Origo to secure $20 million in debt financing from DFC

Agri-fintech company, Origo Commodities, will raise a debt funding of $20 million (Rs 145 crore) from the .S. government’s development finance institution, US International Development Finance Corporation (DFC).

As a digital platform for agri stakeholders, Origo aims to provide procurement, warehousing support and trade finance to farmers and traders. The Gurugram-based company will utilize the fresh capital to build up capacity with agri producers and traders in the small and medium category and help them overcome the challenges posed by the outbreak of the COVID-19 pandemic. Origo will also work with the SMEs by providing them procurement support and financing to scale their volumes.

Leveraging its digital trade and finance platform, E-mandi, the company plans to facilitate better price discovery and seamless commodities trading. The platform enables a online commodity trade that allows users to have better procurement, better pricing and better financing.

Agri-finance industry has an estimated market potential of up to $100 billion in primary and secondary trade. Despite the COVID-19 pandemic Origo’s business model has allowed it to increase the trade finance from Rs 100 crore in FY 20 to Rs 180 crore in FY 21 and now on track for Rs 600 crore in FY 22 with 130 crores already done in Q1. E-Mandi platform will also facilitate non-funded trade of Rs. 350 crores.

In a statement, Sunoor Kaul, co-founder, Origo Commodities, said, “At Origo, we have been working to improve the efficacy of the Indian agricultural commodity sector with our agri-fintech platform. Commodities are complex and our endeavour always has been to simplify the understanding and participation. We will utilize the funds to strengthen the sector that was battered by the pandemic and ensure it realizes its true potential.”

DFC’s guaranty is provided in line with the agency’s commitment to investing in projects that help grow agricultural businesses, strengthen value chains to reduce food waste, build critical food processing and storage infrastructure, and enable countries to expand food exports. The loan will be deployed through a local bank. The DFC guaranty will enable the bank to provide around Rs. 145 crore loan to Origo. The structure is significant as it helps in mobilizing local capital for Origo, and eliminates foreign exchange rate fluctuation risk from its balance sheet.

Setuka Partners LLP was the exclusive advisor to this transaction.

Portea Medical secures commitment for $7 mn loan guaranty facility from DFC

BENGALURU: Portea Medical secured a commitment from the United States International Development Finance Corporation (DFC) for a $7.7 million local currency guaranty facility to assure repayment of a rupee-denominated loan to be issued by a local commercial bank in India. The DFC-guaranteed loan will be used to support expansion of Portea Medical’s business through digitalization, broadening service offerings, increasing geographical coverage and developing innovative delivery channels for home-based healthcare, helping reduce pressure on the hospital system in India, especially during the COVID-19 pandemic.

According to a report by RedSeer Consulting, the home healthcare industry in India is slated to grow to $11-$13 billion by 2025. The pandemic has further accelerated this growth. Portea Medical has an array of offerings and introduced services such as dialysis and chemotherapy at home during the pandemic. The company planning to expand its footprint across the country.

During the pandemic, Portea marshalled more than 1,000 healthcare workers and 500 doctors, directly and through partnerships, to deliver home isolation support for COVID-19 patients under agreements with the governments of Delhi, Karnataka, Haryana, Punjab, Chennai and local administrations. Portea has tended to over 4 lakhCOVID-19 positive patients to date.

In a statement, Meena Ganesh, co-founder, MD and chairperson of Portea Medical said, “DFC is well known for their focus on creating social impact through investment in businesses in areas including healthcare. DFC’s investments are spread across Latin America, Sub-Saharan Africa, the Indo-Pacific, and emerging markets around the world. Their focus on low-and lower middle-income countries has ensured that organizations get the much-needed financial support for developmental projects. With such a reach, they have been instrumental in providing direct equity and support for investment funds, as well as direct loans and guarantees of up to $1 billion.”

“DFC is happy to support Portea Medical, a business co-founded by a woman, in bringing medical care to patients’ homes – an agility that is needed now more than ever as the pandemic continues to strain resources. Portea Medical’s continuous commitment to lifting underserved women out of poverty by training them for healthcare careers that will impact lives for generations is also commendable,” said Algene Sajery, DFC’s Vice President of the Office of External Affairs and Head of Global Gender Equity Initiatives, in a statement.

Setuka Partners LLP based out of Washington DC, led by Aman Khanna, served as the exclusive advisor to this transaction. The DFC guarantee will enable a local commercial bank in India to extend an equivalent of Rs 52 crore loan to Portea. The structure will help in mobilizing local capital for Portea and mitigates foreign exchange risk from Portea’s balance sheet.

