International Finance Corporation (IFC) says it will support irrigation major Netafim India's capex and working capital requirements. The company would require around $75 million for its proposed projects. Netafim India’s parent company, Netafim Ltd, is 80 per cent owned by Orbia (formerly Mexichem)
IFC said that the company is facing delays in receivables caused by the Covid-19 pandemic, which has led to higher working capital requirements. Netafim India requires $75 million of financing for the coming years to support its working capital needs, cover the financing needs of new community irrigation projects, and execute capital expenditure investments to maintain its production facilities. The proposed $75 million long-term financing will be in the form of Non-Convertible Debentures.
Funds will be disbursed to Netafim India to cover its financing needs throughout the country, with the largest use of proceeds being in the states of Andhra Pradesh, Gujarat, Tamil Nadu, Telangana, and Chhattisgarh.
The expected project-level outcome is its contribution to generating better yields for the local farmers and strengthening their resilience to climate stocks. The project in India may have larger benefits given the potential for creating impact at scale using the community irrigation model. It will also contribute to sustainability by promoting water used efficiency in agriculture in several water-stressed regions, said IFC.
Founded in 1965 in the Negev desert in Israel, Netafim Ltd (Netafim) is a global player in the micro irrigation systems (MIS) sector. Clients value Netafim’s team of 200 agronomists deployed globally that provide expertise in all crop types and growing conditions.
The proposed investment consists of a loan up to $20 million (Rs 152 crore) to Netafim Irrigation India Private Ltd (Netafim India), guaranteed by Netafim, to support the working capital needs of Netafim India arising from the Covid-19 crisis, and capex needs to maintain local production capacity. IFC is also considering mobilising a financing package of up to $55 million (around Rs 417.8 crore) with commercial banks and /or development finance institutions (parallel loans) for the same purpose.
It may be noted, Netafim is a key technical partner with IFC in the Better Farming Alliance, a commercial partnership that was launched to bring effective solutions to chili and tomato smallholder farmers in India to help them increase yields, income, and access to markets. Netafim and IFC have also worked on a project combining solar powered pumps and drip irrigation in India, targeting larger crop production systems such as sugar cane, where water use efficiency is critical for sustainability.
Netafim India’s parent company, Netafim Ltd, is 80 per cent owned by Orbia (formerly Mexichem) and 20 per cent owned by Kibbutzim Hatzerim (also the founder of Netafim). One of Netafim’s key factories is also located within Kibbutz Hatzerim.
Orbia, founded in 1953, is a Mexican company involved in several industries, including building and infrastructure, data communications, irrigation, chemicals, and more. Orbia focuses on insuring food security, reducing water scarcity, reinventing the future of cities and homes, connecting communities to data infrastructure, and expanding access to health and wellness with advanced materials.