NSEL to liquidate defaulters’ assets FMC Asks Exchange To Recover 83Cr Payment Dues From 9 Entities

Mumbai: The Forward Markets Commission (FMC), the regulator for the futures trading in commodities in the country, on Wednesday asked the crisis-ridden National Spot Exchange (NSEL) to take possession of the assets of all those nine defaulters to liquidate and recover the Rs 83 crore that they have jointly failed to pay to the exchange.      The nine defaulters now stand to lose some of their assets to auction for meeting their pay-in obligation to NSEL. These nine entities include Ark Imports, Loil Overseas, Lotus Refineries, N K Protiens, NCS Sugars, Spin Cot Textiles, Tavishi Enterprises, Vimladevi Agrotech and Yathuri Associates.      In its payout on Tuesday, compared to a total outstanding liability of Rs 174.7 crore, the exchange could pay to its investors only about Rs 92 crore. This was the first of its 30 such weekly payouts scheduled to take place every Tuesday till March 2014, and the total amount involved is close to Rs 5,600 crore. However, with the exchange defaulting nearly 50% of the amount in its first payout itself, investors are now skeptical about how much of the total liability the exchange will be able to meet.      In a letter to the NSEL board, FMC pointed out that under the rules of trading on the commodity bourse, the exchange should ask all the defaulters to hand over their "books, documents, papers, assets, cheque books and other documents, as may be specified by the exchange and the same should vest with the exchange for the benefit of the creditors". It instructed NSEL to move to liquidate all realizable assets of the defaulter members to meet their pay-in obligations, which in turn should be passed on to the investors who are to receive money from the exchange.      FMC told NSEL that the proceeds of commodities auctioned and money realized from the defaulter should be done in the shortest possible time. The money received by auctioning the assets of the defaulters should be deposited in the escrow account opened for this purpose. In turn this money should be paid to those who are to receive pay-ins from the exchange, but the same should be done with the approval of the regulator.      On Wednesday, NSEL investors who were to receive money from the exchange, received part of their money into their bank accounts. Each investor got about 1.64% of the total receivable after 5% of the net receivable being deducted as value added tax (VAT), one of the investors said. According to the earlier plan published by NSEL, each investor was to receive about 3% of their net receivable every week for the next 20 weeks, and then about 1.5% every week till March 2014. They are also entitled to get interest at the rate of 8% per annum for the delay in payment.  Govt won't take over NSEL board  New Delhi:The government is unlikely to take over the board of NSEL, arguing that it does not have the technical wherewithal to deal with the crisis. "Taking over the NSEL board is not a big issue but the problem is managing it since we do not have the expertise," atop source in the ministry of consumer affairs said. Government officials said the move was also not being pursued as the promoters would be able to get away without ensuring pay outs that add up to nearly Rs 5,600 crore. The ministry said it wanted the finance ministry and Sebi to take charge of the commodities market. TNN GETTING INTO A SPOT  May 2005 | NSEL is incorporated as a company  2006 & 2007 | Signs MoUs with various state governments  June 2007 | Receives govt exemption to launch contracts that allow delivery of goods after several days  Oct 2008 | Commences live trading, providing deliverybased spot trading in 52 commodities  March 2010 | Launches first contract under e-series that uses demat accounts for traders and investors  Apr-Aug 2012 | FMC seeks data, suspects norm violation July 31, 2013 | NSEL suspends trading in most contracts after a ministerial directive to change the structure of contracts; the move affects volumes and leads to a payment crisis  Aug 14 | NSEL seeks eight months to settle dues  Aug 19 | NSEL giving wrong info, says FMC as govt mulls stock audit  Aug 20 | NSEL defaults on dues; top brass, including its chief executive, is sacked  Aug 21 | FMC tells NSEL to take possession of the assets of nine defaulters who failed to pay the exchange an aggregate amount of Rs 83 crore