Multi-trade organisation Vibaantta Global has entered the sugar business and its acquisition of US-based BGE Global Distribution Inc. earlier this year is to handle the commodity’s trade.
It plans to open a subsidiary of BGE Global Distribution, a Florida-based company specialising in the distribution of food-based commodities, particularly refined sugar sourced from Brazil and other South American countries, in Brazil for the sugar business and import ethanol into India, the company’s director Paras Sachdev said. “This acquisition isn’t just a business transaction; it’s a testament to Vibaantta’s vision for the future of food,” he told businessline in an online interaction.
Paras Sachdev, Director of Vibaantta Global
Vibaantta, which entered the rice business recently, has entered the sugar trade with ICUMSA 45 sugar, which is highly refined and high-quality. In India, S-30 grade sugar, which is ICUMSA 150, is produced.
Sugarcane allocation
“West Africa, Europe, the US and the Middle East consumed ICUMSA 45 sugar. East African nations consume grades such as S-30. In sugar you need allocation (of sugarcane area) for the next 3-5 years. In Brazil, these allocations are made in November and December,” said Sachdev.
Vibaantta plans to get as much sugarcane allocation as possible. Since it produces ICUMSA 45 sugar, it will be “easier to produce ethanol”. This is where the company thinks it can import ethanol directly into India. Vibaantta plans to acquire stakes in “certain factories” in Brazil. “We are talking to a few of the biggest hedge funds in India and the US, mainly owned and managed by Indians. We plan to do 5-6 million tonnes annually, he said.
The sugar business will mainly be based in Brazil, which has the latest technology including in ethanol manufacturing and huge production capacity. Vibaantta, which plans to export about 6,00,000 tonnes of rice this fiscal, will export to West Africa, the Middle East, the US, India and China. “We are trying to import rice into Brazil,” he said.
Food reserves
Recent floods in the southern part of Brazil resulted in a 40 per cent rice production loss. Due to this prices have increased by $300 a tonne. “The quality of the rice there is the same as in India. So, we are planning to enter the import market here,” he said.
Stating that the company’s focus has been on food commodities, Sachdev said Vibaantta would like to work on food countries in some of the African countries. “In many of the African countries, whatever they purchase are consumed immediately. For example, Liberia consumes 30,000 tonnes of parboiled rice every month but there is no food reserve. It does not have funds, too, to keep reserves,” he said.
Over the next five years, the company will focus on these African nations and help them build their food reserves for sustainable growth. “Our focus is to bring India everywhere,” said Sachdev.
Taking mills on lease
Vibaantta, which entered manufacturing of medical devices and glassware for a few international brands has two offices abroad — London and Dubai.
The company entered the rice business by taking on lease mills in Gondia and Balaghat, Madhya Pradesh. Both are plants that produce parboiled rice. After acquiring these mills, Vibaantta expanded its network to Africa. “We are in about 15 countries in Africa, have an office in Dubai and a warehouse in Abidjan now,” said Sachdev.
Though the company is not doing any government-to-government deals, it got requests from Ghana, Gambia, Liberia and Cote d’Ivoire. Parboiled rice accounts for 90 per cent of Vibaantta’s rice business, while basmati accounts for the rest.
Vibaantta exports “a very small quantity” of white rice, to Maldives which the government has allowed to improve bilateral relations.
On the 20 per cent duty on parboiled rice exports, Sachdev said when Vibaantta entered the business parboiled prices were about $300-320. Since India imposed curbs, prices have doubled in the global market “At this point, if I have to do a shipment from the Nava Sheva port to Cote d’Ivoire, the per tonne price is about $600 due to freight costs besides the 20 per cent export duty,” he said.
Reining in prices
Shipping freight has doubled or trebled over the past few months. “For a product that we are sending to Libya, the cost is $5,000 per container,” he said.
The current high prices for parboiled rice has left the African countries struggling to rein in on traders and distributors on the pricing side. “In Liberia, the government has stepped in to control since traders have also increased the margins along with the rise in rice prices,” the company’s director said.
One of the major challenges that rice exporters face while trading with Africa is that the banking system with India is not strong. “Everything has to be rooted through other countries and because of that, again, additional margins are imposed and prices go up because of all these things,” said Sachdev.
On kharif production prospects for rice, he said India could produce 137-139 million tonnes this year.
Sachdev said his objective is to make his company a big conglomerate. He also wants to be the youngest person to take the company public by 2025-26.
