Kayman Sankar Investments Limited (KSI) has reopened its Blairmont, West Bank Berbice mill, that was forced to close four years ago with the loss of 200 jobs, amid a financial crisis the company is only now starting to recover from.
CEO of Kayman Sankar Group of Companies, Beni Sankar said the business was able to come out of receivership after negotiations with the government and the banks. The business received a debt write-off of 60% from the banks and a reduction in the interest rate from 20% to 10% with a period of ten years to repay the loans.
KSI restarted with 40 staff in time for this year's spring crop and did not have to make any investments, as the parts on the mills were in relatively good condition and just needed minor maintenance. Sankar told Stabroek Business he intends to concentrate on value-added products including packaged rice, as well as the parboiled rice processed at the Hampton Court branch - Kayman Sankar & Company Limited (KSC).
He is now preparing to market the packaged rice in all the shops in Berbice and as for overseas exports he intends to stop selling bulk rice.
Sankar said for this crop the company is paying farmers $1,600 for a bag of paddy and has bought 40,000 bags, far short of the mill's capacity of 250,000. So far he has sent eight tons of parboiled rice to Trinidad and recently invested in packaging equipment and a colour sorter at a cost of US$150,000.
Farmers have received 50% of their money and within a month would get the full payment, he promised. He said the price for paddy was high but he had to "go with the flow." And coupled with higher fuel costs, up some 30%, it will mean higher prices for consumers.
Sankar said the fuel price could have been lower if the government had given farmers a break on the tax. In Essequibo, he said, farmers used to pay tractor owners $1,400 per acre to plough, but this crop they paid $2,000. The Rice Producers Association is presently negotiating with the government to give farmers four gallons of duty-free fuel for every acre.
Sankar says he is grateful to the government and the banks for helping him with the restructuring of his loan and is committed to honouring the news terms of payment. But he adds that the only disadvantage is the banks did not give him working capital which is important in terms of volume of production and his assets are tied up as security, meaning he cannot approach another lending agency.
The company still has outstanding debts to private persons, who are coming down hard on them now that it is out of receivership. But, he said, "We would pay, we do not intend to rob anybody. They just have to give us a chance to be more productive."
KSI first started at Blairmont in 1992 with 250 staff at a time when the rice industry was booming due to strong world prices and greater access to the lucrative European market. Sankar wanted to diversify production and cultivated 10,000 acres of land at Vanbetta, West Bank Berbice at a cost of US$15M. The land, which was all swamp, ended up costing US$1,500 per acre to develop. In 1995 KSI saw its Essequibo branch earn a total of US$20.6m out a total of US$90.2m for rice production. But the next year prices plummeted.
Nine years on Sankar is still optimistic for the industry's future, noting that the government has represented the sector in terms of access to overseas markets.