MCX Q3 performance worst in 3 years

MCX posted 71% decline in its net profit at Rs 21.84 cr for the quarter ended December 31, 2013 compared to Rs 75.87 cr in the corresponding quarter of the last financial year

The net profit of India’s largest commodity exchange, the Multi Commodity Exchange of India (MCX), declined by over two-thirds for the third quarter ended December 31, 2013 on sustained fall in business over the last several quarters.

With a net profit of Rs.21.84 crore for December quarter, the exchange performance has been the worst since it was listed and from when the quarterly data are available.

The September quarter performance was also bad but this quarter impact on performance seems to be acute and the exchange’s performance started worsening post imposition of the commodities transaction tax and fall in gold prices along with stiff import curbs. Later however impact of NSEL crisis was also felt on volumes on MCX.

MCX posted 71 per cent decline in its net profit at Rs 21.84 crore for the quarter ended December 31, 2013 compared to Rs 75.87 crore in the corresponding quarter of the last financial year.

Total income also plunged by 51 per cent to Rs 79.59 crore for the third quarter of the current financial year as against Rs 162.78 crore in the same period last year.

“MCX’s performance during Q3 FY2014 has been encouraging, despite the challenges such as imposition of commodities transaction tax on non-agri commodities and weak market sentiments, among others. The exchange retained its position as India’s largest commodity exchange with a market share of about 86 per cent,” said Dr Manoj Vaish, MD & CEO, MCX.

Indicating on the exchange’s approach after its board has been restructured and no representative now on board from the anchor investor the Financial Technologies, Vaish said, “We will focus on nurturing the Exchange’s strengths and transform it into a professional and compliance-driven institution. We intend to provide a transparent, efficient and well-developed marketplace by espousing innovations and best practices in all facets of our business, developing market linkages and engendering wide participation.”

This is his first ever indication after joining from 1 February on future direction of the exchange. He has inherited the December quarter performance.

In last 11 quarters for which quarterly data are available, the exchange’s best performance was prior to listing in the September 2011 quarter. In that quarter total revenues were Rs.161.3 crore, and net profit was Rs.89 crore. The exchange was listed on 9 March 2012.

MCX to review related party deals

 

The board of directors of the Multi Commodity Exchange (MCX) is understood to have taken an initiative to review all related party deals and contracts and for this the board has set up a four member committee. Sources aware of the development said that the committee comprising of Pravir Vohra, FMC Approved Independent Director among others will undertake the review process. 

 

Financial technologies (FTIL) which had set up the exchange a decade ago has been the technology provider to the exchange since inception and that arrangement will also come under the review, said the source. 

 

The stock exchange promoted by the FTIL has also initiated the process of reviewing related party deals and contracts including that of technology by the FTIL. All this started happening after the FTIL representatives resigned from the board of both the exchanges.