Debt-ridden Nafed plans to mortgage Delhi propertieshttps://indianexpress.com/article/business/business-others/debt-ridden-nafed-plans-to-mortgage-delhi-properties-2/

Debt-ridden Nafed plans to mortgage Delhi properties

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By: Sandip Das

Saddled with accumulated losses of about Rs 600 crore and having piled up a debt of Rs 1,800 crore to a consortium of banks, National Agricultural Cooperative Marketing Fedration of India (Nafed) is resorting to mortgaging of its prime properties in the capital to stay afloat.

The Debt Recovery Tribunal (DRT) is learnt to have asked Central Bank of India, one of the lenders to Nafed, to complete the valuation of the latter’s three properties — Nafed House (a nine-storeyed building at Ashram Chowk), a cold storage facility located on Lawrence Road and a private residential property in East of Kailash — before being mortgaged to banks.

The proposed mortgaging is expected to fetch the cooperative some Rs 265 crore, helping it retire the debt partially and reduce the interest burden because of which it has been posting net  losses since 2007-08.

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Thanks to the stressed financial position, Nafed’s operations have been severely crippled. Except the paltry commission it gets from the government for its price support measures, it has little other means of income, as its commercial presence in the farm goods market is almost non-existent now. Nafed hopes that part payment of the debt will enable it to take fresh loans (as Nafed’s account with banks would cease to be NPA) to expand operations.

What did Nafed in was its 2006 decision to become guarantor to unsecured loans of Rs 3,900 crore availed by 29 private companies for undertaking exports in agricultural and non-agricultural items like dry fruits, iron ore, etc.

As several of these debtors defaulted, the onus of interest payment fell on Nafed, forcing it to take debt. The federation has managed to recover Rs 2,900 crore from defaulting partners so far, but the delays have cost it dear (see table).

As a part of settlement of Nafed’s debt, an Escrow account has been opened with Central Bank of India where recoveries from the defaulting private companies are being put. The DRT, sources said, asked the defaulted parties in a separate case to pay Rs 200 crore to Nafed as part of arbitration awards.

Nafed specialises in procurement of copra, oilseeds, cotton and pulses. It undertakes market intervention activities when the prices of these agricultural commodities fall below the minimum support prices.     FE