EOW and ARK Imports

ARK Imports Pvt. Ltd; located in the city of Ludhiana is a merchant and small scale manufacturer and exporter of polycarbonate, pellets and plastic granules and also manufactures wool. The company ARK Imports Pvt. Ltd. was registered on 23 June, 2011. ARK Imports Pvt. Ltd. currently has 3 Directors / Partners: Kailash Aggarwal, Rajni Aggarwal wife of Kailash Aggarwal and Anubhav Aggarwal; son of Kailash Aggarwal and Rajni Aggarwal.

ARK Imports is one of the major defaulters of NSEL owing Rs.719.50 crores to the commodities exchange. ARK Imports traded in goods which were supposed to be in their warehouse and received the money in lieu of sales and was found guilty by law. Economic Offenses Wing (EOW) is confident for ARK Imports; which is the first attachment order in the NSEL that the value of the properties attached will be sufficient for recovering investors’ money. “We have started attaching the properties of NSEL borrowers who have defaulted,” atop EOW officer said. “We have issued orders relating to at least 25 properties of the borrowers.” The same person added the process of seizure will take at least 15 days. Meanwhile, the EOW probe has revealed that some of the borrower companies have remitted money outside the country. “The books of accounts of a few companies show that money has been remitted overseas. We are sharing this information with the enforcement directorate for further probe,” the EOW officer said, asking not to be identified.

Despite of the property seized by the EOW, Kailash Aggarwal and Anubhav Aggarwal is out on bail. Recently Kailash Aggarwal submitted his medical tests that need to be carried out of India. MPID Court sought medical papers for the dire need of Kailash Aggarwal to travel to Singapore. MPID Court refused the tour as his son Anubhav Aggarwal is in Australia and he could abscond.

    

NSEL Recovery Group (NRG)

National Spot Exchange Limited (NSEL) was established in 2005. NSEL commenced its “Live Trading” journey on 15^th October, 2008. Basically the idea behind to start NSEL was to set spot trading platform for commodities. NSEL had been operated in 16 States in India along with delivery-based spot trading in 52 commodities. NSEL is a company promoted by Financial Technologies India Ltd and NAFED.

NSEL was thus established as an endeavor to fulfill the Government plans of creating and developing a common market for agricultural produce by providing a nationwide electronic trading platform with wide participation of a large number of stakeholders in the agricultural commodity ecosystem. Mr. Anjani Sinha, was responsible for daily operations, business growth and regulatory interaction at NSEL.

Electronic spot exchange is a new concept altogether. First electronic spot market to obtain license under APMC Act in Maharashtra, Karnataka, Gujarat, Orissa, Rajasthan and MP. It was the trade activity that was carried out in all states by enabling farmers to sell their produce to bulk consumers. Various trade matching solutions provided by NSEL that benefited farmers, consumers, bulk buyers and government agencies are:-

·         Continuous action by matching orders on price time priority

·         Forward auction model implemented for FCI

·         Forward auction model for sale of cotton bales on behalf of NAFED

·         Electronic auction for MMTC, PEC, NINL, STC and NAFED

·         Forward and Reverse auction model for HAFED

Impact of NSEL Intervention:

• NSEL commenced its operation in Bihar and Orissa for creating direct market linkage between farmers and upcountry buyers, exporters, processors tec.
• Financial Times, London devoted a full page article on an NSEL initiative in Bihar, which was based on a field survey conducted by its team of reporters.
• NSEL also got FOW, London ( Futures and Options World ) award for “Best Exchange in Product Innovation in South East Asia and Australia” for this intiative.
• NSEL launched cardamom contract for the farmers of Kerala
• Apart from trading operation, NSEL had carried out cotton procurement on behalf of Nafed under the PSS operation conducted by the Government of India

The crisis at NSEL arose when trading clients paired certain contracts to maximize returns. A wide range of contracts were traded at NSEL included:-

