Nafed wants Rs 2k-cr interest free loan to erase bad debt

Font Size

Print

Feedback

Email

Discuss

• Discount UK Shopping

Related Articles

Bt brinjal is safe: ChavanImport of fodder seeds likely: PawarPolicy vacuum, supplies behind vegetable inflationIndia deposits rice, wheat seeds in Svalbard Vault

New Delhi: The National Agricultural Cooperative Marketing Federation (Nafed), a 50-year-old body set up to provide marketing support to farmers, is now seeking government’s support to come out of the financial mess. It has asked for interest free loan of Rs 2,000 crore to erase its bad debt incurred because of failed ‘tie-up business’ started few years ago.

Despite making gross profit since last 10 years, Nafed is finding it difficult to sustain its operations due to its huge losses to the tune of Rs 1,000 crore incurred due to its failed ‘tie up business’. The interest liability of around Rs 130 crore annually is wiping out profit made by the federation.

Nafed has asked the government for Rs 1,000 crore interest free loan towards paying off outstanding interest liability and another Rs 1,000 crore for its working capital requirement. In a proposal for seeking financial assistance from the government to bring the federation out of the financial crisis and improving profit sent to ministry of agriculture, Nafed has said that it would pay back entire loan amount within next 10 years out of profit earned from its operation.

“We are not seeking any financial support, we are asking for interest free financial assistance to wipe out our bad debt,” UKS Chauhan, managing director, Nafed told FE.

Under the business tieups arrangement during 2004-06, Nafed had provided bank counter guarantee to 29 private companies to the tune of more than Rs 3,900 crore for undertaking exports in agricultural and non-agricultural items like iron ore, dry fruits etc. But several companies defaulted on repayment. Nafed even made amendments to its charter and decided to invest and give loans to non-agricultural trade and business.

According to sources, major defaulting parties include Delhi-based Earth Tech Enterprises Ltd (Rs 5,37.76 crore), Mumbai-based Swarup Group of Industries (Rs 2,39.91 crore), Zenith Mining Pvt Ltd (Rs 81.45 crore), Rital Impex (Rs 65.29 crore) and Handum Industries (Rs 71.51 crore). While the federation has already recovered Rs 2,900 crore from the defaulting partners, it is paying interest to the tune of Rs 140 crore per annum on the remaining amount. The federation has also initiated criminal proceedings against defaulting companies.