Variations in castor seed domestic acreage, based on yield and price realization
. Indian, Chinese and Brazilian crop sizes
. Crop development based on monsoon progress in key growing regions
. Domestic demand for castor oil from Indian companies
. Comparative prices with other vegetable oils in the domestic market

51
Supply & Demand of Castor Oil
Castor Oil Production (in ‘000 T)
Countries Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec
2009 2008 2007 2006 2005
Russia 1.0 1.0 1.0 1.0 1.0
Ethiopia 2.3 2.4 2.0 1.5 1.5
Brazil 42.5 52.3 43.3 48.7 70.2
China,PR 81.4 83.1 81.5 90.2 101.7
India 375.8 413.0 367.6 351.2 335.2
Thailand 5.4 5.7 5.6 5 4.5
Oth countries 24.4 23.8 22.5 21.9 21.2
Total 531.8 580.3 522.6 518.5 534.3
Source - CastorOil.in and derived from data obtained from sources such as Oilworld -
www.oilworld.biz
Observations from the Above Table
. Major countries producing castor oil are India, China, and Brazil.
. There is a significant difference in castor oil production among countries: India is by far
the largest producer of castor oil, contributing over 70% of the total production in 2009.
China and Brazil together contribute 23% of the total world production in castor oil
during 2009.

52
Castor Oil Imports (‘000 T)

Countries Jan-Dec Jan-Dec Jan-Dec 2007 Jan-Dec Jan-Dec 2005

2009 2008 2006
Belgium-Lux 0.9 0.5 0.3 0.4 0.3
Bulgaria 0.1 0.2 0.3 0.4 0.3
Czech Republ 0.1 0.2 0.3 0.2
Denmark 0.4 0.9 0.3 0.5
Finland 0.7 0.4 0.5 0.6 .
France 17.8 85.3 48.9 43.9 66.3
Germany 33.6 34.3 32.6 27.4 22.8
Ireland 0.1
Italy 1 0.6 1.3 3.6 6.5
Netherlands 24.6 15.3 19.3 14.8 15.3
Poland 0.1 0.2 0.2 0.2 0.1
Portugal 0.1 0.1 . . .
Slovenia . 0.1 . . .
Spain 2.4 2.5 3.5 3 3.3
Sweden 0.7 . 0.3 - .
U.K. 5.2 3.5 5 5.5 4.6
EU-27 87.2 143.5 113.3 100.4 120.2
Norway 0.1 0.1 0.1 0.1 0.1
Switzerland 4 5.6 5.6 5.8 4.2
Croatia 0.1 0.1 0.1 0.1 0.1
Serbia/Monten 0.1 0.2 0.1 0.2 0.1
Other Europe 4.3 6 5.9 6.2 4.5
Russia 1.8 2.4 2.2 2.2 3
Ukraine 0.6 0.7 1 0.7 1.2
C.I.S 2.4 3.1 3.2 2.9 4.2
S.Africa,Rep 2.1 2.4 2.8 2.2 1.9
Canada 5.5 4.6 2.9 3.3 2.2
U.S.A 32.1 48.8 44.3 45.9 41.8
Mexico 2.1 1.9 1.8 1.8 1.3
Brazil 8.8 6.8 3.7 . .
China,PR 124.2 73.4 70.4 79.5 53.6
Japan 13 19.4 19 17.6 26
Korea,South 4.4 5.8 4.6 3.9 4.5
Taiwan 2.1 2.8 3.7 2.9 2.9
Thailand 12 16.8 10.6 11.4 15

53
Turkey 2.1 4.8 2.7 2.1 1.9
Oth countries 10 8.7 9.9 8.7 8.5
Total 312.3 348.8 298.8 288.8 288.5

54
Source - CastorOil.in and derived from data obtained from sources such as Oilworld -
www.oilworld.biz
Observations from the Above Table
. Of the countries listed above, China was found to be the largest importer of castor oil. .
China imports about 40% of the total imports, followed by Europe (28%)
Castor Oil Exports (‘000 T)

Countries Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec

2009 2008 2007 2006 2005

Belgium-Lux 0.2 0.1 0.2 0.2 0.3

France 0.1 0.1 0.1 0.1 0.1
Germany 0.9 0.8 0.4 0.4 0.3
Netherlands 0.5 0.4 0.6 0.3 0.5
Spain 0.1 0.3 0.2 0.1 0.1
U.K. 0.1 0.1 0.2 0.1 0.1
EU-27 1.9 1.8 1.8 1.2 1.6
U.S.A 6.7 6.8 3.9 4 2.5
Brazil 0.9 0.2 0.7 4.2 11.8
India 280 315.5 270 255 245
Oth countries 20.9 22.7 20.7 23.2 26.2
Total 312.3 348.8 298.8 288.8 288.5
Source – CastorOil.in and derived from data obtained from sources such as Oilworld - www.oilworld.biz
Observations from the Above Table
. India is by far the largest castor oil exporter worldwide and it exports 70-75 percent of its total
production.
. Compared to 2008, exports from India decreased by more than 10 percent in 2009.

55
Summary of Production, Imports and Exports from Prominent Countries/Regions
2009 data (in „000 Tons)

Country Production

India 375.8
China 81.4
Brazil 42.5
Total 499.7
Country Imports
China 124.2
Europe (27) 87.2
USA 32.1
Japan 13
Thailand 12
Total 268.5
Country Exports
India 280
USA 6.7
EU (27) 1.9
Brazil 0.9
Total 289.5
Source – CastorOil.in and derived from data obtained from sources such as Oilworld - www.oilworld.biz

56
Indian Castor Oil Industry
India is the largest producer of castor seed and oil. It contributes about 1 million tons of castor seed
with and over 4,00,000 tons of castor oil to the world total production. The annual domestic
consumption of castor oil in India is only about 80,000-1, 00,000 tons. Of this, the soap industry
consumes about 25,000 tons, the paint and allied industries 35,000 tons and the lubricant and derivatives
industry 20,000 tons. In terms of % split between castor oil and derivatives, about 40% of castor oil
consumption in India is in the form of derivatives and 60% for the various castor oil grades. About
85% of total castor oil consumed in India is sold in bulk, the rest (about 15%) in retail.
Castor Oil Exports - Historical Scenario
Castor crop plays an important role in the agricultural economy of the earning substantial foreign
exchange through export of castor beans and oils. A significant part of India‟s castor oil production (over
70 per cent) is exported. The country annually exports about 300 thousand tons of castor oil thereby
earning foreign exchange worth US$ 170 – 200 million. India is the first country in the world to exploit
hybrid varieties on a commercial scale in this crop. Major markets include Europe, USA, Japan and now
China and Thailand.
Region-wise Export Statistics of Castor Oil (including derivatives, US$ Millions)

Region 2000-01 2001-02 2002-03 2004-05 2005-06 2006-07

East Asia 53.7 41.1 28.8 85.8 70.8 90.6
South Asia 1.2 0.5 1.0 0.7 1.4 0.9
West Asia 1.7 2.0 2.6 2.6 3.8 4.9
Africa 2.3 1.6 2.1 2.8 3.3 4.4
East Europe 13.6 13.7 7.0 3.3 3.4 3.1
West Europe 110.1 65.1 57.7 113.5 88.9 102.4
North America 39.4 18.4 14.4 30.4 36.5 33.6
Latin America 0.3 0.6 0.6 0.5 0.8 0.8
Total 221.6 145.1 120.9 239.5 208.9 240.9
Source: Pharmexcil India
Note: Values derived based on US$/Re exchange rates at respective years.

