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Business News/ Companies / NSEL case: EOW arrests MD of PD Agroprocessors
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NSEL case: EOW arrests MD of PD Agroprocessors

PD Agroprocessors owes Rs644.5 crore to the commodity spot exchange

In the NSEL payments crisis, EOW has so far attached assets worth Rs4,564.65 crore. Photo: Abhijit Bhatlekar/MintPremium
In the NSEL payments crisis, EOW has so far attached assets worth Rs4,564.65 crore. Photo: Abhijit Bhatlekar/Mint

Mumbai: The economic offences wing (EOW) of the Mumbai police on Wednesday arrested Surender Gupta, managing director of PD Agroprocessors Pvt. Ltd, in connection with the Rs5,574.34 crore payments crisis at National Spot Exchange Ltd (NSEL).

PD Agroprocessors, the third-biggest defaulter, owes Rs644.5 crore to the commodity spot exchange. This is the sixth arrest by the agency in NSEL case.

The EOW has arrested Anjani Sinha, former chief executive officer of NSEL, and four other people in connection with the crisis.

Last month, the agency attached Dunar, a rice brand promoted by PD Agroprocessors, under the Indian copyright and patent norms.

According to its website, Dunar Food Ltd, which owns the brand, was launched in 1956 but the brand itself was only launched in 2008 in the domestic market and in 2011 in the international markets.

In the NSEL payments crisis, EOW has so far attached assets worth Rs4,564.65 crore. This includes money deposited in the escrow accounts of NSEL, the frozen bank accounts of NSEL and its directors, and attached assets of borrowers, directors and officials of the spot exchange.

The settlement crisis at NSEL came to light on 31 July when the exchange abruptly suspended trading in all but its e-series contracts. These, too, were suspended a week later. The closure of trading may have been prompted by an instruction from the ministry of consumer affairs to the exchange asking it not to offer futures contracts.

A spot exchange isn’t supposed to do so, but NSEL was doing that.

NSEL tried to implement the change but because its appeal was to investors and members who were not interested in spot trades, it eventually had to suspend all trading. It later emerged that all trading on NSEL happened in paired contracts with investors, through brokers, buying a spot contract and selling a futures one for the same commodity.

The entities selling on spot and buying futures were planters or processors and members of the exchange. It turned out there were only 24 of them, and they used the paired contracts as a way to raise easy money.

When the trading was suspended, the investors were left holding contracts that the members couldn’t buy because they didn’t have the money to do so.

On 14 August, NSEL proposed a payout plan, but it has been unable to stick to the schedule and has not made a single complete payout since.

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Published: 05 Mar 2014, 08:56 PM IST
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