"| So ae \ _aTTe MAHARASHTRA eet 49 NY iis 564336 peaeeras 21 ain at me aim he He es ~1 septs sara afro é a. PF Az A Oe I, Anjani Sinha, Former MD & CEO of National Spot Exchange Limited having registered office at FT Tower, CTS No. 256 & 257, 4” Floor, Suren Road, Chakala, Andheri (East), Mumbai-400093 do hereby state on solemn affirmation as follows: 1. I joined Financial Technologies Group in June 2003 for the MCX project. I was designated as CEO of MCX during the initial period and thereafter, as Director Business Development since 2005. I was part of the initial team responsible to set-up and develop MCX. We achieved good success in MCX and it became the number 1 Commodity Exchange in the country. As a result, I enjoyed good repo and trust of the promoters of FT group. QAIn the meantime in February 2005, National Spot Exchange project was announced and the company was incorporated in May 2005. In 2007, 1 ‘was given the responsibility to develop spot exchange project. . I have been associated with NSEL since 2007 in senior management position and was appointed as its MD & CEO in 2011. At present, NSEL is suffering from one of the worst crisis in the history of Commodity Exchanges in India. As per settlement data, on 1* August, 2013, there was outstanding liability of Rs. 5572.75 crore recoverable from 25 buyers and payable to 12627 clients through 148 members of NSEL. Since then, the Issue has been raised in all media channels and has become a cause ‘of concern for all Government agencies. As former MD & CEO of the Exchange, I am duty bound to explain the entire episode with full truth ‘and ownership with the objective of recovering money from all the payable members and distribution thereof among all the clients with the help of relevant Government agencies. . 1 alongwith the senior management team of NSEL, which includes Shri Amit Mukherjee, AVP, Business Development, Shri Jai Bahukhandi, AVP, Warehousing, Shri Shashidharan Kotian, CFO, Shri H B Mohanati, AVP, Delivery, Shri Santosh Mansingh, AVP, Clearing and settlement of NSEL are responsible for the current problems faced by NSEL. None of the Board members are responsible for the same. I understand the pain and agony faced by large number of investors and members, whose money is blocked in the NSEL settlement and therefore, I will do my best to disclose full facts and information about the misdeeds happened at NSEL and also other relevant information to help the Government agencies to recover the same. NSEL was set-up in the year 2005. There was no precedence of electronic spot exchange in the country. There was no specific regulator for electronic spot exchange. Since 2007, we have struggled to develop its business model and to make it commercially successful. In this process, we went through launching various types of contracts, so as to make it a commercially viable entity. ”. The business model of electronic spot exchange was initially developed as a delivery based trading platform providing various types of tradable contracts, but gradually it became more of a financing model, rather than Just offering deliverable physical commodities. This attracted. large number of clients/ investors towards NSEL, because they started getting good returns on their investment (ranging between 14 to 18 %) on annualized basis. . In this process, there are 25 buyers introduced on the Exchange platform over a period of last 4 years. Some of these entities are part of the group entities, such as, ‘+ Laxmi group : 3 entities + Mohan India group: 3 entities + Aastha group: 2 entities - Ax.9. In this manner, there are 20 individual groups, which have used NSEL platform to raise funds. At present, 5 entities (out of total number of 25) are making regular payments, which includes Topworth, Aastha, MSR, Sankhya and Metcore, while 19 members have failed to pay thelr dues and have been declared defaulter. 