57
 Castor Oil Exports – Current Scenario
Indian Export of Castor Oil (Excluding Derivatives)

Year Volume (MT) Value (Rs Crore ) Value per T (Rs / T)

1998-99 193,913 595.98 30734

99-00 234,824 897.56 38223
00-01 227,033 806.07 35505
01-02 204,877 556.22 27149
02-03 163,862 520.85 31786
03-04 161,619 603.27 37327
04-05 208,176 788.56 37879
05-06 182,159 627.43 34444
06-07 195,610 653.05 34995
07-08 176,177 757.29 42985
08-09* 308,625 1821.57 59022

Notes:
(1) 1 $US= Rs 45 approx. in Mar 2010. There have been significant fluctuations in the US$/INR rate
during this period; * - including bulk and container
(2) Please note that all the above data are for exports that do not include the castor oil derivatives, but
only the main grades of castor oil.
Castor Oil Current Data - Countries Exported to by India
Countries that currently import castor oil from India are
. European Union
. USA
. Japan
. Thailand
. China
Castor Oil Export Percentages to Various Regions from India (2006-2007) (excluding
derivatives)

Region % Exports Volume of Exports (MT)

W Europe 45 87750
E Asia 25 48750
N America 20 39000
58
E Europe 5 9750
Africa 3 5850
Latin America 2 3900
Break-up of castor oil and castor oil derivatives in India’s exports
An approximate estimate is provided below for the break-up of castor oil & castor oil derivatives
exports. This % has been derived from statistics on India‟s exports over the last 5 years.
. Castor oil grades: 80% . Castor oil derivatives: 20%
Castor Seed Production and Acreage in India
Castor Growing Areas in India & its Production
Castor grows under tropical conditions. It needs heat and humidity and does best in regions where
both are ample. India, gifted with an ideal climatic condition, has recorded the largest produce of
castor seed in the last few decades.
The states in India that are the major producers of castor are
. Gujarat
. Andhra Pradesh
. Rajasthan
. Karnataka
. Orissa
. Tamil Nadu
. Maharashtra
The Indian state of Gujarat produces over 65% of the total castor seeds in India followed by
Andhra Pradesh and Rajasthan which contribute about equal share. In Gujarat, Castor cultivation
comprise 6 districts of North Gujarat, viz., Mehsana, Banaskantha, Sabarkantha, Gandhinagar,
Ahmedabad and Kutch, with the first two being the two most important.
Andhra Pradesh relies on the districts of Nalgonda, Mehboobnagar, Prakasam, Guntur and Ranga
Reddy for the production of castor seeds.
State % Share of Production of Castor Oil in India (2006 - 07, estimate)

State % Share of Production

Gujarat 66
Rajasthan 14
Andhra Pradesh 12.5
Karnataka 3.2
Tamilnadu 1.4
Maharashtra 1.6
Major Trading Centers of Castor in India
The major trading centers of castor and its derivatives in India are:

59
. Rajkot (Gujarat)
. Ahmedabad (Gujarat)
. Gondal (Gujarat)
. Gadwal (Gujarat)
. Bhabar (Gujarat)
. Disa (Gujarat)
. Kadi (Gujarat)
. Jedcherla (Andhra Pradesh)
. Yemignoor(Andhra Pradesh)
Castor Seed Acreage and Production in India
Area ('000 ha) Production ('000 tonnes) Yield (kg/ha)
637 308 480
810 716 880
880 930 1060
776 770 990
810 800 990
835 840 1070
782 765 979
1080 883 818
716 652 911
583 428 733
712 796 1111
743 793 1068
864 990 1146
628 762 1213
786 1053 1339
840 1114 1326

Source: Ministry of Agriculture, GOI

60
 India-wide Data from Castor Crop Survey 2008-09 Conducted by: The Solvent Extractors’
Association of India & A.C.Nielsen
Gujarat
. Total area under Castor crop in Gujarat for the year 2009-10 is 4.37 lakh hectares. It has
decreased by 3% as compared to previous year. Area under Castor crop has increased in all the
major castor growing districts except Ahmedabad, Patan, Rajkot, Surendranagar and Vadodara.
. Estimated total production of Castor Seeds in Gujarat for the year 2009-10 is 7.34 lakh tonnes,
it has increased by merely 1% as compared to previous year. However this growth is mainly in the
districts such as Vadodara (28%), Ahmedabad (24%), Rajkot (19%), Patan (16%) districts and
Sabarkantha (8%).
. Average yield for the year 2009-10 is 1679 kg/hectare as against 1608 kg/hectare during the
year 2008-09.
Rajasthan
• Total area under Castor crop in Rajasthan for the year 2009-10 is 1.18 lakh hectares. It has
decreased by 7% as compared to previous year. This year, area under Castor crop has mainly
decreased in Hanumangarh (43%) and other major district is Sirohi (4%). Where as the area under
crop is increased in Pali district by 10%.
• Estimated total production of Castor Seeds in Rajasthan for the year 2009-10 is 1.26 lakh tonnes.
It has decreased by 8% as compared to previous year. Production in Hanumangarh and Sirohi
district has decreased by 66% and 18% respectively as compared to previous year. As against this,
the production in Pali, Jodhpur, Barmer and Jalore districts has increased this year.
• Average yield for the year 2009-10 is 1065 kg/hectare, which is 1% lower than previous year.
Yield has mainly decreased in Hanumangarh and Sirohi districts. Last year also yield was lower
than the average yield of Rajasthan
Andhra Pradesh
• Total area under Castor crop in Andhra Pradesh for the year 2009-10 is 1.35 lakh hectares. It has
decreased by 30% as compared to previous year. Area under Castor crop has decreased in all
other districts of Andhra Pradesh this year except Kurnool. Similar trend has observed in last year
also. Since last 2-3 years, area under Castor crop in Andhra Pradesh is continuously decreasing.
• Estimated total production of Castor Seeds in Andhra Pradesh for the year 2009-10 is 0.44 lakh
tonnes. It has decreased by 38% as compared to previous year due to decrease in area and yield.
• Average yield for the year 2009-10 is 325 kg/hectare, which is 12% lower than the previous year.

