OST Business Bureau
Bhubaneswar, Sep 30:
The Odisha government has decided to restructure the capital fund of the Odisha State Cooperative Marketing Federation (MARKFED) with a net worth of Rs 95.30 crore by turning its Rs 177.27 crore of debts into equity.
The government will scale up its equity participation in the MARKFED to Rs 206.83 crore from the present level of Rs 29.56 crore which would allow the Federation to boost its bottom-line and business to the tune of Rs 1,000-crore level per annum.
The capital restructuring plan has been prepared by the UK-based management consultancy firm Deloitte.
The decision was taken at a high level meeting at the State Secretariat here recently in the presence of additional chief secretary, Finance UN Behera and secretary, Cooperation Bishnupada Sethi.
The meeting felt MARKFED should be a financially viable organisation without any dependence on the government to deliver its mandated services to farmers.
The Federation, which provides agricultural inputs like fertilisers and pesticides and procures produce of farmers, is of late, facing heavy loss due to the default of Regional Cooperative Marketing Societies (RCMSs) for which it could not repay its loan to the government.
With a loss of Rs 114.82 crore till March 31, 2013, the Federation is not considered creditworthy by financial institutions, including commercial banks.
It was decided in the meeting that instead of writing off the loans and accrued interests amounting to Rs 177.27 crore, the amount would be turned equity of the state government to enable the MARKFED to have a net worth of Rs 95.30 crore.
With an improved net worth and an improved balance sheet, the MARKFED would achieve creditworthiness to have access to adequate and low-cost borrowings from banks and other financial institutions at competitive rates.
The Federation would be able to raise the required working capital of Rs 200 crore to have a business turnover of Rs 1,000 crore, which is now at the level of Rs 700 crore as envisaged in the Business Optimisation Plan, official sources said. (MM)