NSEL crisis: Taxmen raid Anand Rathi, more names on radar

Written by fe Bureau | Mumbai | Updated: Sep 25 2013, 18:19pm hrs
Anand Rathi
The income-tax department on Tuesday raided domestic brokerage firm Anand Rathi on alleged suspicion of tax evasion on investments in the National Spot Exchange Ltd (NSEL), which is caught in a payment crisis.

The firm has an exposure of Rs 629 crore with NSEL, the highest among all domestic brokerages. According to sources, the raids were conducted on 20 locations of the brokerage firm. The raids are part of the I-T department probe into the role of brokers and investors that traded through these brokerages.

Jignesh Shah: Financial Technologies India Ltd (FTIL)

The tax sleuths are examining the money trail to ascertain whether the money was properly audited in the books of the brokerages. The tax agency is especially looking into the proprietary trades of the brokers to ascertain the source of funds.

Multi Commodity Exchange of India Ltd (MCX)

Recently, Motilal Oswal Financial Services clarified that out if its total exposure of R254 crore in the NSEL matter, a little over R57 crore was with respect to the proprietary positions undertaken by the group.

Meanwhile, the I-T department has already sought the details of all the investors from brokerages and will check if some of the larger entities have the money accounted in their books. Reports suggest that the I-T department will soon issue notices to more than 20 borrowers that entered into trades without being backed by commodities.

It is believed that the I-T department would soon conduct similar raids on the offices of other brokerages that have an exposure towards NSEL.

Apart from Anand Rathi, domestic entities such as India Infoline Commodities, Geojit Comtrade, Systematix Commodities Services, Motilal Oswal Commodities Brokers, AUM Commodity, Purvag Commodities and Derivatives and Emkay Commotrade also have substantial exposure in the spot exchange.

The tax department is not the only government agency that is currently probing the NSEL matter. The Economic Offences Wing (EOW) is looking into the aspect of criminal intent, cheating and misappropriation of funds.

FTIL accounts cannot be relied upon

Financial Technologies India (FTIL) on Tuesday informed the stock exchanges that the accounts of the firm for the year ended March 31 should no longer be relied upon due to the crisis in its subsidiary National Spot Exchange (NSEL).

FTIL said due to this its standalone and consolidated accounts for FY 13 may undergo amendment together with revised auditors report which will be approved and published once the amendment is finalised. The company on a conservative basis has decided to defer the agenda item numbers 1,2 and 5 of the notice of the AGM scheduled on September 25 to respect the auditors view and will satisfy the statutory auditors of the company on financial accounts though standalone and consolidated financial statements have been audited prior to the event at NSEL, the company stated.

As per standalone financials of FTIL, the total income forms part of revenue generated from NSEL during the FY 2012-13 is largely on account of technology services which contributes only 4.79% of the total income of FTIL, further there is no outstanding amount pending against the same.The contribution from revenue generated from NSEL in the net profit is only 6.56%.