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Premal Balan, Dilip Kumar Jha & Rutam Vora | Ahmedabad/ Mumbai September 04, 2013 Last Updated at 22:45 IST

NK Proteins: The biggest defaulter in NSEL's books

The company owes Rs 969 cr and its net worth was Rs 109 cr as on March NK Proteins' (NKPL) unsettled position of Rs 969 crore at the National Spot Exchange (NSEL) vis--vis a net worth of Rs 108 crore has already taken a toll on its rating. Icra recently downgraded its long-term rating to B- from BB+. NKPL is the biggest defaulter in the list of 24 members which collectively contributed to a default of Rs 5,600 crore at NSEL. The company says this has been grossly overstated. "We do not owe the amount as specified by NSEL. Although the actual amount of dues is still being worked out, primary investigation shows the real amount is much lower than NSEL claims," said Nilesh Patel, managing director of NKIL. The company paid Rs 5 crore of the total receipt of Rs 15.37 crore to the exchange in the third payout disbursal. NKPL has been told it owes Rs 969 crore and its net worth was Rs 108.99 crore as on March, according to Icra. This, however, does not include Tirupati Retail (India) Pvt Ltd, producer and retailer of the Tirupati brand of edible oil in Gujarat. Patel said the company had asked NSEL for a reconciled account statement, which it has not got. "Once the reconciled statement is submitted, we would pay the dues immediately. NKPL has lost huge money by trading on NSEL. And, the company's reputation has been damaged by declaring it a defaulter," he said. If the matter was not resolved amicably, he said, they'd take legal recourse. Analysts doubt its repayment ability as one of its companies is already under the ambit of the Board for Industrial and Financial Reconstruction (BIFR). "With its liquidity weakening, the company has not yet disclosed how they plan to pay the outstanding (dues) with NSEL," said an analyst. NKPL, added the analyst, has limited financial flexibility in terms of availing working capital facilities from banks due to the weak financial position of its group company, NK Industries Ltd (NKIL), now under BIFR. Icra has revised the long-term rating of NKPLto B- and the short-term rating to A4 from A4+. Under Nilesh Patel, NKPL was incorporated in March 1992 as Maruti Proteins Ltd and took the present name in February 1993. An avid trader himself, Patel is well versed with the oil extraction business. The politically connected businessman from Kadi block in Mehsana district had incorporated the company with brother Nimish Patel, who's also chairman and managing director of NKIL. Patel, who has been successful in keeping his political links under wrap, also happens to be the son-in-law of of Shankarlal Guru, who resigned as the chairman of NSEL after the payment crises at the exchange surfaced. With two decades of experience in the oilseeds business, he'd good at reading the tone of the commodities market. Today, his Tirupati brand is a market leader in the cottonseed oil segment, with 40 per cent market share in Gujarat. In spite of this successful retail business, traders claim, NKPL has been accused in the past for defaulting
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on payments to traders, farmers and even banks. Bankers, under condition of anonymity, said it had availed of loans from a consortium of lenders in the mid-1990s and defaulted. "It was in 1995-96 when we last dealt with the company to settle our receivables. Since then, our bank does not make any transaction with them," said one of the public sector lenders. Even seed suppliers in the past have accused the company of habitually defaulting. NK Group and the Adani Group's agro trading arm, Adani Wilmar Ltd, had formed a 50:50 joint venture called AWN Agro Pvt Ltd, which became the largest castor oil exporting entity in India. However, the association was reportedly ended in February this year, after two years.

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