Early-Stage Venture Capitalism Needed For Financing In Food Processing Sector: Deepak Shahdadpuri, MD and Founder, DSG Consumer Partners
Early stage venture capitalism is the need of the hour according to Deepak Shahdadpuri, MD and Founder, DSG Consumer Partners
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Access to affordable credit is a key requirement to boost growth in various sub-segments of the food processing sector. At a session in World Food India 2017 (day three), called “Innovative Financing to Unleash Growth”, methods of financing growing for various sub-segments of the food processing sector were deliberated upon.
The panel discussion, moderated by Rajesh Srivastava, Chairman & Managing Director, Rabo Equity Advisors Pvt Ltd. (subsidiary of Rabobank), started with Madnesh Kumar Mishra, Joint Secretary, Department of Financial Services, Ministry of Finance, Government of India saying, “The Mudra Loan scheme is a success story which is relevant for financing of the food processing sector. The income of farmers should increase by five times if the food processing sector aims to grow ten-fold. There is humungous potential for job creation and employment in this sector. All the banks have been asked to look at the MSME sector, which can be an engine of growth.” He also added, “The banker has to look at the segregated view of the food processing sector, to differentiate in terms of credit appraisal and financing. Insurance is a big part of it, as farm products are very risky, it depends on the weather and other factors. When deliberating on innovative financing, we must keep in mind the farmer and how we can rise his livelihood“.
Prasad Gopalan, Manager, Agribusiness and Forestry, Asia, International Finance Corporation (IFC), World Bank said, “The macro picture is pretty much set. India should develop capital markets to fund some of the long-term capitals, and raise affordable capital.” “We have a global interest in this sector, and hence, it is integral to understand the chain between farms to fork. We will partner with the UN Environment to launch a funded program in a collaborative manner to help bring prosperity to the rural farmers. It is our commitment to help farmers sustainably with low environmental impact”, added Diane Boogaard, Chief Executive Officer-Asia, Rabo Bank.
”Potential investors are reluctant to invest in the whole value chain from farm to fork. Finance should be focused on specific parts of the value chain. Financing agencies like ADB should create an enabling environment for financing. We need to build institutional capacity for farmers to produce in scale and better quality and double their income”, said Mio Oka, Director- Environment, Natural Resources and Agriculture, Division South Asia, Asian Development Bank. Saket Misra, CEO, Venus India Asset Finance Pvt Ltd. said, “There is a massive requirement for credit. We need a change in paradigm as to where food processing is taking credit. States need to keep up with the centre in terms of financing for the food processing sector.”
Dr. Torben Huss, Executive Vice President, Investment Fund for Developing Countries (IFU) gave a brief overview of what IFU follows by Philippe Serres, Regional Manager- South Asia, Proparco saying, “One aspect that has been overlooked is credit finance. There is a link between agri-business and climate, for example, cold-chain actually is positive from a climate perspective as it saves more carbon emissions by preserving food. There is a need to provide long-term low cost funding“.
“A big need of the hour is a more early stage venture capitalism coming into this sphere. I would encourage more development of funds for writing the first cheque for players, and not just focus on existing businesses”, said Deepak Shahdadpuri, MD and Founder, DSG Consumer Partners. Sumit Gupta, Group President and National Head, YES Bank concluded the session saying, “Players should spend more time into understanding the market better. We have been believers and lenders into the FPU space and we agree that there is a need for innovative financing in the food processing sector.”