Will the 24 companies pay Rs 5,599 crore that they owe to NSEL?

Jignesh Shah, founder of Financial Technologies, promoter of National Spot Exchange

Mohan India is essentially a shell company. In 2011-12, the last date for which its financials were available, the company earned a net profit of Rs 2,044, and had revenues of Rs 72,400. Its balance sheet size was about Rs 17 lakh. Yet Mohan India, along with a sister concern Tavishi Enterprises (which was incorporated this year and whose financials are not yet available) together owe the National Spot Exchange Ltd (NSEL) Rs 952 crore.

Backing this sum, claims NSEL, is collateral amounting to 3.27 lakh tonnes of sugar stored in warehouses in northwest Delhi.Mohan India and Tavishi are part of a large Delhi-based business group. Towards the end of this week, NSEL finally released a list that was long awaited — the 24 companies that collectively owe the exchange Rs 5,599 crore. It will use this money, when it is paid, to settle dues with around 200 or so other stock exchange members who are owed money.

Of these eight have agreed to pay up by August 14 when settlement for contracts becomes due. Another 13 have agreed to pay 5% of their dues every week till their books are clear. Negotiations are on with another three members to clear dues of about Rs 311 crore. "These companies will pay their dues and lift stocks against their names," says Anjani Sinha, the embattled chief executive of NSEL.

The exchange is promoted by Financial Technologies BSE 6.01 % , founded by Jignesh Shah. Sinha claims that the companies who owe funds to NSEL are part of the agricultural supply chain, who have need for such stocks in their business.

Will they Pay?

The list of companies is varied. While Mohan India has few assets, there are others which are very much real businesses in the commodities sector. Here are the scenarios which could play out in the weeks ahead: one, all could go well.

The companies could pay up, take possession of the goods lying in various warehouses, and NSEL will use those funds to settle dues with 'creditors'. The alternative scenario is messier: some or many of the 24 companies could default on their obligations, forcing NSEL to take possession of stocks and sell them in the market. Which scenario is more likely? ET Magazine spoke to Balbir Singh Uppal, CMD of Lakshmi Energy and Foods BSE 4.85 % .

According to NSEL, group companies related to Lakshmi owe around Rs 689 crore, against stocks of paddy held in a godown in Punjab. "We've settled about Rs 240-250 crore worth of dues to NSEL," says Uppal.

"For the remaining amount NSEL will have to sell the stocks and recover the dues," he adds. ET Magazine spoke to a director of another one of the companies named by NSEL and which is easily among those with the largest portion of dues outstanding. The director refused to come on record. This director is also the head of a real estate conglomerate and a separate set of real estate companies.

"In fact this is my primary business," he said, referring to the real estate sector. He also claimed that he was not involved in conducting transactions on NSEL, which was being done by a business acquaintance. This acquaintance in turn was a conduit for other parties to enter the market. "These [transactions on NSEL] were just forward trading. There was no intention to take delivery of the goods. We have no stake in the commodity business," he said.