Project detail - Suminter India Organics Private Limited

Who is our prospective customer?

Suminter India Organics Private Limited ("Suminter", the "Company") is an industry-leading and globally operating integrated business-to-business organic agri supply chain company. The Company sources, processes, and exports certified organic, genetically modified organism (GMO)-free, and sustainably sourced long shelf-life agricultural produce (such as soya, cotton, coconut, oilseeds, spices, sugar) from a network of 90k+ smallholder farmers in India, East Africa (primarily in Uganda and Ethiopia), and the Philippines.

What is our funding objective?

FMO will invest up to INR 2 billion in Suminter in a round with two other investors that recently joined the Company's cap table. The objective of FMO's funding is to acquire shares from two existing shareholders. Together with the other new investors, FMO will support Suminter in expanding its operations and increasing its economic and social support to smallholder famer communities in India, East Africa, and the Philippines.

Why do we want to fund this investment?

FMO will focus on supporting Suminter on (i) strengthening supply chain management practices of the Company through the implementation of FMO's internally developed agri supply chain management process, (ii) developing a climate smart agriculture program for smallholder farmers that the Company works with, and (iii) supporting the implementation of the environmental and social action plan (ESAP) to a high quality together with other investors. On Corporate Governance (CG), FMO will be additional as well by making dedicated CG resources available to draft a detailed CG report, shaping the envisioned CG structure, and providing direct support with establishing the Company's wider CG action plan. On financial additionality, it should be noted that the total deal size is too large for the two other incoming investors and requires the participation from FMO to create strong alignment in the shareholder base going forward. Lastly, FMO is bringing financial additionality by providing liquidity to the market. The investment will be eligible for an Reducing Inequalities label through the Company's economic and social support for 90k+ smallholder farmers in India, East Africa, and the Philippines (incl. providing training on safe and sustainable organic farming practices with the objective of reducing costs and increasing yields, obtaining organic certification which allows the farmers to sell their produce at a premium, and providing them with a reliable market for their produce). Eligibility for a Green label is to be determined.

What is the Environmental and Social categorization rationale?

Suminter’s E&S risk categorisation is Cat. A. Key risks relate to IFC Performance Standards (PS) 1-4, with the potential of triggering PS5 (Land Acquisition and Involuntary Resettlement) (although currently not the case) and with risks for PS6 (Biodiversity Conservation and Sustainable Management of Living Natural Resources) related impacts if improper biodiversity management and monitoring is performed in their supply chain of smallholder farmers. PS7 (Indigenous Peoples) and PS8 (Cultural Heritage) are currently not expected to be triggered, although this will be verified with additional assessments during first year. Due to the various geographies where Suminter operates, including and targeting fragile and conflict affected areas, contextual risks are considered high and require proper assessment and mitigation, for which measures have been proposed. Overall, the combination of contextual risks and E&S risk in accordance with the IFC PS, results in the high-risk categorisation.