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Project Finance Expansion Grain Business in India

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International Business News shows that Dunar, headquartered in Karnal, India is in the business of procurement, processing and supply of basmati rice. About the Company: it owns two production facilities in Karnal, Haryana (modernized in 1996) and Amritsar, Punjab (commissioned in March 2010). The processing capacity of Karnal facility is 26 tons per hour (tph), while that for Amritsar facility is 24 tph.

Following Risk Management Reports received Dunar plans to invest in the expansion of 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 ton and rice husk-based power generation capacity of 3 MW in Karnal and a new rice husk-based power plant of 2 MW in Amritsar (in addition to the existing 1 MW capacity).

Mr. Surender Gupta with his wife and children and Mrs. Kanta Gupta own 63% and 28% of Dunar, respectively. The remaining minority shares are owned by Mr. Gupta’s mother and Dunar’s management. They are the Project Sponsors.

Proposed Project Finance cost of about US$140 million includes capital expenditure for the expansion as well as additional working capital requirement associated with increased sales. The Company plans to raise up to US$30 million in equity and fund the remaining project cost by internal cashflow and working capital debt.

Hindmarsh LLC proposed how to finance it: IFC to invest up to US$30 million in total with combination of equity (up to 20% of the Company’s share capital) and A loan. Then, Hindmarsh LLC will arrange for a Private Equity Fund to invest about US$10 million in equity as a co-investor to the IFC investment.

The Company owns two production facilities in Karnal, Haryana and Amritsar, Punjab where the Project will take place.