10.1 have no relationship with any of the buying members. I do not have any business dealings with any of the buying members, except their business relationship with NSEL/ IBMA. I have not taken any personal benefit from any of the buying members, for which I may be subjected to any enquiry. I do not have comprehensive, concrete and specific information about personal benefits derived by senior management team of NSEL from any of the buying members. However, I suspect that they might have entered into dealings with the buying members for their personal benefit. For this, they should be subjected to any judicial enquiry. For instance, Shri Jai Shrivastava, a director of Mohan India stated during a meeting in Delhi held on 7" September, 2013 that he has given Rs. 35 crores to Shri Amit Mukherjee, a part of the amount given in cash and part in cheque. I also came to know that in course of visits to Delhi, Shri Amit Mukherjee was using high end cars like Bentley, Porsche, etc. and stay at Hotel Radisson Blue( owned by Mohan India/ Mera Baba group), which were sponsored by Shri Jai Shrivastava. I also came to know yesterday that Shri Amit Mukherjee showed his wrist watch to our Delhi staff Shri T Ravishankar costing around Rs. 2.5 lacs (brand name something like” Longinese”). As told by Shri T Ravishankar yesterday, Shri Jai Bahukhandi, another officer of NSEL bought a high end SUV costing around 17-18 lacs around 4-5 months back. On my part, I have not taken any such benefit from any of the buyers including Shri Jai Shrivastava. But, once in the month of June or July 2013(exact date I do not remember but can be found from travel schedule) I have stayed at Hotel Radisson Blue for one night, because there was a meeting with Shri Jai Shrivastava to discuss the liquidation plan, which continued till late evening _and so, I stayed there and had dinner. In the meeting and dinner, Shri Jai Shrivastava, Shri Amit Mukherji and myself were present. 11.NSEL has following important departments: ‘+ Business development, headed by Shri Amit Mukherjee. All the 25 buyers have been identified and introduced by this department. Name of persons who have introduced these buyers to NSEL are as follows: ‘Shri Manish Chandra Pandey, based at Karnal. He has introduced PD Agro processors, ARK Imports, Lotus Refineries Pvt Ltd., Namdhari Food, Namdhari Rice, White water Food, and Yathuri Associates. Shri Manishchandra Pandey was earlier employed in NBHC and most of these entities were existing clients of NBHC (except Lotus and ARK Imports as per my information). + Shri Amrendra Reddy, based at Hyderabad: MSR Food, Sankhya, Metcore, Spincot. * Shri Kalpesh Shah: Mohan India Group (3 entities). He was introduced to Shri Jai Shrivastava through a mutual friend Shri Sanjeev Kumra. ‘Aastha group, Topworth, NK Proteins, NCS Sugar and ‘Swastik overseas were identified and introduced by Shri Amit Mukherjicdirectly. os,+ Laxmi group was introduced by the existing buyer M/s White water, because Shri Kamal Divan, promoter of White Water is son in Law of Shri Balbir Singh Uppal, who Is promoter of Laxmi group. “Shri Manishchandra Pandey and Shri Amarendra Reddy report to Shri Amit Mukherjee and so after preliminary introduction, Shri Amit Mukherjee was involved in further driving the business at all these places. Warehousing department, headed by Shri Jal Bahukhandi, who alongwith his team is the custodian of all warehouses designated by NSEL. Finance, headed by Shri Shashidharan Kotian. Delivery department, headed by Shri H B Mohanti Clearing and settlement department, headed by Shri Santosh Mansingh Membership department, headed by Shri Santosh Mansingh. 12. The present problem faced at NSEL is as follows: (a) (b) There are 25 buyers, who have entered into transactions on NSEL platform for getting their working capital against physical stock of goods through buy and sale transactions. Some of them have used this platform actually for the purpose of running their business operation smoothly, but some of these buyers have used such funds against repayment of their outstanding debts. Besides, some of these buyers have diverted these funds for some other activities such as extension of their plants, investment into real estate and may be for other activities too. The Exchange does not have access to information about end use of such funds, but from the members’ Bank Settlement Account, the Exchange is able to identify how much funds they have transferred for their use. This Is also a fact that these buyers have used part of these funds towards repayment of their interest component and other Exchange charges. Besides, members have also used this fund for giving it back to the Exchange as cash margin deposit. Considering all these factors, the cost of funds comes to around 21-22 % per annum. Hence, the total amount payable by the members as on date include the principal amount utilized by them plus cost of funds paid by them through rolling over of their liability by way of ‘compounding. An analysis of the figures payable by these members Is as follows: Rolling over cost of funds NK PROTEINS LTD 969.89 | 388 ‘ARK IMPORTS PVT LTD | 719.50 | 165. P D AGROPROCESSORS PVT LTD. 639.55 _| 215 MOHAN INDIA PVT.LTD [575.08 | 63 YATHURI ASSOCIATES | 424.64 [55 LOIL CONTINENTAL FOOD LTD, 335.15 | 46 TAVISHI ENTERPRISES | 333.01 | 7PVT. LTD. LOIL HEALTH FOODS 8 a6 70: roy 289.12_| 45 LOTUS REFINERIES 9 14180 | pyr LTD. 252.56 | 49 JUGGERNAUT 10 __| #4779 | proxects LTD 220.20 | 3 qas0 |TOPWORTH STEELS & un POWER PVT. LTD. 169.51_| 12 qase0 |METKORE ALLOYS & 2 INDUSTRIES LTD 106.88__| 5 qao10 | SWASTIK OVERSEAS 13 CORPORATION 101.23 | 21 qa0so | WHITE WATER FOODS 14 PVT LTD 86.12 | 19 LOIL OVERSEAS FOODS Pree eer sasa | 26 16 | 14230 | NCS SUGARS LIMITED [58.85 | 2 NAMDHARI FOOD 13990 | INTERNATIONAL PVT 7 LD 51.07 _|16 SPIN COT TEXTILES 1s__| 14630] pyrirp 38.26 | 4 SHREE RADHEY 19 __| 13780 | trapine co 35.04 {7 73960 | AASTHA MINMET INDIA PVT-LTD. 26.47 | 44 BRINDA COMMODITY 14730 | pyr LTD 14.93, VIMLADEVI AGROTECH 14160 | UmrreD 14.02 3 NAMDHARI RICE & 14170 | GENERAL MILLS. 10.45 | 3 MSR FOOD 14260 | pROCESSING 9.55 ‘i ‘SANKHYA 14270 | INVESTMENTS 2.13 2 Total 5572.75 [1201 (c) I would further like to clarify that none of these buyers are in any way associated with me or anybody in our group. All these buyers have their individual business activities and have no business relationship with our group. Our interaction with these buyers is confined to their business transactions on NSEL platform and the only benefit derived by us is the transaction charges, delivery charges, etc. earned by NSEL from these buyers. Charges levied by the Exchange is around 0.1 % of turnover. Save and except such benefit, NSEL or any other FTIL group company has not received any benefit from these buyers. I further confirm that I have not received any personal gain from any of these buyers and I may be subjected to enquiry by any agency in the matter. 13.Underlying issues: (a) In order to create financially viable model of spot exchange, NSEL launched contracts like T + 2 and T + 25. This was intended to create a linkage-between farmer/ trader, arbitrageur and the buyer. : Ad-(b) © (a) (e) In the process, traders supplying goods got immediate funds. Arbitrageur got return on investment. Buyer got working capital against commodities. Before launch of a contract, the warehouse team was required to visit the location. Once they confirmed about availability of stock, then only contract was launched. Hence, trading always ‘commenced against physical stock confirmed by the warehousing team. ‘The design of the contract was good, but it had a basic weakness in the form of allowing plant location as the delivery center. On one hand, for making the contract workable, it was essential. If the stock is to be held in professional warehousing system outside the plant, the cost of operation in respect of collateral management charges, etc. was not viable. But, on the other hand, allowing the plant of the buyer as the delivery location provides better control to the buyer compared to the Exchange. Warehousing team of NSEL was not competent to handle such volume of operation. The inefficiency of warehousing team led to breaking the chain between physical stock and exposure. On the other hand, all the 24 buyers were timely issuing sale bill and other documents, so as to confirm that they have adequate stock to back their exposure. They were also submitting their VAT returns and paying VAT to the department confirming all such purchase and sale transactions. 14.Based on above, if we analyze the fault of various parties, it appears as follows: ‘Fault on the part of buyers: * Misrepresentation of facts pertaining to declaration of stock position; + Issuance of sale invoice without having goods in stock + Issuance of false documents relating to physical possession of goods + Entering into sale transactions without having stock of goods + Defrauding money by enjoying the sale proceeds without effecting deliveries * Diversion of funds availed through fictitious sale transactions to buy real estate and other propérties. * Making false statement about stock position in presence of FMC officials. + Fault on the part of the business development team, which was headed by Shri Amit Mukherji: ‘Introducing buyers with bad credentials into NSEL system. Most of the buyers under default are from Punjab and Haryana, who were introduced by Shri Manish Chnadra Pandey, who stays at Karnal, Haryana. ‘+ Not informing the management about possible diversion of funds by the buyers. If the buyers are investing funds into