Police action spurs NSEL defaulters

NSEL is currently facing a Rs 5,500 crore payment crisis

Fearing action from the economic offences wing (EOW) of the city police, borrowers of the National Spot Exchange (NSEL) have started queuing to sign settlement agreements with the beleaguered spot commodity trading platform, struggling to resolve a Rs 5,500-crore payment crisis.

Both NSEL officials and Jignesh Shah, the promoter, hinted on Wednesday that many borrowers were negotiating for paying their dues.  According to informed sources, Chandigarh-based Yathuri Associates, the fifth largest defaulting borrower, with a payment obligation of Rs 421 crore as on December 11, is negotiating for a 10 per cent cut and a two-year timeline for full repayment. “While the exchange might consider the ‘haircut’, the timeline looks a bit stretched. We are looking for a maximum of a one-year settlement period,” said an exchange source.

Efforts to reach Gagan Suri, chief executive officer of Yathuri, did not elicit a response.

NSEL’s fourth largest borrower, Mohan India, had signed a settlement agreement with NSEL with a 15 per cent haircut, approved by a local court. However, the commodity derivatives market regulator, the Forward Markets Commission (FMC), is yet to do so. FMC had sought a clarification on the agreement between Mohan India and NSEL. As on August 15, Mohan had a total payment obligation of Rs 575 crore.  FMC had asked NSEL for details of the source of funds to bridge the latter’s ‘haircut gap’.

Meanwhile, FMC has granted permission to NSEL to distribute Rs 11 crore already paid by Mohan India and in the exchange’s escrow account. The amount will be distributed in the next settlement cycle. Another defaulting borrower, Aastha Minmet with a total payment obligation of Rs 26.5 crore as on August 15, is also in active discussion with NSEL for signing a settlement agreement.

“We are evaluating legal aspects for the agreement, which will be clarified very soon. We will sign the agreement with NSEL shortly, without seeking any haircut. We find a difference in the figure of around Rs 5 crore, which we are currently working on with the exchange,” said Mohit Aggarwal, director, Aastha Minmet.

In another development, Spin Cot Textile, with a payment obligation of Rs 38.3 crore as on August 15, has also shown interest in negotiating with NSEL for a settlement. The high court here had recently asked the company to pay a minimum of Rs 50 lakh a month and clear the entire amount in a year.

According to an exchange source, Juggernaut Projects Ltd, another borrower with a payment obligation of Rs 220 crore, is negotiating with NSEL for a haircut. According to an NSEL official, both Juggernaut and Aastha are looking to settle at a combined Rs 200 crore, against their combined dues of Rs 243 crore.

Meanwhile, the EOW has taken cognizance of the delay in payment by PD Agroprocessors, NSEL’s third largest borrower, with a payment obligation of Rs 639.6 crore.