NSEL crisis: NK Proteins MD Nilesh Patel arrested

“The charge against NK Proteins is that it was the first company to start this whole financing activity in the garb of paired contracts. Thereafter the money was partly used to fund the business and part of it went to build a 50:50 joint venture with Adani Group for export of castor oil,” said the official,adding that it is too early to say if anyone from Adani will be questioned.

Patel is the fourth person to be arrested by the police in the case. The police have arrested three former NSEL executives,including the former MD & CEO Anjani Sinha,Amit Mukherjee and Jai Bahukhandi. Patel is the first person among the defaulting entities to be arrested. His company is running an outstanding liability of nearly Rs 970 crore with the exchange and has cleared only around Rs 7 crore out of it.

The reconciliation of accounts for NSEL has further revealed that NK Proteins raised around Rs 350 crore through financing structures on NSEL. The interest charges have mounted to nearly Rs 575 crore,say sources.

Sinha,in an affidavit submitted last month,stated that NK Proteins came up with the concept of T+3 and T+36 contracts in castor seed. “By end of December 2011,it was known to us that he was not having stock to back the exposure. Still,we allowed him to continue because of the fear of widespread default,if we choose not to allow him to roll over,” said Sinha.

Regulatory bodies have meanwhile stepped up their efforts to ring-fence MCX and MCX-SX from the financial shenanigans at the NSEL. While Jignesh Shah has managed to retain his seat on the board of MCX,it has inducted five more directors,thus reducing the hold of Shah and Financial Technologies over the bourse. Shah has time till October 30 to prove his “fit & proper” status as its promoter. Of the new directors three are shareholder directors representing banks and institutions holding stakes in the bourse.

In an evidence of the government separating the boards of the Shah run enterprises from his control in stock exchange,independent directors are now calling the shots. Ten directors out of the 12-member board are now either independent or nominated by the FMC and the government. Apart from Shah,Paras Ajmera,non-executive director,is the other FTIL nominee on the MCX board.

NSEL defaults for 10th time

Mumbai: NSEL has defaulted for the tenth straight week as it could pay only Rs 30 lakh to investors against a scheduled amount of Rs 174.72 crore. With Tuesday’s pay-out,NSEL has settled just Rs 180 crore against Rs 5,600 crore. ens