In an attempt to bail Nafed out of a cash crunch, the two financially healthy cooperatives, Iffco and Kribhco, are likely to buy out its two fertiliser units in Rajasthan and Madhya Pradesh. Nafed is under severe financial stress with a built-up debt of Rs 2,000 crore and the government has refused to offer any financial support.
?Due to a huge interest liability on outstanding loans, we are left with no option but to sell our real estate properties and fertiliser units at various locations across the country to improve cash flows and retire debt. Our bio-fertiliser units in the two states would be of interest to the two fertiliser cooperatives and we would soon conclude talks over its sale (with them),? said a senior Nafed official. Both Iffco and Kribhco refused to comment.
Each fertiliser cooperative has the option to buy either or both of the units on the block.
Nafed has to repay Rs 2,000 crore it has borrowed from various banks. Many observers believe that the cooperative is trying to improve its financial position through the sale of its fertiliser manufacturing units. The cooperative has recently cut 10% of employees salaries and had also offered a Voluntary Retirement Scheme (VRS) to its employees to bring down its administrative expenses.
?We are supposed to get around Rs 1,500 crore from various tie-up business, but the matter is with the Delhi HC and we are unable to receive any money till the time the case is resolved,? the official added. After the government refused to help, the cooperative took measures to cut its losses independently. ?In a recent meeting among various cooperatives, it was decided that the healthy fertiliser cooperatives could support us,? the official added.
The federation in 2012 had submitted two proposals for loan restructuring to the agriculture ministry. However, the agriculture ministry has rejected the plan.