International Finance Corporation (IFC), the multilateral lending arm of the World Bank, is investing $54 million in Tamil Nadu-based Suguna Holdings (SHPL), the holding company of the country’s largest private sector poultry enterprise, Suguna Foods (SFPL), through a mix of debt instruments. The funding will form part of the company’s $67.2-million expansion projects across India, Bangladesh and Kenya.
Coimbatore-headquartered privately-held SHPL is underaking construction of feed mills, breeders and hatcheries through a $15.9-million investment in Suguna Food and Feeds Bangladesh (SFFBPL) and a $8.4-million investment in Suguna Poultry (Kenya) (SPKL) in order to capitalise on the growing economy and expanding the poultry sector in both countries, according to an IFC disclosure document.
As part of the investment, IFC will provide a loan of up to $15 million and rupee-denominated non-convertible debentures (NCDs) of up to Rs 180 crore (approximately $25 million equivalent) to SFPL in India, $10 million to SFFBL and $4 million to SPKL.
Suguna’s fully-integrated operations cover broiler and layer farming, hatcheries, feed mills and processing plants across 20 Indian states and one Union territory, and have overseas presence in Sri Lanka, Bangladesh and Kenya. SFPL in India generates over 97% of SHPL’s revenues.
Suguna is planning capacity expansion consisting of the construction of poultry infrastructure, including potentially a hatchery, processing plant, poultry environment-controlled shed, premix plant and related poultry assets, as well as incremental working capital financing, through a $42.9-million investment in SFPL to further expand its operations in northern and eastern parts of the country, primarily Uttar Pradesh, Odisha and West Bengal.
On the development impact, IFC said the most significant, expected project-level outcome would be the impact on the incomes of poultry farmers who participate in Suguna’s outgrower (contract farming) model. At the market level, the investment is expected to contribute to integrating the farmers into the poultry value chain by transferring its experience and business model to Bangladesh and advancing the sophistication of contract farming in this underdeveloped market through demonstration and replication, it added.