SMEs have a challenge of non availability of funds. What's your opinion on this?
A. R. Sharma: SMEs require very small funding to run, even which they are not even getting from financial institutions. And that is why our industry is facing the challenge of liquidity. I think if bankers ask for collateral security it means that the banker doesn't have faith in their customers... this funda is totally wrong...absolutely wrong.

Another problem with bank finance is the norm of industry-specific categorization of companies. Like oil industry is in the negative list, they said, 'No more funding to oil industry we have very bitter experience.' To some extent all bankers have this same mindset.

Don't you think that bankers are setting up a risk development funds for their own safety?
A. R. Sharma: Yes, they are setting up a risk development fund, but they have also introduced many counters checks for ensuring the safety of the fund. Now they have realized that every industry is lucrative and every industry is competitive.

Now for any more than rupees ten crore fund there is two ratings necessary as per RBI norms. That means if you have rating one for an independent industry which will give the entire picture about your industry that makes the fund safer. Then if you are putting up an other industrial unit then you have to have independent appraisal from approved agency like NETCOM in Chandigarh or from GILT funds so we get an appraisal from that. And these agencies have introduced many counter checks to ensure the safety of the fund then. It beats me why these banks are asking for collateral securities of Rs 50 crore worth of non productive asset... that's the problem of funding to SMEs.

Do you think this is the biggest challenge SMEs are facing?
A. R. Sharma: Of course this is the biggest challenge of SMEs in India. Banks have not come out of their age-old norms. Although the government has introduced so many schemes for SMEs to ensure funding to them, still banks are not forthcoming in lending to SMEs.

Do you agree that funding for marketing or branding is also a hurdle for SMEs?
A. R. Sharma: This is one of the problems that I am also facing because marketing or branding needs lots of investment. There are no such schemes, no government schemes for marketing and branding...nothing. No bank will provide funds for this. It is an intangible asset. No bank will get the collateral security for that so they are not ready to give to loan for brand building activity. And for branding and marketing you need to have huge money, which SMEs are not able afford.

SMEs right now are basically concentrating on their core strength that is production. Now if today you ask me, I am the India's largest producer of refined food cooking oil, instead of extending my market under my own brand called Ricela, I would prefer to tie-up with leading brand players of the industry. So for me because my core strength is production, I feel I should not look at spending on a marketing campaign, as of now.

It means SMEs are more into B2B marketing?
A. R. Sharma: Yes, it is B2B marketing which is best suited to the needs of SMEs and they are using this more now a days.

Is there any alternative for this?
A. R. Sharma: Alternatives are always there like the government has introduced the system of independent appraisal by the agencies, system of rating by independent agencies and if these systems are fine then why there is a need of collateral security. I think it is very difficult to change the mindsets of the bankers as per as the security aspects are concern.

What do you think is the best marketing tool for SMEs?
A. R. Sharma: Tie-ups with the people who have good marketing skills and have good brands. Join hands with them, it is the time for being interdependent.

Now the government has introduced the necessity of Nutrition labeling on the products. What is your opinion on this?
A. R. Sharma: Nutrition labeling is definitely be compulsory. This is one of the preemptive step that the Pepsico has taken. They were using palm oil highly saturated fat then this draft notification came out in the last year in Jan-Feb, I think, and we immediately started looking in that direction.

Please tell me about your organization. What is A.P. Organics Ltd.?
A. R. Sharma: A.P. Organics Ltd. was established in 1992 with the sole objective of producing and promoting “Rice Bran Oil” as World’s Healthiest Cooking Oil”, we are today India’s Highest Production Award Winning Group, located in district Sangrur in the Punjab Province of India, which enjoys the distinction of being one of largest rice producing districts in Asia. Our enterprise has obtained ISO 9001:2000 Certification.

Our mission is to be a leading global player in production and marketing of Health Oils, Functional Foods and Nutraceuticals. While marching ahead we seek to develop highly satisfied customers, business partners and employees. Also, we seek to contribute to the development of communities and protection of environment in which we operate.

Why Rice Bran Oil is considered better than other edible oils?
A. R. Sharma: Both Olive Oil and Canola Oil are not good for frying due to very low smoke point of Olive Oil and very high content of instable alpha linolenic acid in Canola Oil. Hence, these oils are not suitable in Indian context as we mainly use edible oils for frying and not for salad dressings. Rice Bran Oil besides having much better frying stability than Groundnut Oil & Sesame Oil, contains some unique micro-nutrients (Oryzanol & Tecotrienols) because of which it is known to reduce cholesterols better than any other edible oil.

What is your say on Bio-diesel?
A. R. Sharma: Let not burn edible oil for bio-diesel when there is shortage of edible oil itself.