Will the delay in acquiring land in Maharashtra for Dedicated Freight Corridor project affect JNPT port in

On June 20, a double-stack container train, comprising 178 boxes in two layers, departed from Gujarat’s

Mundra port

on a trial run. The rake carried real goods: glycerine, softwood pulp, aluminium scrap, base paper, electric parts, compressors, knitting machines and polyester fabric, all imported from countries such as France, Germany, Mexico, Italy and the United Arab Emirates. Their final destination was either Delhi-NCR (National Capital Region) or Punjab.

A day later, an elated Railway Minister Piyush Goyal tweeted, “The first trial run for double stack container train from Mundra, Gujarat to NCR has been completed successfully,” adding how his ministry’s move would lead to efficient movement of freight between ports of Gujarat and the rest of India.

Meanwhile, Indian Railways (IR) is, at the time of writing this report, waiting for a date to be conveyed by Prime Minister Narendra Modi to flag off a container train in the 646 km stretch from Rewari in Haryana to New Palanpur in Gujarat, comprising 42% of the western Dedicated Freight Corridor (DFC) project. With feeder routes to three Gujarat ports — the government-run Deendayal (erstwhile Kandla) and the privately held Mundra and Pipavav— being overhauled and upgraded for carrying double-stack containers, what is waiting in the wings is a faster, uninterrupted and highly costeffective journey of export-import items between north India and coastal Gujarat. It sounds like a perfect script — till this stage.

But there is a problem, and that has arisen out of the partial rollout of the DFC project due to a delay in acquiring land in Maharashtra. The Mumbai-based, government-owned Jawaharlal Nehru Port Trust (JNPT) port, also called Nhava Sheva, fears that it will be left in the lurch, with a big persion of freight traffic to ports in Gujarat. A railway official in the know says JNPT has taken up the matter with the ministries of shipping and the railways.

JNPT Chairman Sanjay Sethi says, in an email interview to ET, that once the DFC is partially rolled out, the Mundra port of Gujarat will gain some initial volume. However, he insists that a market-driven rail tariff will finally decide the volume between Mundra and JNPT. He says JNPT’s losses in the short run could be 10-20% of the present ICD (inland container depots) volume, which means cargo originating from dry ports.

The greater the delay in acquiring land in Maharashtra the more the losses the JNPT could incur. Currently, the flagship DFC project faces major land acquisition bottlenecks in 16 locations in Maharashtra’s Raigad, Thane and Palghar districts, according to documents previewed by ET, making it clear that the rest of the project is unlikely to be wrapped up by June 2022, the new deadline set by DFCCIL (DFC Corporation of India Ltd), the railway entity anchoring the project. The deadline for completing the project has been extended multiple times in the past.

A delay in acquiring land in Maharashtra will likely yield a surprise bonus to three Gujarat ports at the cost of JNPT. What’s more, if cargo vessels get used to the new arrangement, will they ever return to Mumbai even after the DFC corridor gets extended to JNPT?

“That Gujarat ports will have a temporary advantage is not by any design. It just happened,” says Anurag Sachan, who was managing director of DFCCIL till last year. “First, land acquisition has been more challenging in Maharashtra. Relocation of families living in the city of Mumbai is not yet over. Second, when Japanese agency JICA gave loan in tranches (since 2010), the Railways decided to start the work from the Delhi end,” he says, adding that in normal circumstances the entire western DFC (1,506 km from Dadri in UP to JNPT) would have completed at the same time. The Rs 95,238 crore DFC project has two components, western and eastern. The eastern corridor, also under construction, runs from Ludhiana (Punjab) to Dankuni (West Bengal).

The completion of a long section of DFC on the western side means that goods from North India could now be ferried at a cheaper rate to Gujarat ports, first via DFC’s trunk route till New Palanpur station before getting those perted on feeder routes — 318 km for Deendayal, 380 km for Mundra and 469 km for

Pipavav

.

What if the same goods needed to be transported to JNPT?

In an email reply, DFCCIL MD Ravindra Kumar Jain explains, “We have planned certain inland container depots at New Swarupganj (Rajasthan) and New Varnama (Gujarat) which, in turn, will provide double- to single stacking facilities for JNPT-bound traffic. These containers will thus have a part journey at a reduced cost before being carried to JNPT on usual Indian Railways’ routes.”

In other words, faster and low-priced, double-stack journeys (rate could be 30% less) will be available between North India and ports of Gujarat whereas for JNPT it will be a break journey, partly in elite double stack and partly in ordinary railway lines.

1

2

LAND IN TROUBLE
Former Railway Board chairman and CEO Vinod Kumar Yadav says JNPT port will continue to be relevant though it will be affected temporarily. “JNPT’s traffic could be hit a bit for some time, but once the entire western DFC is ready, likely to be in June 2022, there will be a level-playing field once more. The Maharashtra government should ensure the remaining part of the land is acquired fast,” he says.

