"The Exchange is fully committed to ensure proper settlement of all outstanding obligations and to comply with the directions issued by the government in this regard and to settle all issues as per rules and bylaws of the Exchange. We will commence trading operations once new regulations by FMC are in place," NSEL MD and CEO Anjani Sinha said.
The exchange officials and market participants held the meeting with Forward Markets Commission (FMC) officials today to resolve the issue of settlement, Sinha said.
NSEL had earlier suspended trading and merged the settlement cycles of all one-day forward contracts (other than e-series contracts) on July 31.
The said action was taken due to certain abrupt structural changes in the market place leading to disruption.
This situation was aggravated by the loss of trading interest, due to uncertainties leading to trade in-equilibrium.
Sinha pointed out that in the interest of arriving at a consensus and satisfactory solution for settlement of dues in accordance with Exchange rules and bylaws, he held various meetings with the members of the exchange, the buyers/ processors and FMC officials.
These meetings were also aimed at ensuring avoidance of any incidence, which may have consequential impact on larger market.
He expressed confidence over handling large quantum of pay-in/pay-out obligations at the same time. However, in case of declaration of default by any member, which would lead to a long litigation process, two options have been proposed and the final decision would be taken after due consultation with all stakeholders.
Sinha added that the exchange have two options.
There are eight members/processors, who are willing to pay as per the scheduled due date or even earlier. The total amount pertaining to such members is Rs 2,181 crore.
Another 13 members/processors, who have offered to pay 5 percent of their total dues every week, if the same is agreed upon. Total amount comes to Rs 3,107 crore approximately, Sinha said.
These members are namely, Jugger nautes Projects Ltd, MSR Foods Processing, PD Agro Processors Pvt Ltd, Shree Radhe Trading, Sankhya Investments, Spin Cot Textiles, Swastik Overseas, Topworth Steels & Power, Vimladevi Agrotech, N K Corporation, NCS Sugar, Metkore Alloys & Industries and ARK Imports.
The exchange is also in discussion with three processors namely Namdhari Food International, Namdhari Rice & General Mills and Lotus Refineries. The amount pertaining to these parties comes to Rs 311 crore, Sinha added.
Sinha also said that under the second option, the exchange is in possession of post dated cheques (PDC) from various processors amounting to Rs 4,900 crore against their settlement obligation and balance parties have confirmed payment regularly.
While PDCs are a commitment, the payout process may not roll out smoothly in a month's time. Hence, the market participants have proposed option one as a safer alternative, he said.
FMC officials have also asked for details of members, planters and other participants who are not cooperating with the exchange in resolving the matter related to settlement cycle.
The FMC along with other government agencies would work together to ensure a safe and secure settlement of dues, Sinha added.