Buyers to meet FMC on coffee delivery at NMCE

The stand off between National Multi Commodity Exchange (NMCE) of India and a group of coffee buyers on the issue of delivery on the expiry of the July contract is likely to escalate with the latter meeting Forward Market Commission (FMC) on Tuesday.

The Bangalore-based General Commodities Ltd, along with a few other buyers, are scheduled to meet FMC director Bharat Tripathi in Mumbai.

"We have decided to meet the FMC director as the NMCE is dragging its feet on the understanding of having a joint sampling of the disputed material," Shah said.

Following the dispute over the quality of the coffee delivered, a meeting of all parties involved was held in Bangalore on July 29, he said.In that meeting, it was decided that a joint sampling of the coffee delivered by NMCE would be held and if the quality was found up to the mark, the buyers will take delivery, Shah said.

According to the understanding the joint sampling should have been held last Monday. However, NMCE is now dragging its feet on the issue, he said.NMCE managing director Kailash Gupta was not available for his comment. Gupta is on a foreign visit and expected to be back on August 12, an official at NMCE said.

General Commodities Ltd had lodged a complaint with FMC against NMCE on July 6, regarding the failure of exchange to provide delivery of coffee on July 15, the contract expiry day and the poor quality of coffee delivered later.The complaint stated that NMCE had unilaterally changed delivery specifications and delivery time from July 15, 2005, to July 17 and then to July 19.

"NMCE by-laws clearly stipulate that if a seller fails to deliver coffee by the 15th of the delivery month then the seller has to pay penalty equal to the highest price traded during the life of the contract," it said.

NMCE also failed to issue warehouse receipts to the end buyers of the certified lots on the expiry day. No warehouse receipts were issued till July 20, it said.

NMCE maintains that it could complete the coffee delivery process only by July 21 due to initial teething problems. It has said such hiccups have taken place in the beginning of pepper, rubber and cardamom contracts too and they are now resolved.

It has also decided to pay compensation at the rate of 36% per annum for two days of delay in streamlining the process.

This was the first delivery of coffee after the introduction of coffee futures trading at NMCE in February 2005.