FTIL today opposed the merger of scam-hit NSEL with itself as proposed by regulator FMC for speedy recovery of dues, saying that such a move would affect the Jignesh Shah-led company and 60,000 shareholders.
Instead, Financial Technologies India Ltd (FTIL) has suggested that government agencies, brokers and trading clients should "join forces" with National Spot Exchange Ltd (NSEL) to ensure recovery of Rs 5,300 crore from 24 defaulters.
"...while investigations and various legal proceedings are pending, where the actual facts are yet to be established, any action based on FMC's recommendations towards merging NSEL with the FTIL will irreparably prejudice and harm FTIL and its over 60,000 shareholders, 1000 plus employees, lenders and other stakeholders," FTIL said in a statement.
FTIL group is in big trouble after over Rs 5,500 crore payment crisis surfaced at its subsidiary NSEL last year. After FMC declared FTIL as 'unfit' to run any bourses, the company had to exit from its commodity exchange MCX and lose management control in the stock exchange, MCX-SX.
In a letter to BSE and NSE, FTIL said its Board is opposed to FMC's recommendations that NSEL be merged with FTIL and the government should take over management of FTIL.
"Should more than 60,000 public shareholders of FTIL suffer a non-existent liability of Rs 5,500 crore by the device of a forced merger when the very existence of any legal liability of NSEL and consequently of FTIL as its holding company, is sub judice before the Bombay High Court," it said.
Stating that the government can merge two companies in public interest, FTIL said that interest of 13,000 clients of the brokers who traded on NSEL platform for higher return cannot be "termed as public interest".
The company said about 66 per cent of the entire outstanding amount is due to 781 persons. Asserting that it has fully supported NSEL in recovery process, FTIL said it has given a loan of Rs 179 crore to the spot exchange to make part payment of dues to 6,600 small investors.
It also informed that NSEL has recovered more than Rs 360 crore from 24 defaulters and same has been distributed proportionately amongst the investors.
"NSEL with support from FTIL and under guidance from FMC has been making all efforts for recovery of the money from the defaulters including but not limited to filing various recovery suits and criminal complaints for dishonour of cheques against defaulters," it said.
FTIL said it has also supported NSEL in meeting administrative and legal expenses.
Financial Tech stock price
On September 16, 2014, Financial Technologies closed at Rs 244.05, down Rs 7.4, or 2.94 percent. The 52-week high of the share was Rs 403.60 and the 52-week low was Rs 129.95.
The latest book value of the company is Rs 522.91 per share. At current value, the price-to-book value of the company was 0.47.