Faced with mounting debts because of a failed tie-up business about a decade ago, National Agricultural Cooperative Marketing Federation of India (Nafed) would soon get a breather, with the finance ministry agreeing to provide the farmers’ cooperative a one-time interest-free loan of Rs 478 crore against the original title deeds of its 17 freehold properties.
The amount will be used to pay back Nafed’s debts as one-time settlements to eight lender banks who have failed to recover an accumulated outstanding dues of R1,600 crore. Besides, the farmers’ cooperative will also assign auction rights of some properties of a mall in Mumbai to eight lender banks which is valued at around R150 crore.
According to Sanjeev Kumar Chadha, managing director, Nafed, the proposal for Nafed’s revival has been cleared by the finance ministry and is currently being examined by the law ministry. A cabinet note would be soon prepared following the nod from the law ministry. “Within the next couple of months, we hope to get a nod from the government,” Chadha told FE.
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As reported by FE earlier, Nafed, which procures mainly oilseeds, pulses and copra from farmers on behalf of the government when the prices of the commodities fall below the Minimum Support Price (MSP), stood guarantor to unsecured loans of R3,900 crore availed by 29 private companies for undertaking exports in agricultural and non-agricultural items during 2003-2006.
As several of these debtors defaulted, the onus of interest payment fell on Nafed, forcing it to take loans. Though the federation has managed to recover R2,900 crore from defaulting partners, the delays have cost it dear and the debt servicing costs mounted to R1,600 crore.
Nafed had in 2014 offered to mortgage its Delhi properties to some of the lenders, as suggested by the debt recovery tribunal (DRT). However, the banks were not very keen as they were not convinced that all property titles were foolproof.
An independent agency had estimated the value of the cooperative’s three properties in Delhi — Nafed House (a nine-storey building at Ashram), a cold storage facility located on Lawrence Road and a private residential property in East of Kailash — at around R265 crore.