61
 All India
• Total area under Castor crop in India for the year 2009-10 is 7.40 lakh hectares. It has decreased
by 10% as compared to previous year.

• Estimated total production of Castor Seeds in India for the year 2009-10 is 9.34 lakh tonnes. It
has decreased by 4% as compared to previous year.
• Average yield for the year 2009-10 is 1261 kg/hectare as against 1180 kg/hectare during the year
2008-09. It has increased by 7% as compared to previous year.
• State–wise Area, Yield and Production of Castor Seeds in India (2009-10)
District Estimated Area Under Crop * Estimated Production
Estimated Yield *
('000 ha.) * (Kg/ha.)
2008-09 2009- % ( '000 tonnes)
2008-09 2009- % 2008- 2009-10 %
10 Change 10 Change 09 Change
Gujarat 451 437 -3% 725 734 1% 1608 1679 4%
Rajasthan 127 118 -7% 137 126 -8% 1076 1065 -1%
Andhra 192 135 -30% 71 44 -38% 369 325 -12%
Pradesh
Other States 56 50 -11% 43 30 -30% 760 600 -21%
#
Total 826 740 -10% 976 934 -4% 1180 1261 7%
* Nielsen India estimates; # Secondary source
Source: http://www.seaofindia.com/castoroil_data/Castor%20Crop%20Survey_2009-10.pdf

India’s Status in the Global Castor Oil Industry

As mentioned earlier, India is the undisputed leader in castor oil production. India supplies over
70% of the total production of castor oil in the world.
However, India‟s castor oil exports for 2007-08 were about $ 170 million, which is not a very
large value given the potential for this industry.
There are two reasons for this low quantum of export revenues:
. The total amount of castor oil production worldwide (and thus by India), is relatively
very low when compared to production of other seed-oils. . A large percentage of India‟s
castor oil exports are the basic commodity grades with very
little value addition.

62
The total volume of oils and fats produced was about 145 million T in 2007-08, among which oils from
oilseeds would be about 120 MT (CastorOil.in estimate).
One can see that castor oil has less than 0.5% of total world market for oils from oilseeds.
Admittedly, one cannot compare castor oil volumes with the volumes of oils such as palm oil or soybean oil
because these are edible oils and hence they have much larger usage and demand in the food market.
However, the fact that an oil with use as versatile as that of castor oil has a share of less than 0.5%
shows what tremendous potential it has for future growth.
Low Value Addition by the Indian Castor Oil Industry
The basic grades of castor are the commercial grade, first special grade etc.

The basic and generation I derivatives are essentially considered commodities and incorporate small
value additions, and provide thin margins (in the range of 5%). The value additions and profit margins for
generation II & III derivatives are significantly higher and these are very attractive.
The combined revenue potential from the generation II & III derivatives is about $650 million.
Data based on 2007-08 exports show that generation II & III derivatives accounted for less than 20% of
India‟s castor oil exports (by value). It is estimated that value for generation III derivatives alone will be
almost an insignificant percentage of the total Indian castor oil exports.
What is the Existing & Current Potential that the Indian Castor Industry Should Capitalize On?
Compare $650 million to $175-200 million - the value of India‟s castor oil exports - and the value is India
is losing out becomes clear. In spite of being the largest castor oil exporter by far (75% of global exports),
India is able to capture only about 25% of the total value from the market.
Thus, while India could gain a lot more from both higher production of castor oil as well as
higher value addition, it is most likely that a higher focus on value added products will be the most optimal
method for the short and medium term, owing to a number of structural and market related factors.

63
Demand - Supply Estimates for Castor Oil Derivatives
According to the industry nomenclature, generation I derivatives include hydrogenated castor oil, 12-
hydroxy stearic acid, dehydrated castor oil acid, and ethoxylated castor oil among others. Generation II
castor oil derivatives include sebacic acid, undecyclenic acid, heptaldehyde, polyols and dimer acid.
Generation III derivatives include the esters and salts of generation II derivatives as well as derivatives such
as methyl-12-hydroxystearate.
The global market for generation II castor oil derivatives is estimated at $300 million (based on 2007 data).
For generation III derivatives, where half of the generation II derivatives are converted, the estimated
market worth is close to $350 million (based on 2007 data).
Overall, the castor oil and derivatives industry have shown an average demand growth of about 4% per
annum for the period 2000-2007. While the demand for castor oil and castor oil derivatives is on the
increase, except for some of the derivatives such as HCO, 12-HSA, the demand is quite relatively low in
quantities for reliable data availability. Data availability for demand and supplies for many of these
derivative chemicals is sparse as well.
The following table provides qualitative estimates of worldwide demand and demand-supply gaps for
the various grades and derivatives of castor oil. While we have made an attempt at quantifying the
qualitative benchmarks at the end of the table, the numbers should be taken more as intelligent
estimates rather than as official data, because there are no official data available for specific grades and
derivatives of castor oil.
It is requested that the following data hence be considered as approximate and qualitative estimates. These
have been computed based on secondary data, industry interactions, and transactions done by
CastorOil.in in the past 4 years.
Current Demand-Supply Estimates for the Various Grades of Castor Oil and Derivatives
Product Demand Current Demand Supply
Gap
Castor Seed High Medium
Castor Meal / Castor Residue High High
Hydrogenated Castor Oil (HCO) Medium Medium
12 Hydroxy Stearic Acid (12 HSA) Medium Medium
Methyl 12 HSA (Hydroxy Stearate Acid) Low-Medium Medium
Blown Castor Oil Low-Medium Medium
Sulfated/Sulfonated Castor Oil, Turkey Red Oil Medium Medium
COLM (Urethane Grade) Medium-High Medium-High
Commercial Grade Castor Oil Very High Medium
BP Grade Castor Oil Medium Medium

64
Deodorized/Deodourised Castor Oil Medium Medium
European Pharmacoepia Grade Castor Oil Medium Medium
Extra Pale Grade Caster Oil Low Medium
Pale Pressed Grade (PPG) Grade Caster Oil Medium Medium
First Pressed Degummed Castor Oil Medium-High Medium
First Special Grade (FSG) Castor Oil Very High Medium
United States Pharmacopia (USP) Castor Oil High Medium
Dehydrated Castor Oil (DCO) Medium-High Medium
Ethoxylated Castor Oil Medium High
C 3 Derivatives of Castor Oil
Glycerine Very High Low
C-7 Derivatives of Castor Oil
Heptanoic Acid Low Medium
Heptaldehyde Low Medium
Heptyl Alcohol (Heptanol) Low Medium
C 11 Derivatives of Castor Oil
Undecylenic Acid Very High1 Very High1
Undecanoic Acid Low NA
Undecylenic Aldehyde Low NA
Undecylenic Alcohol Low NA
Calcium Undecylenate Low NA
Zinc Undecylenate Low NA
Allyl Undecylenate Low NA
Sodium Undecylenate Low NA
Methyl Undecylenate Low NA
Ethyl Undecylenate Low NA
C 18 Derivatives of Castor Oil
Esterols Not known NA
Ricinoleic Acid Medium Medium
Methyl Ricinoleate Low-Medium Medium
Sebacic Acid Very High2 Medium-High
2-Octanol Low Medium

