A month after the crisis-ridden National Spot Exchange (NSEL) claimed that eight of its 24 members were willing to pay their dues on time, they have paid just over 2%of their combined liabilities so far. Exchange officials said these processors backed out of their payment commitments, worsening the settlement crisis.
Of their total outstanding of R2,181 crore, as estimated by the exchange on August 4, the processors have so far paid R45.50 crore. While two of the processors — Tavishi Enterprises and Yathuri Associates — haven’t paid at all, only Aastha Minmet India has settled its obligations. Barring Aastha Minmet, NSEL has declared all the seven processors defaulters. These processors are Loil Continental Food, Loil Health Foods, Loil Overseas Foods, Mohan India, Tavishi Enterprises, Yathuri Associates and White Water Foods.
On August 14, NSEL chalked out a 30-week settlement period and declared weekly pay-out of R174.72 crore for close to five months and that of R86.02 crore later, relying heavily on the commitments of these processors to make smooth payouts in the initial phases and also to give some relief to those that were seeking more time, market sources said.
On August 4, NSEL had also told the FMC that 13 other processors were seeking more time to settle the dues and had offered to pay 5 % of their total obligations of R3,107 crore every week and talks were still going on with three more processors for the settlement of R311 crore. So, the failure to keep payment commitments by the eight processors made the matter worse for the NSEL, which had to resort to a loan from its owner Financial Technologies (India) to pay some investors, mainly the smaller ones.
As of September 4, the exchange declared a pay-out of R120.10 collected from its members against the required pay-in of R524.16 crore.
Doesn’t handle NSEL stocks anymore, says NBHC. The National Bulk Handling Corporation (NBHC), another company promoted by NSEL owner FTIL, said on Thursday it managed stocks at five warehouses of “pre-stored commodities for NSEL only during June and July this year in its history and also no warehouse receipts were issued by NBHC against this stock”. It also reiterated that it doesn’t handle NSEL stocks.
“The assignment was just to manage the warehouses. It has since the end of August given back these warehouses to NSEL along with the balance stocks. As of date, NBHC carries stocks worth R65 lakh on behalf of NSEL,” it said in a statement.
Across locations in 19 states of India, NBHC manages about R5,500 crore worth of stocks, of which about R4,200 crore of stocks are funded by banks to the respective commodity owners, (farmers, processors, traders etc) after the respective bank’s independent audit and due diligence. It manages warehouses/storage facilities for about 42 banks. It also provides storage facilities to the corporates, farmers, processors, traders, among others, and acts as a warehousing service provider for FTIL-promoted MCX, which makes for about 5-7% of NBHC’s total stock usually.
“Most of the banks have conducted/are conducting audits of their stocks in NBHC’s warehouses and no deviations have been found. All NBHC’s clients are from the commodity space, and are quite familiar with the ecosystem of commodity warehousing. Clients are welcome to visit the warehouses to check their stocks, to quell any fears whatsoever,” it said.