Swastik Overseas founder not new to defaults

Recently, things have taken a dramatic turn for Swastik Overseas Corporation, which operates out of a small establishment in a sparsely inhabited commercial complex off Ashram Road here. The little-known commodities trading firm became a talking point after the Income Tax Department raided its office on August 22.

The buzz wasn't without reason, as the propriety firm floated by Rajesh Mehta owed Rs 100.88 crore to the crisis-ridden National Spot Exchange Ltd (NSEL) as on August 27. In fact, when the NSEL payment crisis surfaced, the company's total dues stood at Rs 113.33 crore.

In his late 50s, Mehta, a known face in the commodities (primarily oilseeds) trading business here, was once part of a reputed family-run commodity commission and trading business. "It is because of the reputation of his father's oil and oilseeds trading business under the name Kirti Brokers that people know Rajesh Mehta. He was also given directorship in the erstwhile Ahmedabad Commodity Exchange. But his urge for making money quickly through shortcuts has brought him more hate than respect," says a leading commodities trader close to Mehta.

After splitting from the family business, Rajesh Mehta joined NK Group, where, sources said, he worked as a commission agent and looked after crop surveys and godowns. Later, along with Rajesh Todi, an NK Group official, he floated Swastik Overseas Corporation. According to market insiders, his association with NK Proteins led to Swastik Overseas' involvement with NSEL. "Rajesh Mehta doesn't have the abilities to operate in a regulated market. Support from NK Proteins would have helped him in making huge money," says a source.

This is not for the first time Mehta has defaulted on payments. Those close to him said he had been arrested earlier, probably twice, owing to payment-related issues.

Mehta's 25-year-long association with commodities trade has been marred by various controversies. "He evolved different methods to escape from making payments, be it sales tax, value-added tax or repayment to his own bankers. He was good at it and defaulted several times on payments to traders and bakers," said a veteran commodity expert and a former office-bearer of erstwhile Ahmedabad Commodity Exchange.

"Nobody, except a new entrant in the commodity business would ever do business with Mehta or his company in the entire commodity circle in Ahmedabad. We knew him for years. He has defaulted on large payments repeatedly," he added.

Going by market speculations, Mehta would find it extremely tough to meet the payment obligations of about Rs 100 crore to NSEL.