A very large percentage of Undecylenic Acid is used by Arkema to manufacture Nylon 11 Large
percentage of Sebacic acid is used for the manufacture of Nylon 6
Notations for Demand
Very High: 50,000 T and above per year High: 30,000 - 50,000 T per year
Medium-High: 15,000-30,000 T per year Medium: 5,000-15,000 T per year
Low-Medium: 1,000-5,000 T per year Low: Less than 1,000 T per year

65
Notations for Demand-Supply Gap
Medium: There exists some demand over and above supply, but there has not been a significant
amount of demand that has gone unmet
Medium-High: There have been some instances where a significant demand has gone unmet
High: There have been many instances where a significant demand in the market has gone unmet
Low: There have been very few instances when a significant demand has gone unmet
NA: denotes that info on demand supply gap is not available owing to the negligible demand
volumes

66
Future Demand-Supply Estimates for the Various Grades of Castor Oil and Derivatives
Growth of Key End-User Segments
The major end-use industries for castor oil derivatives castor oil are:
. Lubricants & Greases
. Coatings
. Personal Care & Detergent
. Surfactants
. Oleochemicals
Growth of Key End-user Industry Segments for Castor Oil Derivatives

Industry % Growth (CAGR), based on Potential

2005 data
Lubricants & Greases 2 44 million T by 2012
Coatings 4.9% (about 11% in Asia!) -
Personal Care & Detergent 6% $375 billion by 2012
Surfactants 4% $16.65 billion by 2012
Oleochemicals 4% 8.5 million T by 2012
Over the past one decade, the growth in demand for castor oil and derivatives has been about 4-5% per
annum (CAGR). If one looks at the table above, this % growth seems to be in line with the CAGR for the
various industries. However, one must remember than a very large percentage of the high value added
derivatives are produced by companies outside India, and India simply supplies the commodity oils to
them. That is, while the demand in quantity for Indian castor oil has been growing at 4-5%, India gets a
small share of the actual profits that result from high value add.
Apart from this, there are other emerging segments that could hold even more significant potential for
castor oil derivatives.

67
Let‟s look at some of the other segments in which castor oil can play a role: Growth Prospects for Bio-based
Products
A McKinsey & Co. 2006 survey provides the following data for the potential for bio-based materials in 2010

Market segment Market size in 2010 Growth % 2005-10 CAGR 2005-10

($billion)
Biofuels 42 100 15%
Plant extracts 23 20 3.7%
Pharma ingredients 20 100 15%
Bulk chemicals and 15 50 8.5%
polymers
Food ingredients 11 35 6.1%
Oleochemicals 8 6 1.1%
Enzymes 4 100 15%
An analysis of the above table shows that there are some market segments that have much higher growth potential and
in which castor oil could play a significant role.
Among the segments in the table above, it is doubtful whether castor oil can have a significant role in the
biofuels industry, given castor oil‟s relatively high cost as well as the small quantities of castor oil produced when
compared to the massive volumes required for transportation fuel. However, in high growth segments such as
pharma ingredients, biopolymers and food ingredients castor oil could have a considerable role to play. While in
some of these segments (pharma for instance), castor oil already is a contributor, it is expected that there will be
many more segments within pharma as well as the other two in which castor oil can significantly increase its
presence.
Demand-Supply Estimates
Based on its research, CastorOil.in makes following estimations for future demand of various products. Please
note that most of these are based on qualitative inputs as scarce official inputs are available for some of the
derivatives mentioned

Product Future Demand Current Demand

Castor Seed Very High High
Castor Meal / Castor Residue Very High High
Hydrogenated Castor Oil (HCO) Very High Medium
12 Hydroxy Stearic Acid (12 HSA) Very High Medium
Methyl 12 HSA (Hydroxy Stearate Acid) Medium-High Low-Medium
Blown Castor Oil Medium Low-Medium
Sulfated/Sulfonated Castor Oil, Turkey Red Medium-High Medium
Oil

68
COLM (Urethane Grade) Very High Medium-High
Commercial / Industrial Grade Castor Oil Very High Very High
BP Grade Castor Oil Medium-High Medium
Deodorized Castor Oil Medium-High Medium
European Pharmacoepia Grade Castor Oil High Medium

Extra Pale Grade Castor Oil Low Low

Pale Pressed Grade (PPG) Grade Castor Oil Medium-High Medium

First Pressed Degummed Castor Oil Medium-High Medium-High

First Special Grade (FSG) Castor Oil Very High Very High
United States Pharmacopia (USP) Castor Oil High High

Dehydrated Castor Oil (DCO) Very High Medium-High

Ethoxylated Castor Oil High Medium
C 3 Derivatives of Castor Oil
Glycerine Very High Very High
C-7 Derivatives of Castoroil
Heptanoic Acid Low Low
Heptaldehyde Low Low
Heptyl Alcohol (Heptanol) Low Low
C 11 Derivatives of Castor Oil
Undecylenic Acid Very High Very High
Undecanoic Acid Low Low
Undecylenic Aldehyde Low Low
Undecylenic Alcohol Low Low
Calcium Undecylenate Low Low
Zinc Undecylenate Low Low
Allyl Undecylenate Low Low
Sodium Undecylenate Low Low
Methyl Undecylenate Low Low
Ethyl Undecylenate Low Low
C 18 Derivatives of Castor Oil
Ricinoleic Acid High Medium
Methyl Ricinoleate Low-Medium Low-Medium
Sebacic Acid Very High High
2-Octanol Low Low
Notations for Demand
Very High: 25,000 T and above per year High: 10,000 – 25,000 T per year
Medium-High: 5,000-10,000 T per year Medium: 2,500-5,000 T per year
Low-Medium: 1,000-2,500 T per year
Low: Less than 1,000 T per year
Historical & Current Price Data for Various Grades of Castor Oil, Castor Seeds
69
 Castor oil prices are highly volatile. An example of volatility is seen in seed prices
There is a wide intra and inter seasonal price variation. The price in US$ is made even more
volatile due to the volatility of the Indian Re. against the US $.
The price increase of castor seeds has been quite dramatic since the middle of 2007. It increased by
over 30% between June 2007 and June 2008.
Usually, the prices of castor seeds firm up during the planting period that is Jul - Aug due to lesser
availability. It eases down during the harvesting period (Jan - Feb) as a result of increase in supply.
There is a price variation of about 30% between planting and harvesting seasons.
Factors to watch out for regarding castor oil prices:
. Production constant since 2-3 years
. World demand for castor oil is increasing @ 3-5 % per annum
. Export demand expected to increase significantly in future
Some other points to note about castor oil prices:
. It is generally believed that being a versatile industrial oil with varied applications, demand for castor
oil is price inelastic. There is invariably a minimum quantity of this commodity that is consumed
annually by advanced countries irrespective of price.
. Between 2006 and 2009, prices have fluctuated in a wide range between a low of $650 a ton and the
present high of $ 1,500 a ton.
Castor Seed
Average Prices for Castor Seeds
(all prices in US$, FOB Mumbai)

