Multiple And Complex Manipulations

The NSEL fiasco has taught Indian businesses a lot of lessons since it unfolded. Greed has undone all the good work put in by an entrepreneur for over a decade in creating what was until a quarter ago regarded as the best example of India’s growth story. Investors are yet to find their lost wealth and court cases against various parties are in full swing. In this entire melee the promoters of the company have managed to sell off a stake they held in their Singapore affiliate. 

Financial Technologies Singapore Pte Ltd a wholly owned subsidiary of Financial Technologies the parent company of NSEL sold 100 per cent of its equity holding in Singapore Mercantile Exchange Pte Ltd (together with its wholly owned subsidiary SMX CC) to ICE Singapore Holdings Pte Ltd an entity owned by the Intercontinental Exchange Group, Inc for USD 150. 

According to the official release to the Indian exchanges by FTIL, the transaction was approved by the Board of the company. So far, so good. The real twist in the tale however comes in the latter part of the release which says that FTIL will be utilizing these funds towards repayment of outstanding debt towards External Commercial Borrowings and Foreign Currency Loan making FTIL debt free. 

What is intriguing is the absolute disregard that the parent company has for the misgivings of another of its subsidiaries. It would have been better if the FTIL management had concentrated on getting over this mess by trying to figure how best the investors can be paid their dues rather than trying to safeguard itself by selling off the assets it is holding in the form of stakes international exchanges. 

Interestingly neither the regulators nor the government is raising any questions on such actions of the FTIL management. Not considering the holding company responsible for the doings of its subsidiaries will certainly set a wrong precedent. The official company release after the declaration of the stake sale read that ‘Wishing the ICE and SMX team the very best for future success, Mr. Shah said he has mixed emotions about parting way with an asset that he had nurtured as a global showcase of an institution built with Singapore’s world class infrastructure and regulation coupled with Indian technology and expertise but said that he will be happy to watch it scale new heights with satisfaction from a distance under ICE.’ Well Mr Shah had said the same when he had resigned from the board of MCX-SX a while ago.

This distance that Mr Shah is trying to maintain or creating between him and the organization that he has built over the past one decade actually seems like trying to distance from the problem that an affiliate company has created. Indian courts are known to carry on proceedings until eternity. Justice will come at its own pace, and by the time it does people would have forgotten what had actually happened. The problem here is, there is no trial of the money so far. Will investors ever be able to get back their hard earned money is a big question mark.

Meanwhile, the MCX board at its meeting held on the 27th appointed Satyananda Mishra as the FMC approved independent director. But the real kicker comes in the second appointment that has happened. Miten Mehta an old time confidante of Jignesh Shah is being appointed as the shareholder director in the company. This virtually means that the affairs of the board still remain firmly in the hands of Jignesh Shah through his proxy Miten Mehta. So now we know what Mr Shah means when he says he will be watching the organizations that he nurtured from a distance.