Telengana banks step up collateral demand from bird-flu hit poultry industry

HYDERABAD: Telangana's poultry sector claims to have been hit with a double whammy: a month after bird flu hit chicken sales, the industry says banks have asked them to provide additional collateral on loans taken.
“The poultry sector in and around Hyderabad alone has suffered losses of at least 300 crore, hitting small and medium players badly on account of the recent bird flu outbreak. Arranging additional collateral is impossible for the loss-making units,“ said Errabelli Pradeep Rao, president, Telangana Poultry Federation.

Bird flu was detected in a poultry farm in Thorrur village of Rangareddy district, adjacent to the capital city, in April, after which about 1.6 lakh birds were culled to contain infection.

Poultry consumption was hit last month and although the situation returned to normal, demands for chicken dropped by 15-20% in the region.

“At a time when we are worried over the huge losses by bird flu outbreak in the region and planning to seek additional financial support, the bankers are hostile to us and insisting on additional collateral on existing loans,“ said the proprietor of a medium-sized company in Telangana, requesting anonymity.

The poultry firms are now seeking the government's help by asking state-level bankers' committees to consider waiving the additional collateral while providing supplementary overdraft facilities and loans.

The Telangana Poultry Federation is talking to the bankers and appealing for help to overcome the crisis. “We are also asking the state government to press the bankers to consider the problems favourably and bail us out,“ said Rao.

An official from Andhra Bank, who declined to be identified, confirmed it had sought additional security, that the loans might turn bad due to troubles in the sector.Spokespersons of State Bank of India and State Bank of Hyderabad did not respond to text messages seeking comment. Most loans to Telangana's poultry industry have been advanced by state-owned banks that sought to meet their annual priority sector-lending targets. Of about ` . 21,990 crore loans disbursed by banks in Telangana to agriculture last year, the poultry sector received almost ` . 3,000 crore.

Telangana accounts for a fifth of . 90,000-crore Indian poultry inthe ` dustry. Almost 70% of more than 10,000 poultry farms in the state belong to small and medium entrepreneurs.

“While there are no major issues for large enter prises, most of the small and medium players were finding it highly difficult to serve the existing debt...forget about arranging additional collateral,“ said D Ram Reddy, MD of the 1,400-crore Sneha Farms & Feeds Group, which controls 20% of the live chicken market in Telangana and Andhra Pradesh.