Year Prices - $ / MT
2004 400
2005 410
2006 350
2007 475
2008 (Jan - June) 575
2008 (Jun – Dec) 675
2009 (Jan - Jun) 515
2009 (June – Dec) 589

Monthwise Castor Seed Price (Average)

(US$/T, NCDEX)

2006 2007 2008 2009 2010

70
Jan 318 434 511 524 629
Feb 325 449 546 487 627
Mar 336 462 594 489 640
Apr 325 486 580 519
May 316 473 580 539
Jun 317 470 612 532
Jul 342 481 699 543
Aug 344 479 707 574
Sep 368 477 698 592
Oct 391 478 662 592
Nov 404 497 651 639
Dec 398 513 637 648
Note: 1 US$= Rs 45
Castor Seed Price (Average)

Castor Oil
Castor Oil Prices (average price for commercial grade) – US$/T, FOB Mumbai

Year Price
2002 675
2003 925
2004 850
2005 925
2006 775
2007 1025
2008 (Feb) 1160
2008 (June) 1350
2009 (Jan) 1050
2009 (June) 1104
2010 (Jan) 1330
Oil Price (Average)
Monthwise Castor
71
(US$/T, MCX)

Month 2006 2007 2008 2009 2010

Jan 692 950 1077 1050 1330
Feb 695 975 1161 1055 1314
Mar 723 1005 1282 1038 1367
Apr 711 1045 1288 1091
May 695 1011 1299 1115
Jun 697 991 1355 1104
Jul 737 1015 1471 1123
Aug 761 1021 1527 1195
Sep 804 1022 1501 1253
Oct 867 1025 1421 1250
Nov 909 1071 1413 1344
Dec 896 1092 1378 1390
Note: 1 US$= Rs 45
Castor Oil Price (Average)

72
A Snapshot of Castor Seed, Castor Oil & Castor Cake Prices in Jul/Aug 2008 and Jan 2009 – do later
Jul/Aug 2008
All castor products hit a record high in Jul/Aug 2008. A look at the average prices below will tell the
story.
All prices in US $ / Metric Ton, FOB India

Product Price
Castor seed 700
Castor oil 1500
Castor cake 110
These prices were 20% higher than the already high prices existing in May 2008 (in the middle of May
2008, castor seed prices were quoting at US $ 575-600 per MT). In spite of such a sharp increase, industry
professionals and traders have said that the demand had not decreased considerably.
Jan 2009
The data for average prices in Jan 2009 tell an entirely different story.
All prices in US $ / Metric Ton, FOB India

Product Price
Castor seed 500
Castor oil 1050
Castor cake 65
It can be observed that there is a dramatic reduction in prices across all the castor products. In spite of these
low prices, suppliers say there is much less demand, primarily because of the global economic
downturn.
Castor Oil & Castor Seed Price Volatility
Monthly Price Volatility of Castor Seed and Oil in Mumbai Market (based on data between 2000 and
2006)

Monthly Var % 0-2 months 2-5 months 5 & above months

Castor seed 24 % 43 % 35 %
Castor Oil 25 % 40 % 35 %
Maximum Variation in Mumbai Markets in % Terms

Period Castor Seed Castor Oil

Daily 3.2 3
Weekly 7.8 7.2
Monthly 16 15

73
74
Pricing Pattern
The price of castor seed is influenced by climatic conditions, prices of castor oil in the world trade,
production in India and Rotterdam prices in Europe. An analysis of spot prices for the past few years clearly
indicates that the commodity price is volatile.

Rationale for the Castor Seed Contract

Some of the main reasons for introducing the futures contract in castor seed are:
Fluctuating production of castor seed in India: There is significant fluctuation in the production of
castor seeds in India. The market participants like the farmers, traders, oil millers, exporters and
industries which produce value added derivatives face an eternal price risk due to fluctuating
production. Hence it is imperative to introduce a hedging mechanism for efficient price discovery
and price dessimation.

Volatile commodity: Market research done by NCDEX shows that the Annualized Price Volatility is
15%.

75
 Wide usage of castor products: Castor oil and its derivatives are used as raw materials in many
industries like Paint, Lubricant, Textile, Pharmaceutical etc. They form a large part of the variable
cost for the production of the above products. Any negative fluctuations in the price of the raw
material may erode their profits. Hence, an efficient hedging mechanism is essential to combat the
price risk.
Large number of market participants: There are many intermediaries in the castor distribution
chain. These intermediaries prevent efficient price discovery and price dissemination for the
farmer. Hence the need for an effective market intelligence platform, so that farmers take
informed decisions.
Limited hedging options: Due to lack of transparency in the unorganized forward markets, there
is counter party risk, default and quality issues. Hence a genuine hedging tool needs to be put
forth for the castor industry.
More than 80% of production is exported: India exports nearly 80% of its production and is
highly vulnerable to the world prices set by other trading countries. Hence, there is a need for
futures contract to hedge their price risk.
Importance of Castor Seed and Castor Oil Futures
The following points underscore the importance of futures trading in castor seed and castor oil
. Uncontrolled and uncertain supply
. Fluctuating and uncertain demand
. Wide and unforeseen price variation
. Wide intra and inter seasonal price variation
. Homogenous nature and well-defined grades
. Long storing period
. Well-developed and organized spot market
Factors that Affect Prices
• Characteristics of Castor Seed and Oil Market
. Uncertain supply - The world castor seed production has fluctuated between 1.2 and 1.8 million tons
since 1997 to 2001. India's production ranged between 0.8 and 1.1 million tons during the same
period.
. Recent developments of artificial substitutes - development of substitutes for castor oil has subjected
the demand to fluctuate in the world market (especially Lesquerella fendleri)
. Long storing period & hoarding - It is a common practice for the castor seed growers and crushers
to hoard the commodity before selling in expectation for better prices.
. Well-developed and organized spot market in India
76
77
• Market Influencing Factors in Castor Trade
The following factors influence castor oil prices, export volumes and overall castor trading:
. Crop development based on monsoon progress in key growing regions
. Domestic demand for castor oil from the major Indian cities & export
demand of castor oil . Variations in castor seed domestic acreage worldwide and specifically in
India, based on yield and price realization . Indian, Chinese and Brazilian crop sizes
. Comparative prices of other vegetable oils in the Indian and global markets . The castor seed
price tends to firm up during the planting period and eases
down during the harvesting period. Prices tend to show significant inter-seasonal variations .
Castor seed growers and crushers hoard the commodity before selling in
expectation of better prices. . During some years (as it happened in 2006), due to better price
realization in
cotton and pulses, farmers had shifted from castor thus reducing the total
area under castor. . Floods and drought in major castor growing states such as Gujarat and
Andhra Pradesh had also adversely affected the crop in some years (eg: 2006)
Castor Oil Futures Market
A few years back, the Government of India has removed all restriction on futures trading in almost
all commodities under the Forward Contracts Regulation Act (FCRA), and this includes agricultural
commodities such as castor seed and castor oil. Since then, there has been a vibrant futures trading in
castor seed and oil.
Castor Oil Futures Contract Specifications on the MCX (Multi Commodity Exchange, India)

