PUNE, May 7: Dinesh Agro Products Ltd (DAPL), a Pune-based mushroom grower whose plans to set up a canning facility suffered a setback through the under-subscription of its Rs 2.75 crore public issue last year, has now secured additional bank loans worth Rs 2 crore. It is also in the process of accessing cheaper foreign funds to the tune of 3.626 million pounds which are being arranged by a prospective joint venture partner.

DAPL managing director Ramakrishna More told The Financial Express that the company is entering into a joint venture with the US- based Oregon Freeze Dry, of Albany, which will arrange the foreign loan from Barclays Bank for DAPL.

Under the terms of the proposed joint venture, Oregon Freeze Dry will also provide the technology for freeze drying mushrooms, whichs is beleived to have a good market in the USA.

DAPL's Rs 2.75 crore public issue was subscribed to the extent of Rs 80 lakhs, leaving a Rs 1.95 crore shortfall. The Rs 2 crore bank loan which DAPL has now raised is in addition to the Rs 75 lakhs which FIs had put in at the time of the public issue.

The shortfall in the subscription had meant that DAPL was unable to instal its canning facility, which in turn meant that it could not export its product. Exports had been the main thrust for the project, which has an equity partnership with the British firm, Macon.

Now, the Rs 2 crore infusion via bank loans will allow DAPL to set up the canning facility, with an installed capacity of 840 tons per annum (tpa). Exports of canned mushrooms are expected to begin from June with export orders worth Rs 20 crore in hand.

DAPL is in the process of expanding its capacity from 1250 tpa to 2800 tpa, of which 800 tpa will be for fresh mushrooms and 840 tpa will be canned. Exports are expected to account for 2,100 tons while 700 tpa will be sold on the domestic market. India exported 20,000 tons of mushrooms last year. DAPL is also in the process of getting Rs 75 lakhs as grant-in-aid from the central government, having got Rs 75 lakhs from the State Industrial and Investment Corporation of Maharashtra (SICOM).

More said while the foreign loan would help them bring down interest costs, from 16.5 per cent to 8 per cent, the freeze drying capacities would allow them to export freeze dried mushrooms to the lucrative US market. He was confident that they would be able to export 150 tons per annum of freeze dried mushrooms to the US, where they command a price of $32 per kilogram. DAPL has appointed a broker in the US for their canned mushrooms in an effort to eliminate middle men and extract the best prevailing international price for the product, now ruling at $8 to $10 per kilogram. At present, Indian exporters realise a meagre $1.5 per kilogram, which is also viable. By appointing brokers, DAPL expects to be able to sell at the rate of $30 per case, amounting to about $3 per kilogram. While DAPL requires a US Food and Drug Administration (FDA) licence to export its produce, More said the broker, an authroised validator, has arranged for an `in principle' sanction. By June he was confident of getting the licence.

Seven container loads, weighing 600 tons, will be exported to Europe in May, once their canning facility is installed. DAPL has a buy-back arrangement with its British partner, through whom it is accessing the European mushroom market.

Macon Agri Ltd holds 5 per cent of the total equity of Rs 7.50 crore, having invested Rs 36 lakhs in DAPL.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.