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Lockouts and excuses; will defaulters also get away with murder?

What has Metkore Steel and Alloys done with the money it borrowed from traders on NSEL’s trading platform? A News Item appearing in a Financial Daily last week reported a lockout at a Ferro-chrome Plant in Tekkali, Andhra Pradesh, belonging to Metkore Steel and Alloys Limited (MAL), one of the defaulters in the NSEL payments crisis.

MAL reportedly cited increased power costs and losses. So, if MAL is unable to operate the plant, the question that arises is what has MAL done with the money it borrowed from NSEL traders?

MAL’s total payment obligation was at Rs 114 Crore in July 2013 of which the company paid Rs 19 crore in the same year.  MAL still owes traders Rs 95 crore.

The plot gets murkier. Earlier this year, MAL pledged 2.5 million of its shares to another firm for another loan facility.

With so much of loan on its books, are traders to understand the company was still not able to manage its business – a plant producing 30,000 tonnes of Ferro-chrome products, a Raw Material that is much in demand by steelmaking companies? Moreover, MAL’s website mentions that its MD Prahant Boorugu has even undertaken backward integration measures like acquiring mining rights.  So, if MAL had already taken care of its own raw material requirements, it should have been in a very advantageous position.

The article in the financial daily goes on to say that last year, the company’s employees at the plant had reportedly blocked representatives of Steel Authority of India (SAIL) and NSEL from inspecting the Ferro-chrome stocks that were kept at the company’s warehouses in Tekkali town.

The inspection was planned after the Maharashtra Protection of Interest of Depositors (MPID) court allowed the auction of MAL’s Ferro-chrome stocks worth Rs 91 crore.

Obstruction of justice at that time and now, this news item about the lockout of the plant are both worrying developments for those looking to recover their dues from the defaulting company.

As noted in earlier posts on this site, there is a lack of concerted action on defaulters. With the focus only on NSEL and FTIL, it is no wonder shady defaulters are getting away scot-free with flimsy excuses and lies.

This post first appeared on Account Suspended, please read the originial post: here

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Lockouts and excuses; will defaulters also get away with murder?


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