International Finance Corporation (IFC) plans to invest $30 million through a mix of equity and debt in Karnal-headquartered Dunar Foods that is in the business of procurement, processing and supply of basmati rice. It will co-invest with another undisclosed private equity fund that is expected to bring in a separate $10 million for the Haryana-based, privately held rice company.
Dunar Foods owns two production facilities – one in Karnal (Haryana) and the other in Amritsar, Punjab (commissioned in March, 2010). The processing capacity of the Karnal facility is 26 tonne per hour (tph) while the Amritsar plant churns out 24 tph.
The company plans to pump in funds in order to expand its production capacity in Karnal from 26 tph to 50 tph during the next two years. It will also invest in additional silo capacity of 60,000 metric tonne and the rice husk-based power generation capacity of 3 MW in Karnal. Another new rice husk-based power plant of 2 MW will come up in Amritsar (in addition to the existing 1 MW capacity).
The total project cost is around $140 million including the capital expenditure for the expansion, as well as additional working capital requirements associated with increased sales. The company plans to raise up to $30 million in equity and fund the remaining project cost by internal cash flow and working capital debt.
At present, promoter Surender Gupta (whose father started the company over three decades ago) with his wife, children and sister-in-law Kanta Gupta, own 63 per cent and 28 per cent of Dunar, respectively. The remaining minority shares are owned by the promoter’s mother and the company’s management. IFC and the private equity fund will jointly hold a minority stake in the company.
For IFC, the private sector investment arm of the World Bank and one of the most prolific and consistent investors in Indian companies over the past few years, this marks the 10th investment (equity/debt) in India since January 1, 2011, with more than $330 million in committed funds.
Last week, it struck a deal for a proposed investment of $10-$15 million in Aavishkaar India II Company Ltd (a successor fund to Aavishkaar India Micro Venture Capital Fund) that would have a corpus of $100-$150 million and would focus on financing early-stage venture enterprises that target fundamental market needs in rural and semi-urban India.
IFC has also proposed to invest in Gujarat-based SEWA Bank, microfinance institution Bandhan, education-focused private equity fund Kaizen, Simran Power Projects Ltd, Shalivahana Green Energy Ltd, PTC India Financial Services Ltd, Exim Bank and a just-announced $30 million loan to Kalyani Gerdau Steels Ltd – a joint venture between the Gerdau Group (Gerdau), a leading Brazilian steel producer, and the Kalyani Group.