real estate, they should know it from the local sources immediately. as Ae‘+ Not informing management about non availability of stock or pledge of stock with other lenders and simply allowing them to siphon off funds. ‘+ Fault on the part of the warehousing team, which is headed by Shri Jai Bahukhan ‘+ The violation done by the warehousing team is the most severe. The weakest link in the entire episode is the warehouse management. Before launch of every contract, Shri Jai Bahukahndi used to visit the location, verify stock, depute warehouse supervisor and security guard and then give confirmation about launch of the contract. Based on such comfort, trading commenced in every contract. But, subsequently, the team did not have any control on the stock. ‘+ Not having adequate contro! on physical stock and also making false stock statement. + Fault on my part: ‘+ Not having proper systems and controls to monitor physical stock vis a vis exposure ‘+ Not informing the Board about increasing exposure and risks of widespread default, which was a breach of trust of other Board members. + Relying upon the statements made by Shri Jal bahukhandi about stock statement and statement made by Shri Amit Mukherji about buyers’ credentials without having cross verification. + Submitting wrong stock statement to the Board on 30" July, 2013 and subsequently to FMC, based on the reports given by the warehousing department. + By 2011-12, the scenario was such that if we do not allow roll over, buyers would have defaulted with huge amount. On the other hand, if we continue to allow him to roll over his Position, his exposure keeps on increasing every year by 20- 25 % due to impact of roll over cost and exchange fee. The judgment error on our part was that due to fear of widespread default, we allowed the market to function rather than stopping it boldly in past. 15.This Is also my duty to inform all concerned that for the entire NSEL matter, the senior management team of NSEL, which includes me and other senior officials of NSEL are responsible. None of the Board members are responsible for any matter pertaining to NSEL. —_It has appeared in media that the promoters of NK Proteins are related to former NSEL Chairman Shri Shankarial Guru and so, he is responsible for all the wrong doings of NK Proteins. Factually speaking, Shri Shankarlal Guru was not responsible for any business conduct, exposure limit or liability of NK Proteins. Similarly, none of the directors of NSEL or its promoters are responsible for the issues faced by NSEL. Our promoters have not derived any advantage out of NSEL operation. NSEL has not given any dividend or eAbonus to its promoters till date. On the contrary, they have given their ‘own funds for settling dues of small clients of NSEL. 16.In this backdrop, I would like to share some specific details about wrong things happened at NSEL: ‘+ In case of Mohan India, Shri Jai Shrivastava came in contact of Shri Kalpesh Shah through their mutual friend Shri Sanjeev Kumra. Shri Kalpesh Shah introduced him to Shri Amit Mukherji, The story given to me as well as to other NSEL team was that they are big sugar trader apart from real estate, hotel and school business and that they also have interest in some sugar mills in UP. They wanted to use this platform for T + 2/ T + 25 contract and also for the purpose of developing Delhi based sugar contract based on delivery. In fact, there were discussion with other sugar traders in Delhi like Vicky, etc. and also some big buyers like Haldiram, who consented to buy through NSEL platform, while Mohan India wil get delivery of sugar from UP and sell/ deliver in Delhi through NSEL. ‘+ But, when it did not happen after 4-5 months, we enquired and then in May 2013, we came to know that the entire story is farce. Mohan India availed funds through this platform and invested into land. ‘+ Initially, Shri Jai Bahukhndi confirmed that stock lying in Delhi is around 1.35 lac MT, but later on it was discovered that at no point stock was more than 5-10 thousand MTs. + In May/ June 2013, for the first time, Shri Amit Mukherjee t ‘organized my meeting with Shri Jai Shrivastava in Sahara Star, , Mumbai with @ proposal that if he is allowed to raise funds to the extent of Rs. 300-350 crore, he can repay the same amount by December 2013 alongwith a profit of around Rs. 200 crores for NSEL SGF, which can be used towards settling the dues of Lotus Refineries who was defaulting since long. I consented for the same and therefore, Shri