Trading Unit 1 MT
Quotation / Base Value Rs / 10 Kg
Maximum Order Size 50 MT
Tick Size (Min Price Movement) 10 paise per 10 Kg
Daily Price Limits 3%
Price Quotes Ex Kandla
Max Allowable Open Position For a client 20000 MT
For a member collectively for all clients – 25% of
the open position of the market @ any point of
Delivery time
Delivery Unit 10 MT (with tolerance limit of 250 Kg)
Delivery Centers Kandla
Quality Specifications

78
Appearance @ 25% C Clear and free from suspended matters
Odour Slight
Colour not to exceed in 5 % “ cell in a 20 yellow maximum / 2 red maximum
Lovibond Tintometer / AOCS CC 13B-45
Free Fatty Acid (AOCS CA 5A-40) 1% max
Hydroxyl Value (AOCS CD 13 -6) 160-168
Moisture and Volatile Values (AOCS CA 2C -25) 0.25% max

Insoluble Impurities (AOCS CA 3 -46) 0.02% max

Ricinoleic Acid Content (ISO 5508 & 5509) 85% minimum
Density @ 30 C (ISO 6883 1995 CORR. 1/1996) 0.952 minimum

Solubility in alcohol @ 20oC Completely without turbidity in 2 volumes of specially

denatured alcohol formula 3A (95%)
Flash Point 280oC minimum
Iodine Value 82-90
RI @ 40oC 1.47 - 1.474
Specific Gravity @ 30 C 0.954-0.96
Test for presence of other oils Negative
Castor Seed Futures Contract Specifications on the MCX (Multi Commodity Exchange, India)

Trading Unit 10 T
Quotation / Base Value 20 kg
Maximum Order Size 500 MT
Tick Size (Min Price Movement) 10 paise
Daily Price Limits 3%
Price Quotes For a client 20000 MT For a member collectively for all
clients – 25% of the open position of the market @ any
point of

Max Allowable Open Position

Delivery time
Delivery Unit 10 MT (+/- 1%)
Delivery Period Margin 25%
Delivery Centers Babhar, Disa, Pathan, Palanpur, Visnagar
Quality Specifications
Gujarat small castorseeds packed in 75 Kg bags.
Delivery samples will have to certified by the
Exchange designated
Oil content quality
(on clean seedsurveyor
basis) Min 47%, Acceptable (45-47%)
Foreign matter and impurities Stones, earth, straw or chaff including castor husk / pod
maximum % by weight is specified and checked

79
Notes from MCX, India
Cash v/s Futures Prices Relationship: In general, futures markets compensate an individual for the cost of
purchasing a commodity today, storing it and delivering it in future. As a result, one would ordinarily
expect to see an upward trend in prices as contract months go further out. Such a condition is known as
Contango and is typical of many futures markets.
However, in castor seed & castor oil the flows of demand and production are not synchronized.
Stored inventories absorb demand fluctuations in periods between production times. There is a
likelihood of shortage in the physical market and peak arrival months in the future. This may cause the
spot price to rise above the futures price between production times. Backwardation is a condition in which
spot price is higher than futures or the futures price is lower in the distant delivery months than in the near
delivery months.
SUMMARY
The castor oil market price experiences significant volatility. Uncertain oil supply, recent development
of substitutes, long storing periods & hoarding are the main reasons for the price fluctuations. In spite
of these factors, there is invariably a minimum quantity of this commodity that is consumed annually
by advanced countries.

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Current End Uses for Castor Oil & Derivatives
Castor oil's application range is very wide. From the attractive uses such as cosmetics to the areas of national
security involving engineering plastics, jet engine lubricants and polymers for electronics and
telecommunications, castor oil plays an important role in today‟s industry.
The chemical structure of castor oil affords a wide range of reactions to the oleochemical industry and
the unique chemicals that can be derived from it. Some of these derivatives are on par with petrochemical
products for use in several industrial applications. In fact, they are considerably superior since they are
from renewable sources, bio-degradable and eco-friendly.
Castor oil and its derivatives today find major application in soaps (bind ingredients in cosmetic and
soap formulas, humectant for soap products), lubricants (jet engine lubricants), grease, hydraulic
brake fluids, paints (varnishes ), polymers (basic ingredient in the production of nylon 11, nylon 6-10,
polyurethanes), perfumery products, surfactants, surface coatings and inks, telecom & engineering
plastics (polyamide 11), pharma, rubber chemicals, polishes, flypapers, in addition to other chemical
derivatives and medicinal, pharmaceutical and cosmetic derivatives.
India’s Industry-wise Castor Oil Consumption by End-use Industry

Industry Percentage
Soaps 30
Paints 40
Lubricants & Derivatives 30
Total 100
Source: based on data from 2005 to 2007; of the total consumption of about 85000 T per year, soaps,
paints and lubricants industries consume approximately 25000 T, 35000 T and 25000 T respectively.
End Uses – by Castor Oil Grade / Derivative
Blown Castor Oil
Blown castor oil is a potential replacement for phthalates and is used primarily as a plasticizer for
lacquers, inks, adhesives, hydraulic fluids and leathers.
Castor oil has been long used as a plasticizer for celluloid and in lacquers but the blown oil has been
discovered to perform better.
Sulfonated Castor Oil
Sulfonated castor oil is castor oil that has been treated so that it is fully dispersible in water, thus making it
perfect for bath oil products. Also called Sulfated castor oil and Turkey Red

