NSEL fiasco: Mumbai EOW arrests NK Proteins MD Nilesh Patel

The Economic Offences Wing (EOW) of the Mumbai Police made the 4th high profile arrest in the NSEL saga, in the form of Nilesh Patel, MD of NK Protein, reports CNBC-TV18's Ashmit Kumar.

This arrest follows the arrest of Anjani Sinha, the former MD and CEO, as well NSEL Executives - Amit Mukherjee and Jai Bahukhandi. Also Read: NSEL: Sources say EOW has identified assets for attachment NK Protein is one of the 24 borrowers with dues allegedly payable to the exchange. NK Protein had an exposure of Rs 935 crore to NSEL, the largest among the borrowers. Interestingly, Nilesh Patel is also the son-in-law of former Chairman of NSEL - Shanakarlal Guru, giving rise to worries over possible conflict-of-interest. EOW sources confirmed that NK Protein was one the first borrowers to avail of the sham financing facilities provided by NSEL. NSEL is alleged to have extended investors' money to borrowers as working capital loans. EOW sources highlighted how NK Protein raised a sum of Rs 350 crore from NSEL and then used the funds for investing in a joint venture with the Adani group. NK Protein, as per EOW sources, entered into a 50:50 joint venture with the intent of exporting edible oil. For the Rs 350 crore raised, NK Protein was required to repay Rs 575 crore, after including interest. However, after failing to make the payment, interest was calculated post the date of default on the amount payable by NK Protein. The interest on the Rs 570 crore payable, along with collaterals and warehousing charges deposited with the exchange is how NSEL arrived at the figure of Rs 935 crore as total amount payable by NK Protein. EOW sources pointed out that the NK Protein management was aware at all times that it would not be able to honour commitments. Despite knowledge of the inability to meet obligations, as per the EOW, the borrower used the investors' funds, made available as loans with the connivance of NSEL management, for business expansion. EOW sources also confirmed that NK Protein did not have sufficient number of godowns or sufficient goods in question. EOW also questioned the Directors of Mohan India, another borrower with exposure in excess of Rs 900 crore, today. Sources confirmed that they are likely to be summoned again for further rounds of questioning. Nilesh Patel will now be made to appear before the magistrate court on October 23, where the EOW will be seeking police custody. Meanwhile, the 14 day police custody of NSEL executives - Amit Mukherjee and Jai Bahukhandi - is set to expire tomorrow. They too will be made to appear before the magistrate court on Oct 23, where they are likely to be moved to judicial custody. Suspects in judicial custody can make an application seeking bail.