By IANS,
Chennai : Coimbatore based start-up venture Sara Cotton Fibres Private Ltd plans to cultivate cotton and soya in 25,000 acres in Ethiopia and also set up a cotton ginning facility in the African country.
“We will grow long staple cotton on the 25,000 acre land leased for 25 years in Ethiopia. The land in a single stretch is along the Omo river there. We have raised $6.4 million through a mix of debt and equity,” chief financial officer K.S. Sundhar Rajan told IANS over phone from Coimbatore.
He said cultivating cotton on 25,000 acre in a single stretch is something new in Ethiopia.
“We will cultivate cotton and soya alternatively. We will import the seeds from Israel and farm equipment from the US and India,” Rajan said.
He said the start-up company’s equity currently stands at around Rs.3 crore.
Sara Cotton has raised $6.4 million through debt and equity to fund its Ethiopian farm plans
The company has raised debt to the extent of $4.5 million from the Development Bank of Ethiopia, a leading government owned bank in Ethiopia, while a combination of overseas and Indian high networth individuals as well as institutional investors have invested $1.9 million for a 14 percent stake.
Chennai based Kalpathi Group has a 58 percent stake as a strategic investor.
According to Sara Cotton, demand for cotton is expected to grow and to keep up with current demand projections, new cotton production of 20 million bales would be required.
Sara Cotton will also set up ginning facility in Ethiopia and bring the ginned cotton to India.
According to Mohammed Saleem, founder CEO of Sara Cotton, the Ethiopian government has offered three tax holidays, duty free machinery imports and duty free import of spares up to 15 percent of the machinery value.
The Ethiopian government has also recently announced cotton as a priority sector for the country, he said.