IFC may take equity in NCMSL

International Finance Corporation (IFC), part of the World Bank group, is considering an equity investment of up to $7.5 million (around Rs 35 crore) and a loan investment of up to Rs 60 crore in National Collateral Management Services (NCMSL). The company is promoted by leading financial institutions, including those from the public sector. The proposed investment is to support the company’s Rs 420-crore investment plan.

NCMSL is an independent provider of integrated supply chain solutions as well as risk management services for producers, traders and end-users of agricultural and non-agricultural commodities.

The promoters include institutions such as Punjab National Bank, Indian Farmers Fertilizer Cooperative (Iffco) and the National Commodity Exchange of India (Ncdex) having 13.56 per cent stake each; Corporation Bank (11.86 per cent); Canara Bank, Bank of India and Karur Vysya Bank with 10.17 per cent stake each; HDFC Bank and Haryana State Cooperative Supply & Marketing Federation (5.09 per cent each); Audit Control and Expertise Group (ACE) and Indian Bank (2.54 per cent each) and Yes Bank (1.69 per cent).

NCMSL is planning to invest around Rs 420 crore, of which Rs 280 crore is proposed to be raised through debt from IFC and local banks and Rs 140 crore from equity and internal accruals. It is planning to implement the project in two phases over three to four years. The proposed debt-to-equity ratio of the project is 2:1.

The project involves construction of warehouses in Haryana, Rajasthan, Uttar Pradesh, Madhya Pradesh, Andhra Pradesh, Karnataka, Kerala, Gujarat, Tamil Nadu and Maharashtra. The warehouses will primarily be located in rural/ semi-urban areas.

The proposed investment would help bring efficient agriculture supply chain solutions and promote inclusive growth, as several of the proposed warehouses would be located in low-income states. Around 50 per cent of NCMSL’s current (leased) warehousing capacity by volume is located in UP, MP and Rajasthan, while 33 per cent of the new (owned) warehousing capacity is proposed to be established in these states.

The company operates around 400 warehouses taken on short/ medium -term lease contracts across the country in over 80 locations.