Jai Shrivastava took two membership in the name of Tavishi and Brinda Commodities and raised funds to the tune of Rs. 347 crore Tavishi 333 + Brinda 14). Deployment of funds was totally in is hands and we were not having any control over the same. As informed by him, he wanted to use this fund to buy land near to Delhi farmers, which were soon to be declared under R zone and so, prices were supposed to go up after such declaration. ‘+ In this meeting, Shri Jal Shrivastava also offered that he can do some investment in my name and that I should do something for my personal benefit, but I refused the same. But, I conquered with him that if he can bail us out of Lotus problem, I will be obliged. + "In addition to above, Shri Jai Shrivastava has given following amount ‘+ Loan of Rs. 35 crores to S R Bhalotia & Co. at 24 % p.a. interest. For this, they have signed a loan agreement. As a matter of fact, NSEL had to recover Its dues from S R Bhalotia & Co. In order to expedite the same, the arrangement was that Brinda commodities will give loan of Rs, 35 crores to S R Bhalotia & Co. and SR Bhalotia will repay to NSEL. This was organized by Shri Amit Mukherjee with my consent. a pe* Cash payment of Rs. 11 crore to Shri Amit Mukherjee to settle some legal fees and expenses pertaining to the matters of ARK Imports and other members of the Exchange. As claimed by Shri Amit Mukherjee, he collected money from Shri Jai Shrivastava and delivered to the concerned people. ‘+ Payment of Rs. 10 crores to IBMA by account transfer, which was to be adjusted against the total profit receivable by NSEL against sale of land during October to December 2013. ‘+ Since inception of Mohan India’s trades till May 2013, the confirmation given by our warehousing team and business development team was that the entire exposure was backed by sugar stock and I had relied upon such statement. In all the joint meetings in presence of senior officials of NSEL, Shri Jai Bahukhandi and Shri Amit Mukherjee had confirmed the same, But, I admit my mistake in the case of Tavishi enterprise and Brinda commodities for consenting to allow them to trade without having stock. 17, ARK Imports: a. In this case, Shri Kallash Agrawal (father) and Shri Anubhav Agrawal (son) are the promoters. I have not met Shri Anubhav Agrawal till date. On phone also, I have not spoken to him tll June, 2013. After the problem happened, I have spoken to him for settlement of dues. I met Shri Kailash Agrawal for the first time when he came to NSEL office in early 2013. At that time, we had called the buyers to pressurize them to reduce their exposure and also to give a plan to liquidate their existing exposure. b. Before launch of the contract, Shri Amit Mukherji briefed me that they are big importers of Raw wool and they import huge quantity from Australia, He further said that they are members of Australian Wool Board and get a discount upto 10 % on bulk purchases. He also submitted copy of some import documents. . Initially, the factory premises were the designated delivery location. ‘The warehousing team confirmed availability of stock and based on that, trading started. I have not allowed or consented any deviation from the set principles. d. Subsequently, it was decided to hire a separate warehouse outside the factory premises for the purpose of better control. However, as I understand that during shifting of stock, he manipulated the quality as well as quantity and therefore, the stock which came into our possession was of lower quality and quantity. During last 1 year, we got information from some members in Ludhiana such as Master capital and some members of Ludhiana stock ‘exchange that the quality of stock is poor. Consequently, a number of clients’ visits were organized to check the quality and quantity. f, Some people also gave information that ARK is buying huge land areas, farm house, etc. in that area. I shared such information with Shri Amit Mukherjee. After enquiry, he Informed me that such information is baseless and is spread by some competitors of ARK, who wanted to avail NSEL facilities, but because the Business development team did not entertain them, they are spreading such rumors. About purchase of land, he informed me that ARK has : AA~ e.incorporated various companies in ROC, so that turnover can be segregated into 3-4 entities and huge turnover is not reported into ‘ARK account only. 9. Hence, I feel that Shri Manish Pandey and Shri Amit Mukherjee have played to manipulate the facts, which has resulted into the disaster of ARK. h. This is also a fact that while in most of the other cases, there have been movement of stock. New stock has come and old stock has gone out, in the case of ARK, there has been no or negligible movement of, stock, Hence, it is apparent that ARK has used NSEL system not for meeting his working capital requirement for raw material; rather he has used it just for raising finance and not as a delivery based spot market. 