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Golden goose dead; investors on wild goose chase

A year ago, unregulated spot exchange NSEL defaulted on paying Rs 5,574 crore to about 13,000 investors. During the year, clarity has emerged as to where the money went, but those who lost it have received hardly 10 per cent of it. The question that remains is: can they hope to get their dues? So far, the investigating agencies have focused on fixing culpability, rather than ensuring investor refunds. The Mumbai police have attached properties worth around Rs 5,000 crore but realising money by auctioning those will not be easy. The NSEL management has recovered and paid Rs 354 crore to investors. Last August, FTIL, the promoter company, had given a loan of Rs 179 crore for repaying small investors. Another Rs 50 crore has been collected by the exchange from defaulters. One defaulter, Metkore Alloys & Industries, has offered ferro chrome worth Rs 114 crore to repay dues of Rs 95 crore. The exchange is negotiating with the Steel Authority of India to sell ferro chrome for Rs 50 crore. This particular transaction appears on course.

Mohan India has surrendered titles of properties worth Rs 400 crore, which will be auctioned soon after obtaining permission from court set up under the Maharashtra Protection of Depositors Interest Act. The court has appointed the deputy collector of Mumbai, Ajit Sakhare, as the competent authority to handle the process. NSEL has appointed valuers who can also conduct auctions. If all these plans go through, all the investors put together could get another 10 per cent of the money. NSEL has appointed a chartered accountancy firm to analyse financial statements of defaulter members to identify related parties and their assets. The economic offences wing (EOW) of the Mumbai police has already handed over documents relating to properties of defaulters attached by it to the competent authority. Saji Cherian, managing director of NSEL, said, “We are making all efforts to hasten the process of recovering money to pay investors. Our next move is to follow up with the competent authority for a speedier auction process of attached properties.” (HOW IT ALL UNFOLDED)

Most of the 33,000 e-series investors have received their money back and the small percentage of amount remaining is likely to be repaid soon. The Sahara Group’s e-series investment has not been sold, according to market regulator Sebi’s instructions. The NSEL Investors Forum (NIF) last week wrote to its members, apprising them of the progress in recovery. The letter said, “We have requested the EOW to prioritise liquidating the attached assets. According to us, at least assets worth Rs 500 crore can be liquidated in the first phase.”

The money trail established so far by the enforcement directorate and the EOW has shown that money raised using the NSEL platform has been used up by borrowers, and no proof of that is available. In most cases, the promoters are facing the heat whereas the borrowers have gone scot-free. The EOW will soon take up cases of brokers who were active in paired contracts on the NSEL. Investigations by the CBI, ED and the Registrar of Companies are still on. For everyone concerned, much will hinge on their final outcome.


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