The Asian Development Bank (ADB) has signed an agreement for $15 million of debt financing through the subscription of non-convertible debentures for Suguna Foods (Suguna), in equivalent Indian rupees, to help sustain poultry farming operations, as well as rural livelihoods and food security in India during the Coronavirus (COVID-19) pandemic.
The agreement was signed by Deputy Director General at ADB‘s Private Sector Operations Department, Christopher Thieme and Suguna Foods Managing Director, GB Sundararajan.
“ADB’s assistance will provide essential liquidity support to Suguna’s operations during this COVID-19 crisis, help the company build inventory buffers and make timely payments to contract farmers and suppliers,” said, Head of the Agribusiness Investment Unit at ADB’s Private Sector Operations Department, Martin Lemoine. “ADB’s assistance will also encourage local lenders to support the business and help attract other medium- and long-term capital and international partners,” Lemoine added.
“Since the 1980s, the Suguna Group has played a crucial role in the poultry industry in India,” said Sundararajan. “Its pioneering efforts bring sustainable income to more than 40,000 farmers in India. A unique blend of technology, integrated and efficient operation are at the heart of Suguna’s success across the length and breadth of rural India. ADB’s support will further strengthen Suguna’s capacity and help avoid disruptions to the supply of poultry to the masses,” Sundararajan added.
Suguna, one of India’s leading poultry broiler enterprises, has been significantly affected by supply disruptions caused by a nationwide lockdown to contain COVID-19. This has resulted in losses and tight liquidity conditions for the company, which employs 7,700 employees and partners. It also supports more than 40,000 contract broiler farmers, including many women, and 200,000 corn and soybean farmers.
Poultry livestock is central to India’s food value chain as an affordable source of animal protein that addresses malnutrition. ADB’s timely financing will help Suguna sustain production to preserve the incomes of farmers and feed suppliers, and ensure continued supplies of poultry. The agreement represents the beginning of a long-term relationship between ADB and Suguna.
ADB’s assistance comprises 2-year amortising senior secured non-convertible debentures, in three tranches. It is consistent with the Government of India’s efforts to strengthen the agriculture sector and improve farmers’ incomes by filling in gaps in agricultural supply chains. It also aligns with the National Action Plan for Egg and Poultry.
The transaction is also aligned with ADB’s $20 billion response package to COVID-19. As part of this assistance, ADB’s Private Sector Operations Department is providing financing support to companies facing temporary liquidity issues.