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Oil, it was the first synthetic detergent after ordinary soap. It is also used in formulating lubricants,
softeners, and dyeing assistants.
Being an anionic surfactant, it is an active wetting agent (a chemical agent capable of reducing the
surface tension of a liquid in which it is dissolved). As such, it is used extensively in dyeing and in
finishing of cotton and linen. Generally, the ability of castor oil and some of its derivatives to wet
surfaces make them useful as excellent carriers of pigments and dyes.
It is of medium viscosity and is usually used in bath oil recipes along with fragrance or essential oils,
or in shampoos.
It is the only oil that will completely disperse in water. It is a surfactant and therefore makes a wonderful
base for bath oil as it mixes well with water, producing a milk bath.
For instance, it is used to emulsify essential oils so that they will dissolve in other water-based
products or for super-fatting liquid soap if you want the soap to remain transparent. This means that the
oil will combine with the water in the tub, and not leave those little oil bubbles floating on the top of
the water.
Sulfonated castor oil is also used in agriculture as organic manure, in paper industry for defoaming, in
pharmaceuticals as undecylenate, in paints, inks and in lubricants.
Alternatives to sulfonated castor oil
Recent research has shown that, on sulfonation to the hydroxyl group, long-chain alkyl ricinoleates
produce surface-active compounds. Tetradecyl ricinoleate, for instance, shows the best surface-active
behavior and seems to be much better than that of sulfonated castor oil.
Urethane Grade Castor Oil
Urethane Grade Castor Oil is a refined grade of castor oil for specific applications that require
minimum moisture. Typical applications include use in making urethane coatings, adhesives and inks.
This grade also finds use in urethane blowing and urethane molding.
BP Grade Castor Oil
This grade is used in pharmacy & medicinal applications in Great Britain
European Pharmacopia Grade
European Pharmacopia Grade refers to the castor oil specifications as laid down by the European
Pharmacopia standards. This grade is used in pharmacy & medicinal applications in the European Union.

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Castor Oil USP
Castor Oil USP Grade refers to the castor oil prepared in conformity with the USP norms. It is the
grade used by the pharmaceutical industry in the USA.
First Pressed Degummed Grade
Castor oil that is first pressed, filtered and then degummed has the unique lubricating properties of
castor without the excessive buildup and carbon. This grade is hence used in the lubricant industry
in a significant manner.
Dehydrated Castor Oil
DCO can be used to improve the quality of house paints, enamels, caulks, sealants and inks. It is
used as primary binder for house paints, enamels, caulk sealant, and making varnishes. This oil
also works well in clear varnishes and hard finish coatings.
By far the most important coatings use of castor oil is in the form of dehydrated castor. In
commercial manufacture of dehydrated castor oil, the aim is to produce the most valuable material
for use as a drying oil. Dehydrated castor oil is now recognized as an individual drying oil with its
own characteristic properties and advantages. The drying oils owe their value as raw materials for
decorative and protective coatings to their ability to polymerize or “dry” after they have been
applied to a surface to form tough, adherent, impervious, and abrasion resistance films. The
advantages claimed in surface coating applications include excellent odor and heat bleachability,
good drying properties, more uniform polymer structure, and lack of after-yellowing.
DCO has advantages over tung oil because it is non-yellowing.
DCO can be converted to dehydrated castor fatty acid by hydrolysis and distillation. This
(dehydrated castor fatty acid) is used in the manufacture of alkyd resins, coatings, appliance
finishes, primers and inks. Alkyd resins in turn are used for paints, enamels, lacquers and
varnishes with high gloss, good adhesion and wetting qualities.
The vulcanization of DCO with sulphur has been reported: factice, the resulting product, has been
found to be a rubber additive with anti-ozonant and good flow properties.
If DCO is epoxidized, the product can be evaluated in poly (vinyl) compounds as a
plasticizer/stabilizer giving rise to the possibility that epoxidized castor oil may be capable of
replacing epoxidized soybean oil.
Ethoxylated Castor Oil
. Ethoxylated castor oil is a nonionic surfactant having many industrial applications. . Used
in polymer coating applications

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. Used in the wool scouring industry, as it is an excellent cleaning agent for grease and
Oil
. Used in corrosion lubricants
HCO
Hydrogenated castor oil (HCO) or castor wax is a hard, brittle wax that is insoluble. It is produced
by adding hydrogen in the presence of a nickel catalyst.
Hydrogenation of castor oil accounts for the largest single use of castor oil for a standard
commodity.
The HCO is insoluble in water and most organic solvents, but it is soluble in hot solvents. It is
water resistant while retaining lubricity, polarity and surface wetting properties. It is this
insolubility that makes HCO valuable to the lubricants markets. It is perfect for metal drawing
lubricants and multipurpose industrial greases.
Thus it is no surprise that HCO is mainly used for coatings and greases where resistance to
moisture, oils and other petrochemical products is required. The early use of HCO in greases was
to improve texture and oxidative stability of greases exposed to high sheer stress with little effect
on structure or consistency. HCO made its debut in greases as a replacement for traditional soap
thickeners, sodium, potassium and calcium.
Hydrogenated castor oil is also utilized in the manufacture of waxes, polishes, carbon paper,
candles and crayons. In addition, it finds use in cosmetics, hair dressing, ointments, and in the
preparation of hydroxyl-stearic acid and derivatives. Sometimes, HCO is used as a paint additive,
pressure mould release agent in the manufacture of formed plastics and rubber goods.
Some new uses of HCO: HCO based rheology modifiers - see the web page -
http://www.crayvallac.com/inks/download/Castor Wax Tec Bulletin.PDF

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Castor Oil Storing & Packaging
Castor Oil Storage
Because the castor oil contains double bonds in its lipid structure, it is prone to an undesirable
reaction called lipid oxidation. Lipid oxidation occurs when the double bonds in the fatty acid
react with oxygen to form peroxides - this changes the chemical nature of the oil. There are many
factors which influence the rate of oxidation in foods: fatty acid composition, free fatty acids
versus the corresponding acylglycerols, oxygen concentration, temperature, pro-oxidants, radiant
energy (visible and ultraviolet light), and the presence of antioxidants.
Owing to the above reasons, castor oil is stored in a controlled environment. That includes
removing oxygen, storing the oil in a cool place, placing the oil in an opaque container, removal
of pro-oxidants (e.g., cobalt, copper, iron, manganese, and nickel), and possibly adding
antioxidants.
Packaging
Packaging Options
In retail, castor oil is usually sold in small packs.
Sea Transport - Castor oil is usually packed in steel drums (200/225 Kg) while transported by sea
in containers. Many suppliers have started using flexibags for packaging as these are significantly
less costly than drums.
. Bulk Shipping - usually for lots of 500 Metric Tons minimum

