Will NSEL return Rs 5600 Crores to its investors ?


NSEL along with 9 of its borrowers i.e. NK Proteins, ARK Imports, LOIL Overseas Foods, Lotus Refineries, NCS Sugars, Spin Cot Textiles, Tavishi Enterprises, Vimladevi Agrotech, Yathuri Associates has duped thousand of NSEL investors of Rs 5600 Crores.

These borrowers sold forward contracts to the Buyers at a premium ranging which guaranteed the buyers 12 to 18% p.a. returns, these borrowers failed to make payments to the exchange on the settlement day and ultimately NSEL had to suspend trading on 1st August 2013.

All the above borrowers are  little known in the market and have no track record, it’s not the case of 1 borrower defaulting but 9 of them together and at time the same which leads to suspicion that this act of default of payment is in collusion with NSEL and its management headed by Mr. Jignesh Shah.

One of its  above named borrowers N K Proteins alone has borrowed over Rs 900 Crores. A company named N K Industries earlier listed on BSE and NSE which is defunct since last 3 years having a Capital of Rs 6 Crores and Net worth of Rs -34 crores ahead by Nimesh K Patel and family having its registered office at 7th Floor, Popular House,,Ashram Road, Ahmedabad, Gujarat, 380009, in 2012 this company  reincarnates  as N K proteins Ltd under  the same management operating  from the same address and trades on the NSEL only with an intention of duping the investors.

(Source Wikipedia, moneycontrol.com  and Website of N. K Protiens.

Apparently the whole scam was designed and well planned, while the investors are making rounds of every government department hoping to get back their money the government is going very slow on this issue, in fact displaying no concern about the same. The media specially the financial channels are down playing the whole incidence and are not giving adequate coverage to the scam except for Zee Business. Mr. Jignesh Shah was fully aware of the credentials and repayment capacities of the companies who were selling fake future contacts on the exchange.

The investors are demanding that NSEL should me merged with  Financial Technologies Ltd or the assets be attached and liquidated to make good their losses, meanwhile Mr Jignesh Shah has already prepared a self-made Scape Goat Mr.  Anjani Sinha, former managing director and chief executive officer (CEO) of NSEL who last week took all the blame for the debacle onto himself and other former senior executives, and attempted to absolve the exchange’s governing board and its promoters.

Needless to say it is easier for Mr Jignesh Shah to take care of one person rather than settle dues of thousands of investors.

Its more than a month and half, no arrest have been made so far, the complacency of the respective government departments is going to cost the hapless investors dearly who are under the false hopes or recovering their dues soon.

Its a  pity that the investors are mostly seniors citizens with their lifetime savings trapped. Its going to be a long time before they see the light of the day.

update 25 Sep 2013

Financial Technologies India Ltd’s statutory auditor Deloitte Haskins & Sells has withdrawn its audit report certifying accounts of the company for 2012-13 fiscal, their withdrawal is on account of withdrawal of Audit report by NSEL’s auditor Mukesh P Shah & Co.

What is the sanctity of an Audit Report ?, if the Auditors are allowed to withdraw the same after a scam breaks out in the public domain and these Auditor who are supposed to be watch dogs of the investor’s money claim innocence in every Scam case.

Way back in March 2009 Price Waterhouse Coopers auditors of Satyam Computer Services Ltd., were surprisingly given a clean chit by the ICAI (Institute of Chartered Accountants Of India) and withdrew all disciplinary proceedings  against PwC. Ironically the Indian arm of PwC was fined $6 million by US Securities and Exchange Commission for not following the code of conduct and auditing standards while pursuing its duties while auditing the accounts of Satyam Computer Services. One fails to understand the sanctity of ICAI and its very reason for existence. Pwc is allowed to go scot free in a country where the cause of action lies and the same organisation is fined for the same crime it has committed in some other country and PwC quitely settles the fine imposed with out any protest.

ICAI which is an holy cow, with nobody to question needs to revisit its code of conduct and should impose stringent measures to curb voilations by its members, while several scams are happening in India I am unable to recall a single Auditor panelized or any action taken on any Auditor in the past.

Does India actually Needs Auditors or the ICAI if they have to merely issue certificates and reports in exchange of fees ?

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One Response to Will NSEL return Rs 5600 Crores to its investors ?

  1. kameswara Rao says:

    I am afraid to put my hard earned money like this cheating companies. Rather I will go for bank FD’s.

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