In a bid to come out of huge losses of Rs 1,000 crore incurred due to its failed ‘tie-up businesses’, National Agricultural Cooperative Marketing Federation (Nafed) aims at increasing its turnover by as high as 55% from its last year achievement.

The federation is aiming at a turnover Rs 7,300 crore for the current fiscal, up from Rs 4,706 crore achieved during the last fiscal. At the start of the current fiscal, Nafed had set a target of achieving a turnover of Rs 4,900 crore during 2008-9.

Besides being a key agency in the arena of onion exports and the procuring agency of the government under the Price Support Scheme for 25 agricultural commodities, Nafed would now focus on areas like bio-fertiliser, promoting organic firming, seeds business and wearhousing and processing sectors to achieve its turnover target.

?There is difficulty in mobilising funds from the financial institutions for rapid expansion due to failure of tie up business,? U K S Chauhan, Managing Director, Nafed told FE. He said that the federation is looking at new areas to repay the Rs 1000 crore outstanding loans at the earliest so that it need not hefty interest of close to Rs 140 crore for annum on the outstanding amount.

Under the diversification plan, Nafed has entered into seed business aggressively by recording a turnover of Rs 21.16 during the last fiscal. ?We see opportunities in seed, bio-fertiliser and wearhousing business in the coming years,’ Chauhan said.

Nafed has entered warehousing sector on a long-term basis for providing infrastructure support to farmers. It has initiated construction of two multi commodity pack houses of 500 tonnes capacity with ancillary units for sorting, grading and pre cooling at Chindwara, Madhya Pradesh.

For expanding bio-fertiliser business, Nafed has set up two plants at Indore (Madhya Pradesh) and Bharatpur (Rajasthan). The total turnover of Nafed on bio fertiliser business during 2007-8 was to the tune of Rs 2.28 crore.

Due to substantial interest outgo because of failed business tie ups, Nafed has recorded a marginal profit of Rs 1.77 crore during the 2006-7 despites making a Rs 42 crore profit. Similarly due to mounting interest burden on the outstanding loan, the federation, which was set up in 1958 to foster farmers’ interest, despite making a profit of Rs 88 crore recorded a loss of Rs 56 crore last fiscal.

Under the business tie up arrangement during 2004-6, Nafed had released advances to the tune of more than Rs 3,900 crore to private companies to undertake exports in agricultural and non-agricultural items. But several companies defaulted on repayment of Nafed as advance.

While the federation has already recovered Rs 2900 crore from the defaulting partners, it is paying interest to the tune of Rs 140 crore for annum on the remaining amount.

The federation had entered into MoUs with 30 companies for exports of materials such as iron ore, dry fruits even wheat where the federation extended credit facility to the private farms. Even Nafed made amendments to its charter and decided to invest and give loans to non-agricultural trade and business.

According to information accessed by FE, major defaulting parties include Delhi-based Earth Tech Enterprises Ltd (Rs 537.76 crore), Mumbai-based Swarup Group of Industries (Rs 239.91 crore), Zenith Mining Pvt Ltd (Rs 81.45 crore), Rital Impex (Rs 65.29 crore) and Handum Industries (Rs 71.51 crore).