The ADB said it has signed a pact for a USD 15-million debt financing through the subscription of non-convertible debentures for Suguna Foods, to help sustain poultry farming operations, rural livelihoods and food security in India during the COVID-19 pandemic.
The agreement was signed by the deputy director general at ADB”s private sector operations department, Christopher Thieme, and Suguna Foods Managing Director G B Sundararajan, the Asian Development Bank (ADB) said in a release.
Suguna, one of India’s largest poultry broiler enterprises, has been significantly affected by supply disruptions caused by the nationwide lockdown to contain COVID-19, it said.
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 2,00,000 corn and soybean farmers, the release said.
“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 the contract farmers and suppliers,” said Martin Lemoine, head of the agribusiness investment unit at ADB’s private sector operations department.
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.
The Bank’s assistance comprises two-year amortizing 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, ADB said.
It also aligns with the National Action Plan for Egg and Poultry.
The transaction is also aligned with ADB’s USD 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.
ADB further said poultry livestock is central to India’s food value chain as an affordable source of animal protein that can address 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,” it said adding that the agreement represents the beginning of a long-term relationship between the ADB and Suguna.