Mumbai: National Spot Exchange has sacked its entire top management, including CEO Anjani Sinha, as the beleaguered bourse could manage to pay just over half of Rs 175 crore first tranche of payment due to investors Tuesday.
The Jignesh Shah owned Financial Technologies-promoted NSEL, which has been barred from offering trade in any commodity following irregularities, also sacked its CFO Shashidhar Kotian and five others with immediate effect.
Meanwhile, sector regulator Forward Markets Commission (FMC) wrote to NSEL Board saying the default in payment in first tranche casts "serious doubts" on credibility of the exchange.
As the exchange failed to pay up the committed amount of Rs 174.72 crore, the NSEL Investors Fourm as well as brokers threatened to take legal remedy at the earliest.
"The board decided that the current key management team headed by Anjani Sinha and other relevant heads of departments be removed from their current assignments, pending an enquiry," NSEL said in a statement.
The board has also announced the appointment of PR Ramesh as an "officer on special duty" to exercise all powers of a CEO and will report to the board directly.
The others who have been removed are Amit Mukherjee, Assistant Vice-president for business development; Jai Bhaukhundi, Assistant VP for market operations; Santosh Mansingh, and HB Mohanty, assistant VPs for market operations; and Maneesh Chandra Pandey, Business Development Manager.
The statement said Sinha will cease to be the MD & CEO of NSEL with immediate effect and he will be a special officer assisting in recovery process.
NSEL said 15 members (buyers) have made payment of Rs 92.12 crore today, while nine of them have defaulted.
The defaulter members include Ark Imports Pvt Ltd, Loil Overseas Foods Ltd, Lotus Refineries Pvt Ltd, N K Proteins Ltd, NCS Sugars, Spin Cot Textiles, Tavishi Enterprises, Vimladevi Agrotech and Yathuri Associates, it said.
The NSEL disbursed Rs 92.12 crore to 151 investors (sellers) including state-run firms MMTC and PEC Ltd and many brokerage firms. Rs 19.16 crore was also paid to NSEL's related entity Indian Bullion Market Association (IBMA).
Questioning NSEL's credibility, FMC said, "non- settlement of outstanding trade on NSEL seriously reflects on your credibility and reputation, which is a key ingredient in meeting the criteria for 'fit and proper' person.
"In the eventuality of you losing your status as a fit and proper person, you (NSEL Board) cannot continue to hold directorship or shareholding in any of the recognised futures commodity exchanges."
"Your status as a 'fit and proper person' is at serious risk and may lead to consequential actions," it said adding that the Board should take complete responsibility for the completion of settlement of all outstanding trade at NSEL.
NSEL has furnished "insufficient and delayed information to the Commission which is neither accurate nor reliable", it added
Some of the brokers with high claims who got the partial payment include MMTC, Motilal Oswal Commodities Brokers, Geojit Comtrade, Indian Infoline Commodities, Anand Rathi Commodities and Indian Bullion Market Association.
NSEL said it would appoint forensic auditor by August 23 to assess the exchange and members' financial and settlement accounts, including delivery and collateral management system.
"The exchange will take necessary legal and regulatory measures in case of any non-compliance with the collaterals lying in various warehouses," the NSEL statement said.
Besides, the NSEL said, it is also conducting a special investigation under the Officer on Special Duty (OSD) to identify various lapses that may have been caused in the operation of the Exchange and to suggest corrective and consequential actions for recovery of outstanding dues.
The NSEL will now seek FMC guidance for the deficit in payout. The FMC had asked NSEL to go ahead for the time being with its payout plan to settle Rs 5,600 crore dues to investors over a period of seven months.
"Since the pay-out has not happened fully, we need to take legal course. All investors were concerned about the ability of NSEL to pay their dues as the payout schedule is vague," NSEL Investors Forum President SK Saraf told PTI here.
Leading commex broker AnandRathi said a group of brokers met the FMC chairman and urged him to take urgent measures to recover the money from the exchange.
"We have met the FMC and urged him to ensure recovery of funds with the help of government agencies. We are also examining the possibility of moving the court," Anandrathi Commodities chairman Anand Rathi said.