Commodity bourse National Spot Exchange (NSEL), promoted by Financial Technologies, defaulted in its very first part settlement to its clients on Tuesday, bringing true their worst fears.
The commodity exchange, which had last week given a detailed schedule to pay Rs5,574 crore in 30 weeks through part payouts, managed to collect only half of the amount planned for the first week from 15 members. As against a payout obligation of Rs174.72 crore, it received Rs92.13 crore.
The exchange could not recover anything from nine members.
These include top defaulting members such as NK Proteins, Ark Imports, Yathuri Associates and Tavishi Enterprises, which owe Rs967.15 crore, Rs719.42 crore, Rs424.64 crore and 333.01 crore, respectively.
The failure to meet the very first payout means the exchange may take longer than the seven months it has sought to complete the entire settlement, unless the government intervenes earlier.
The exchange will pay the Rs92.13 crore to 148 clients in proportion of their dues. Indian Bullion Market Association, Anand Rathi Commodities, India Infoline Commodities and Geojit Comtrade, which have large amounts of money stuck with the exchange, will receive Rs19.17 crore, Rs10.50 crore, Rs5.34 crore and Rs51.3 crore, respectively.
Meanwhile, in order to save its face, the beleaguered exchange sacked Anjani Sinha, the MD and CEO, and other six heads of department.
“The board decided that the current key management team headed by Anjani Sinha, MD & CEO, and other relevant heads of departments be removed from their current assignments, pending an enquiry. Anjani Sinha will cease to be the MD & CEO of NSEL with effect from August 20 and will be a special officer assisting in recovery process,” said an NSEL release.
The move comes after the Forward Markets Commission made known its displeasure over the way things were being handled at NSEL.
“Despite several directives by the Commission, NSEL had given different information on different occasions, even just one day prior to the first Scheduled pay out date. This casts serious doubt on the reliability of the figures submitted by the NSEL and also raises doubt on the seriousness of the Management and Board of the NSEL regarding settlement of the outstanding obligations,” FMC had said in a release on Monday.
Sensing trouble, market participants heavily dumped the stock of Financial Technologies, which closed at Rs141.30 – its lowest since November 2004.
The NSEL board has appointed P R Ramesh, a former Sebi official with over 20 years in legal practice, as the officer on special duty (OSD) to exercise all powers of a CEO of the company and report directly to the board.
NSEL said it is also conducting a special investigation under the OSD to identify various lapses that may have been caused in the operation of the exchange and to suggest corrective and consequential actions for recovery of outstanding dues.