It was a day of drama with investors in the National Spot Exchange (NSEL) organising a demonstration rally outside the office of the crisis-hit exchange to demand their money back and the beleaguered exchange declaring another 10 borrowers as defaulters thereby bringing the total number of such entities to 19.
In response, Jignesh Shah, promoter of Financial Technologies India (FTIL), the holding company of NSEL, clarified that while there have been “lapses” at the exchange, the management assured that these will be “fixed”. He, however, added that his companies have not done anything “improper or unethical.” He said that the exchange is extending all support to Grant Thornton for the forensic audit and the report will be put up shortly.
Meanwhile, P R Ramesh, who has been brought on board to handle the crisis at NSEL, said that the exchange has declared another 10 entities as defaulters while adding that some of the defaulters have been backed by big clients. This has further aggravated the payment crisis as collectively these 19 defaulters — that have made total pay-ins of only R56 crore in the first two weeks of the settlement cycle - account for R5,238.4 crore or nearly 93% of the total outstanding positions.
The list of defaulters includes P D Agroprocessors, Mohan Industries, LOIL Continental Foods, LOIL Health Foods, Juggernaut Projects, Swastik Overseas, White Water Foods, Namdhari Food, Shree Radhey Trading and Namdhari Rice & General Mills.
Earlier this week, NSEL had announced names of five defaulting members against which it filed complaints with investigative agencies since these entities did not have adequate commodities in their warehouses. The decision was based on the findings of the commodity certifying agency SGS, which was appointed by the exchange earlier this month to execute stock inspection.
The five defaulters against whom complaints were filed and who collectively are responsible for R2,381 crore of settlements include N K Proteins, ARK imports, Yathuri Associates, Lotus Refineries and Vimladevi Agrotech.
Meanwhile, two directors — C M Maniar and N Balasubramanian — resigned from the board of FTIL on Wednesday - a day after the listed entity extended a bridge