• Farmers Contracts
• Auction Contracts
• Forward Auction
• Reverse Auction
• e-Series Contracts
• Traders Contracts

When the Government instructed NSEL to stop all contracts immediately, market intermediaries trading clients were caught in a liquidity problem, disrupting the smooth settlement programme that had been going on since the inception of the exchange. NSEL crisis with an estimate of Rs. 5600 crore came to light, where NSEL eventually failed to pay its investors in commodity pair contracts after 31^st July, 2013. There were no underlying commodities in the warehouse, whereas the buying and selling commodities like steel, sugar, paddy, ferrochrome etc. were only shown on paper. Around 13,000 investors along with public sector units like Metals and Minerals Trading Corporation of India (MMTC) and PEC were victims of NSEL crisis. In order to fight against crisis, NSEL Recovery Group (NRG) was formed.

NSEL Recovery Group (NRG) is an initiative by NSEL intended to assist expeditious recovery of money from NSEL defaulters. There were 24 defaulters, out of which 2 defaulters owing a total of Rs. 196 crore have almost cleared their dues. NSEL is committed to expedite recovery from 22 defaulters, where the role of  NRG will include the following:-

1.   To oversee the recovery efforts being made by NSEL.
2.  To suggest additional measures for expediting recovery.
3.  To ensure transparent dissemination of most authenticated information related to NSEL recovery.
4. To help and assist the investigation agencies and judicial forum for expeditious recovery of the money.

NSEL Recovery Group (NRG) is here to help and assist the investigation agencies and judicial forums for recovery of money expeditiously, particularly the High Court Committee, setup by the  Honorable Bombay High Court, in fast forwarding their logical conclusion. They are also the constituents of NRG’s method to stimulate recovery process.

The idea behind to form NSEL Recovery Group was to emphasize its collective attention and resources, on recovery through peaceful and legal means. NSEL Member Brokers and their Trading Clients can join the NSEL Recovery Group and it does not constraint their right to be associated with any other forum/s or to pursue legal course.  

Conclusion:-

The role of NRG is to assist expeditious recovery of money from NSEL defaulters. NSEL has declared 22 members as “Defaulters” as per Rule 41 of the Exchange Bye laws. As on 28^th November 2014, the total outstanding from these defaulters stood at Rs. 5323.66 crore exclusive of interest payable.

Foreign Direct Investment

Foreign Direct Investment - FDI

Foreign Direct Investment is an investment made between two countries through companies or entities. Entities making direct investments typically have a compelling effect and control over the company into which the investment is made. Foreign Direct Investment acts as a source of capital; it has increased employment in our country. Open economies with skilled workforces and good growth prospects tend to attract larger amounts of foreign direct investment than closed, highly regulated economies. Foreign Direct Investment has helped in raising capital, boosted economic attention, released the markets, increased competition and advanced technologies.

Foreign direct investments are different from indirect investments. Developing countries always need financial support in order to achieve stability in economy. Foreign Direct Investment is mostly observed in developing countries. Similarly, India being developing country is always ready to apprehend for foreign direct investment in a maneuver of becoming a developed economy. We all know that Indian economy is a flourishing and it holds highly strong position. Indian economy registers hike in figures of economy when globally there was a heavy financial meltdown. Due to this growth, investors of overseas are confident and interested to invest in India which is giving a boost to Foreign Direct Investment. An Indian company may receive Foreign Direct Investment under the two routes as given under:

i. Automatic Route

FDI is allowed under the automatic route without prior approval either of the Government or the Reserve Bank of India in specific sectors as specified in the FDI Policy, issued by the Government of India.

ii. Government Route

FDI in activities not covered under the automatic route requires approval of the Government which is considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs and Ministry of Finance.

India is the 3rd largest economy of the world in terms of purchasing power parity (PPP) and thus looks attractive to the world for FDI.   Even Government of India,  has been trying hard to do away with the FDI caps for majority of the sectors, but there are still critical areas like retailing and insurance where there is lot of opposition from local Indian companies.