NSEL fiasco takes a toll on MCX, FT operations

While promoter FT postpones announcement of results, the commodity exchange's net plummets

While Jignesh Shah-controlled Financial Technologies (FT) has said the company has postponed the announcement of its results for the quarter ended September, FT group company Multi Commodity Exchange (MCX) has recorded a sharp fall in profit for the quarter.

In a filing to stock exchanges, FT said as the audited financial statements for the year ended March 2013 were pending and a review of the September 2013 quarter was underway, the date when the company would announce its earnings for the September quarter would be announced soon.

The Rs 5,600-crore payment crisis at National Spot Exchange Ltd (NSEL), an FT group company, has affected the operations of both these companies. The situation has been further complicated by the fact that the auditors of both NSEL and FT have withdrawn their reports. In 2012-13, NSEL accounted for a significant portion of FT's profits.

On Monday, the FT stock closed at 159.65 on BSE, down 3.04 per cent.

MCX, in which FT holds 26 per cent equity, recorded a dismal performance for the quarter ended September 2013. Its operating income fell to Rs 88 crore from Rs 137.6 crore in the corresponding period last year. Following the Forward Markets Commission (FMC)'s directive to all commodity exchanges to transfer five per cent of their profits to settlement and guarantee funds, in the quarter ended September, the company transferred Rs 13.17 crore to that fund. This reduced operating income to Rs 10.84 crore from Rs 80.04 crore in the year-ago period.

Operating profit was also hit by imposition of the commodity transaction tax on non-agri commodities from July. FMC had doubled margins on crude oil, precious and base metals, which resulted in a 44.86 per cent fall in volumes compared to the year-ago period and a 46.72 per cent fall compared to the June 2013 quarter. The NSEL crisis also contributed to the fall in volumes.

Net profit, which was Rs 81.41 crore in the September 2012 quarter, fell to Rs 27.05 crore in the quarter ended September 2013.

Meanwhile, the company has declared interim dividend of Rs 7/per equity share of face value Rs 10 each for FY 2013-14, based on the un-audited financials for the six months ended September 30, 2013. MCX also announced the appointment of two additional shareholder director on its board — M A K Prabhu (general manager, Canara Bank) and B V Chaubal (deputy managing director and group executive, State Bank of India).