Lotus Refineries has slapped a legal notice on National Spot Exchange Ltd (NSEL) and urged the exchange to remove its name from the defaulters list.
The Mumbai-based company, which was responding to NSEL’s notice, had an exposure of Rs 265 crore in the exchange.
It owes Rs 253 crore after adjusting for the collateral it held with the exchange. It has also placed a fixed deposit of Rs 7.5 lakh as security with NSEL, and has said that it will pay the remaining Rs 5 crore when it is due.
Lotus had refined palm oil stock of 44,586 tonnes worth Rs 247 crore, according to an NSEL warehouse holding list issued on August 6.
Since the exchange has gone for a financial settlement of the entire trade, the company cannot sell the palm oil stock to recover the funds.
Speaking to Business Line, a spokesperson of the company said it had disputed the exchange claim of Rs 253 crore.
“We are in the process of reconciling our exposure in the exchange. If anything, we have to receive money from the exchange,” he said.
Terming the exchange move as illegal, baseless and mala fide, the Mumbai-based company said the unilateral declaration of NSEL proclaiming Lotus Refineries as a defaulter on August 22, in the face of pending commercial dispute, went against the principle of Rule 41 of the exchange. Lotus had sent its notice for conciliation to NSEL on August 19, it said.
Calling upon the NSEL to immediately recall the defaulter declaration, Lotus claimed the term ‘defaulter’ had caused reputation loss to the company and also impaired its ability to raise loans or funds to operate its business.
According to NSEL trade and settlement data on August 12, there is no margin receivable from Lotus Refineries, while a fixed deposit of Rs 7.5 lakh was provided to the exchange.
Also, according to the stock position published by NSEL on its Web site, the exchange is holding 44,586 tonnes of RBD palm oil stock belonging to client Lotus Refineries.
In a release, Lotus also told NSEL that it is willing to settle its alleged obligations, if any, provided the serious disputes and claims raised by the exchange are resolved.
Our Bureau Mumbai, Aug. 31, 2013:
(This article was published on August 31, 2013)