Ahead of the kharif procurement season, the Food Corporation of India (FCI) has sought equity infusion of Rs 8,000 crore from the Government to meet its additional working capital requirement.

The proposed capital-raising initiative comes at a time when the National Food Security legislation, which seeks to provide cheaper food to the poor, is set to be implemented soon.

Bond market

Officials said FCI had recently approached the Government with regard to equity infusion as the bond market has turned unfavourable to borrowers, forcing the State-run entity to go slow on its proposed plans to raise Rs 8,000 crore. Prior to the equity infusion plans, FCI had planned to raise Rs 8,000 crore through long-term bonds, a proposal awaiting Government approval.

Of the paid-up capital of Rs 2,673 crore raised from the Government so far, FCI has utilised about Rs 1,485 crore towards working capital, while the rest has been spent on construction of godowns and other schemes. As of July 31, the authorised capital of FCI stood at Rs 3,500 crore, according to the corporation’s Web site.

“FCI works as a trading entity and about 98 per cent of the capital raised from the Government so far has been utilised for working capital purpose,” an official said. The proposed capital infusion, when materialised, would increase the equity component in FCI.

In March, ahead of the wheat procurement for the 2012-13 season, FCI had raised Rs 5,000 crore through issue of taxable bonds, backed by the Government, to meet its additional working capital requirement. FCI had raised Rs 300 crore in bonds, which had a 10-year tenure at a coupon rate of 8.62 per cent. The 15-year tenure bonds of Rs 4,700 crore had a coupon rate of 8.80 per cent.