18. Lotus Refineries: * Lotus introduced a brand called "LR Active” for various edible oils. He came in contact with Shri Manish Pandey. Shri Pandey brought him to Mumbai office for deliberation. Shri Jai Bahukhandi visited the warehouse locations. But, Lotus did a big fraud by manipulating his stock records and by issuing false bills, etc. ‘+ This was the first case, where NSEL settlement system was Jeopardized. We were trapped in the roll over mechanism. Lotus was not completing pay in. Sometimes he was not doing roll over trades. In such cases, we were forced to use margin deposit to declare pay outs. The problem was that if we declare Lotus as defaulter, the entire system comes to a halt. Lotus stock was not in ‘our possession and so, declaring him defaulter meant the entire edifice comes to a standstill. As a result, Exchange staff were virtually requesting him to continue trading. If one broker becomes defaulter for 100-200 crores, it means that from next day nobody would trade on the Exchange and so, there would be widespread default. On the other hand, if we continue his trading, liability was increasing day by day due to roll over effect. 19. NK Proteins: + We came in contact with NK for getting their buying support in caster seed farmer's contracts. IFMR trust came in contact with us for working on the concept. They commenced procurement from farmers directly and then to sell through NSEL. But, they had limited working capital, which was an impediment to scale up the operation. So, while discussing with them, the concept of T + 3 and T + 36 came out in caster seed contract, NK started participating in the contract. * But, the weakest link was that NK warehouse was the designated delivery center. Hence, NSEL was not having control on the stock. ‘They raised funds through NSEL and NSEL intervened and asked NKPL to liquidate the complete exposure from April 2011 seeing the discomfort and the apparent risks that could arise due to continuance of trading in these contracts. NKPL submitted the following to give comfort to NSEL:~ + That NKPL was in joint venture with Adani group for joint export of castor oll, which will give good profit and he will liquidate up to 200 Cr out of funds to be received from such joint venture. Ac~ 1020. + NKPL was in the process of enhancing their cash credit limits from their consortium bankers to the tune of 200 cr and would liquidate the exposure at NSEL on disbursal from banks. ‘+ NKPL will do LC business for import of CPO and other edible oils by availing buyers’ credit up to 180 days and liquidate the exposure at NSEL. * But, none of the above commitments were fulfilled by NK, In the meantime, exposure kept on increasing due to roll over effect. By end of December 2011, it was known to us that he was not having stock to back the exposure. Still we allowed him to continue because of the fear of widespread default, if we choose not to allow him to roll over. P D Agro, Namdhari, White water Food, etc. + In all these cases, the common features are that they have used NSEL for raising funds against physical stock. But, it is possible that in some cases, those stocks were already pledged with the banks. At head office level, we were not having adequate risk management mechanism and control systems to check whether stocks were already pledged. The ground level business development team did not share such information. Warehousing ‘team was not having control on stock. Physical market players were interested to use this market only for raising funds, not for any other purpose. Investors found the model most lucrative, because it provided them a mechanism to earn regular returns. + Hence, the common problem was that the buyers did not pay interest differential every month, rather kept on adding the same in their subsequent roll over. As a result, exposure kept on increasing. Even though the original exposure was linked to physical stock, sufficient stock to back the subsequent roll over was not there. 