One more year would not have made a big difference, but people associated with the project say it is impossible to complete the rest of the line by mid-2022. They have a reason. Although the non-acquired land impacts just 4.9 km or 0.3% of the length of the western DFC corridor, it is not one stretch. The disputed areas are scattered across several districts, involving too many stakeholders. In a linear project such as highways or railways, even a small dispute over just 100 metres of land could end up stalling the entire project.

A DFCCIL spokesman tells ET that till recently there were disputes in 5.7 km, but since more people have agreed to vacate their homes, allowing local authorities to demolish those buildings, the disputed area has come down to 4.9 km. Though many of these disputes are old, frequent political tussles between BJP-ruled Centre and the state’s Shiv Sena-NCP-Congress government has further slowed down the pace of land acquisition. In some areas, protests against the project are still going on.

Meanwhile, DFCCIL has paid Rs 90 crore as compensation to owners of some 800 structures. As many as 450 buildings have been vacated and demolished in Maharashtra while another 105 are in the process of getting razed, the spokesperson adds.

WHERE WILL CARGO GO?
If the land issue does not get resolved soon, JNPT’s container business is bound to suffer more. It can lose container traffic from north India because of comparative cost and time factors. And Gujarat ports could gain.

In Covid-hit 2020-21, for example, JNPT’s total container cargo business shrunk by 7% to 4.67 million TEUs (twenty-foot equivalent units) from 5 million TEUs a year ago. During the same period, Adani-owned Mundra port witnessed a robust 18% growth in container volumes, registering 5.65 million TEUs in FY 2021, as against 4.81 million TEUs in FY 2020, piping JNPT for the first time to become India’s biggest container port by volume. The government-run Deendayal Port, still better known by its earlier name Kandla, handled only 0.5 million TEUs of containers in 2020-21, which is just 10% of JNPT’s container business. ET’s questionnaire to

Adani

Ports & SEZ Ltd did not elicit any response.

2

According to DFC officials, a new roll-on-roll off (Ro-Ro) rail service, to be unveiled soon, will be useful for JNPT and Gujarat ports. The service, according to the blueprint, will be available for the 646 km stretch from Rewari to New Palanpur; here containerised trucks will be loaded on flat rail wagons, prompting a faster and cheaper journey. At New Palanpur, these trucks will move out of the train and embark on a road journey to their respective ports.

3

“Whether the traffic is meant for JNPT or Gujarat ports won’t matter. Both will be able to piggyback on our rail flat wagons and complete the journey in just 10-12 hours, much less than usual road journeys. This environment-friendly and economically sustainable traffic will equally help the JNPT,” says DFCCIL’s Jain.

Ro-Ro could, for now, assuage some of the fears of JNPT.

( Originally published on Jul 03, 2021 )

Vaccine-making in India for Indo-Pacific region to exceed $1 billion by 2022

The United States is hopeful that expectations for production of one billion Covid-19 vaccines in India for the Indo-Pacific region as part of the Quad plan by 2022 will be exceeded, David Marchick, CEO of the US International Development Finance Corporation (DFC) told ET.

Marchick, currently visiting India to discuss DFC funding for vaccines and green energy projects, is upbeat about vaccine manufacturing capabilities of India including Biological E.

The Biologiocal E has state of the art largest facility in the world to produce significant number of vaccines for Indian domestic requirements as well as for Indo-Pacific region under the Quad plan, Marchick told ET.

On Monday, the US and Biological E finalised a financing arrangement for $50 million to expand the vaccine maker’s capacity to produce Covid-19 vaccines. The arrangement was finalised in March when leaders of the US, Australia, Japan and India – Quad countries – met during a virtual summit.

The US had said it would work via its DFC to finance Biological E’s efforts to produce at least 1 billion Covid-19 vaccine doses for India and developing countries by the end of 2022. Biological E’s new facility, which is already producing vaccines, can and will assist to solve the pandemic, according to Marchick. The supply chain for supply raw material for production of vaccines has also been addressed, he pointed out.

The DFC-Biological E agreement represents a model of the close collaboration amongst countries that will be essential to achieve US President Joe Biden’s goal of addressing the pandemic in 2022, informed sources said. DFC’s investment in Biological E is part of the agency’s Global Health and Prosperity Initiative. India is the most important destination for DFC and Vaccines is not the only area where DFC is investing in India. Projects to address climate change challenges is also on the radar of DFC including solar panels.

ET has learnt that DFC is keen make India a hub for solar panels – a sector currently dominated by China. Besides DFC, last December, announced that it will invest $54 million in equity for the National Investment and Infrastructure Fund to support the development of critical infrastructure projects. The March DFC announced the second disbursement of a $50 million loan to Northern Arc Capital to expand access to loans in several priority sectors across India. Financing will primarily benefit women-owned businesses as well as products and services benefitting women, along with businesses in the food security and water, sanitation, and hygiene.