NSEL defaulter Mohan to pay 1.5% upfront under settlement

Moneycontrol Bureau

Fraud-hit National Spot Exchange Ltd. Wednesday said it has reached an agreement with Mohan India, one of the defaulting borrowers, who owes the bourse Rs 771 crore.

Under the agreement, Mohan India will pay Rs 11 crore (less than 1.5 percent of outstanding loan) upfront, and the remaining amount will be paid over the next one year.

The press release does not give any details about how the money will be recovered, and what action the NSEL plans to take if Mohan India defaults on the payment schedule. Instead it was full of the usual laudatory quotes from the various stakeholders.

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Saji Cherian MD & CEO, NSEL termed the settlement as a “a positive development in the recovery process” and the result of “relentless efforts put in by the new team at NSEL along with the NSEL Investors' Forum.”

In the same release, Jagmohan Garg, director of Mohan India said that he was happy to have “reached an understanding with NSEL with the grace of all mighty Shiv Baba.”

And while the NSEL Investors Forum too has praised the deal, most investors may need divine intervention to get their money back.

On Tuesday, the NSEL failed to make its scheduled weekly payment to investors for the 11th successive week. It paid only Rs29.05 crore against its weekly settlement dues of Rs 174.72 crore.

In the case of Mohan India, media reports say that most of the money raised from NSEL has gone into buying land parcels. That could make the recovery process difficult, given the illiquid nature of the assets.

Also, the Business Standard on September 12 had reported that Mohan India had withdrew Rs 300 crore (borrowed from NSEL) from its group companies and shifted it to unrelated entities. 

Last week, the Economic Offences Wing had arrested Nilesh Patel, Managing Director, NK Proteins, the largest defaulter with over Rs 900 crore outstanding to NSEL.

Remains to be seen if Mohan India's deal with NSEL will exclude it from any action against it by the investigating agencies.

(Posted by Santosh Nair)