Shelf Life
Under normal temperatures and conditions, castor oil has a shelf life of about 12 months. Used in
retail form, refrigeration after opening is recommended

Castor Oil Transportation & Logistics

Distribution from Farms to Refinery
The process mentioned below is representative of a typical distribution of castor seeds in India.
o Castor seeds are bought to the auction place from the farms o At the auction place, traders buy
the castor seeds through an auction process. There are many traders who do this in each city.
o Then, there are a few large brokers (far fewer than the number of traders) who interact with the
traders and who in turn are contacted by the crushers & refiners for purchase

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o The supply chain thus looks as follows: Farmer -> Auction Place -> Trader -> Broker -> Crusher
o Pricewise, if X (Rs) is the price per Kg when it is auctioned, the price at which the crusher receives it is
about 1.05 X (a 5% increase). This increase results by way of commissions to traders and brokers and for
transport costs to the crushing unit.
Transport
Castor oil can be transported by ship, truck, or railroad, depending on the factors. A large part of
international transportation of castor oil happens by sea.
Cargo Handling
Normally, castor oil does not need to be heated, since its solidification point is relatively low.
However, should temperatures during voyage happen to be in the solidification range, the following must
be noted: to be able to pump the oil out of the tanks, it must be at the required pumping temperature.
This is only possible, however, if the oil has been kept liquid during the voyage (above a minimum
temperature). If the oil solidifies in the tanks, it cannot be liquefied again even by forced heating. In the
vicinity of the heating coils, the oil melts, scorches, discolours and becomes rancid.
The oil may also cool too rapidly in the long lines and solid deposits form on the outer walls, which cannot
be pumped out and prevent the still liquid cargo from reaching the suction valve. This problem can be
solved by appropriate heating or insulation of the lines.
Because of the above reasons, loading, travel and pumping temperatures must be precisely complied with,
since any change in consistency which occurs during transport may prove irreversible.
Where the oil is packaged in barrels, the latter have to be handled with appropriate care. Damaged
barrels quickly lead to oil leakage and thus to loss of volume or to damage to other parts of the cargo.

Density & Volume Expansion

The density of castor oil is approximately 0.960 cm3
With a rise in temperature, however, density diminishes, thereby leading at the same time to an increase
in volume. This behavior is described by the coefficient of cubic expansion and is known as thermal
dilatation.
The coefficient of cubic expansion amounts to: g = approx. 0.0007°C-1
As a rule of thumb, castor oil may be expected to increase in volume by 1% of their total
volume for each 14°C temperature increase. So, when filling the barrels or tanks, attention must however
be paid to the expansion behavior of the cargo in the event of a rise in temperature (risk of
bursting of barrels).

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Cargo Securing
In the case of castor oil (as with most other liquid cargoes), it is important for the space above the
cargo to be small, so that only slight movement of the cargo is possible. Movement in liquid cargoes
may have a negative effect on the stability of the means of transport (e.g. during cornering in the case of
trucks and trains or when ships roll and pitch).
Barrels have to be secured in such a way that they cannot slip in the hold or on the loading area and
suffer damage.
Risk Factors and Loss Prevention
Temperature
Castor oil has no particular requirements as to storage climate conditions.
The solidification temperature is of considerable significance in the transport of fatty oils and fats.
They must remain liquid during loading, during the voyage and during unloading. Chill haze (separation)
begins if cooling causes the temperature of the oil to approach solidification point, the oil becoming
ointment-like and finally solid, and it can no longer be pumped.
Separation and the associated change in consistency from liquid to solid occurs more readily upon cooling,
the higher is the solidification point.
The oil must be heated only by a few °C per day, else the risk of rancidity and other negative changes
arises.
The following table constitutes a rough estimate of appropriate temperature ranges. Temperatures may
deviate from these values, depending on the particular transport conditions.

Designation Temperature range

Travel temperature (favorable temperature range) 15°C (12 - 25°C)

Solidification temperature -10 to -18°C

Pumping temperature 30 - 35°C
The travel temperature must be complied with as far as possible during transport, to minimize
oxidation processes.

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Humidity/Moisture
Castor oil is insoluble in water. However, contact with water may give rise to soluble lower fatty acids
and glycerol, which cause rancidity together with changes in colour (yellow to brown), odour and taste
as well as gelling and thickening. Castor oil spoils on contact with water. For this reason, the tanks must
be absolutely dry after cleaning.
Ventilation
Ventilation must not be carried out under any circumstances, as it would supply fresh oxygen to the oil,
which would promote oxidation processes and premature rancidity.
Although castor oil thickens when exposed to atmospheric oxygen, it does not form a skin at the surface.
Biotic Activity
Castor oil displays 3rd order biotic activity. It belongs to the class of goods in which respiration
processes are suspended, but in which biochemical, microbial and other decomposition processes
proceed. Care of the oil during the voyage must be aimed at keeping decomposition processes to a
low level.
Self-heating / Spontaneous Combustion
The oil may ignite spontaneously in conjunction with sawdust or material residues.
Odour
Active Castor oil releases an unpleasant odour. Contaminated oil smells like
ehavior stale water.
Passive Tanks and barrels must always be odour-free, since there is a risk that
behavior quality will be diminished in particular where the previous cargo
had a strong odour.
Contamination
Active Leaking oil leads to massive contamination and may make whole
behavior cargoes unusable.
Of considerable significance with regard to tank cleaning is the iodine
value, which is a measure of how strong a tendency the oil has to
oxidation and thus to drying. Drying is particularly detrimental to
tank cleaning, as the oil/fat sticks to the walls and can be removed
only with difficulty. On the basis of drying capacity, oils are divided
into nondrying, semidrying and drying oils.

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With an iodine value of 81 - 100, castor oil is a non-drying oil, which means that it does not dry
significantly on contact with atmospheric oxygen and so the tanks are easily cleaned.
Castor oil is sensitive to contamination by ferrous and rust particles and water (especially seawater).
The tanks or barrels must be clean and in a thoroughly hygienic condition before
Passive
filling.
behavior
Mechanical Influences
In the case of transport in barrels, extreme mechanical stresses, such as dropping, tipping over or
bumping, may lead to breakage of the barrels and thus to leakage.
Toxicity / Hazards to Health
Before anyone enters a tank, it must be ventilated and a gas measurement carried out. Oxidation
processes may lead to a life-threatening shortage of O2.
Shrinkage / Shortage
In cases where castor oil is packaged in barrels, weight loss from leakage is always to be expected.
Losses of up to 0.3% due to adhesion of the cargo to the tank walls may be deemed normal.
Insect Infestation / Diseases
No risk.
Castor Oil Storage during Transportation
Maximum duration of storage:
Temperature Max. Duration of storage

12 - 25°C 6 months

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