21, Metcore, Sankhya, MSR Food, etc.: They have used NSEL platform in the most appropriate manner. They have increased exposure in accordance with stock and liquidated the same also. At present also, they are regular in payments. 22.1 am ashamed for the current affairs of NSEL. I relied upon Shri Amit Mukherjee and Shri Jal Bahukhandi in respect of most of the matters pertaining to introduction of buying members and custody of physical stock, but apparently their decisions were influenced by the respective parties through underhand dealings. The basic reason for poor control was that they were compromised and so, their inputs were devoid of facts. Still, T own up full responsibility for + Not taking appropriate decisions to stop the market, when the things were going out of hand in the hope that the things will improve and problem will be solved. For last 3-4 months, we were working on a parallel loan arrangement for the buyers, but that also did not materialize till date. * Allowing exposures to increase knowing that sufficient stock to back the same was not available. ‘+ Not having proper risk management system a+ Not outsourcing the warehousing and quality check to outside ‘agency. In fact, whenever I insisted for outside agencies, the warehousing team and Shri Amit Mukherjee insisted that it is not workable because of cost factor. Initially, we used the services of SLCM, but the business development team was not comfortable dealing with them and so, their operation was also stopped at most of the places. 23. IBMA operation: I own up full responsibility for all transactions done by IBMA. No other Board member of IBMA is responsible for any such matter. IBMA transactions on NSEL, MCX as well as MCX SX have happened as per business model designed by me and so, I fully own up such responsibility. 24, Other adjustments in the books: * During FY 2012-13, IBMA received Rs. 20 crores from LOIL, so that IBMA books can be converted into profit. Such adjustment was required, because last year, auditors had refused to accept any transfer from NSEL to IBMA. * In one of the financial years, NSEL/ IBMA received Rs. 15 crore from NK as a profit from purchase and sale of cotton seed wash oil; + In one of the initial year, NSEL received profit of Rs. 6 crores from NK. Conclusion: * I, take full responsibility for the entire issue faced by NSEL today, due to misrepresentation, miscommunication and wrong deeds of the senior management staff of NSEL, in some cases for their individual wrongful gains. We understand that due to poor management and lack of control at our end, thousands of investors are suffering today. + I understand that the entire mess has happened under my management. Even though I have not derived any personal benefit, Tam responsible for the entire mess. ‘+ It is also evident that the entire money has gone to the 24 buyers, who have used it either for their business ventures or otherwise, which can be tracked by investigating the money trail between members’ settlement account, members client account and subsequent movement of funds. + In order to solve the problem faced by all the investors, the most crucial job is to recover money from all the 24 buyers. Some of these buyers are paying regularly (no is 5), some of these buyers want to pay but they have liquidity crunch and some other buyers are trying to frustrate the matter by going through litigation. + “Therefore, we submit that we will fully cooperate with all Government agencies by sharing full details about all the buyers and all other information, as may be available with us, to assist them in recovering the money. I further submit that I have made the above statement now in view of the defaults in making payments by large number of buyers, who owe huge sum of liabilities, as a result of which the Exchange is not able to release pay out to large number of clients. Initially, in the month of August, 2013, most of the buyers confirmed that they admit their Am= 2liability and are willing to repay the same, but are facing liquidity crunch. Therefore, the Exchange also worked out a weekly payment schedule to help them out to come out of this problem. However, during last 1 month, most of them have failed to honor their commitment in respect of weekly installments, which has led to a serious crisis. Therefore, I am making this statement out of my free will and consent. Whatever stated hereinabove is true and correct and it conceals nothing and that no part of itis false. Solemnly affirmed before me on this 11" day of September 2013. Qik Anjani Sinha Deponent. B