FTIL slips on delay in MCX stake sale

Financial Technologies (India) fell 2.23% to Rs 257.05 at 14:23 IST on BSE after the company's board said it would take two weeks more to attain a final bid for its stake in MCX.

Shares of MCX were up 0.69% to Rs 513. Financial Technologies (India) (FTIL) made the announcement on Saturday, 10 May 2014.

Meanwhile, the BSE Sensex was up 488.96 points, or 2.13%, to 23,483.19.

On BSE, so far 4.52 lakh FTIL shares were traded in the counter, compared with an average volume of 4.64 lakh shares in the past one quarter.

The stock hit a high of Rs 272 and a low of Rs 249.80 so far during the day. The stock hit a 52-week high of Rs 870.30 on 28 May 2013. The stock hit a 52-week low of Rs 102.05 on 30 August 2013.

The stock had underperformed the market over the past one month till 9 May 2014, sliding 24.86% compared with 1.29% rise in the Sensex. The scrip had also underperformed the market in past one quarter, falling 5.94% as against Sensex's 12.85% rise.

The small-cap company has an equity capital of Rs 9.22 crore. Face value per share is Rs 2.

Financial Technologies (India) (FTIL) said that the board at its meeting held on 10 May 2014, took note on the progress of the divestment of FTIL's stake in MCX and noted that all the shortlisted bidders continue to be interested in the divestment.

The board also took note of the developments in the past few weeks including, the sharing of the executive summary of the PricewaterhouseCoopers (PwC) report, the clarification issued by FTIL on the executive summary of PwC Report, the revised norms issued by FMC, the resignation of the MD & CEO of MCX and the acceptance of his resignation and the updates and clarifications issued by MCX on the PwC report on 9 May 2014 to the effect.

The board deliberated on the divestment process and decided that further time need to be given in the light of the developments that have come on 9 May 2014. The board decided to give two weeks time to complete the discussions and negotiations with the bidders and attain the final bid. The board is now scheduled to meet on 24 May 2014.

On 7 May 2014, the Mumbai police's Economic Offences Wing (EOW) arrested Jignesh Shah, chairman and group chief executive of FTIL, in connection with the Rs 5574.34 crore fraud at National Spot Exchange (NSEL). Shah's arrest is the 10th and the most significant in the case since the crisis began in July 2013. FTIL owns 99.9% of NSEL. MCX is also an affiliate of FTIL.

FTIL announced after market hours on 8 May 2014, that it is distressed at the arrest of its CMD, Jignesh Shah by the Mumbai Police, despite Mr. Shah co-operating fully not only with the Mumbai Police but also with all other authorities, ever since the NSEL crisis surfaced in August 2013. The company said that it has full faith in the judicial system and is confident that Justice will be done in the case of Mr. Shah. The company will continue to extend its full co-operation and support to all the authorities.

As on 31 March 2013, promoters held 45.63% of FTIL.

The crisis at NSEL came to light on 31 July 2013 when the exchange suspended trading in all but its e-series contracts. These, too, were suspended a week later. The suspension may have been prompted by an instruction from the ministry of consumer affairs to the exchange asking it not to offer futures contracts. A spot exchange is not supposed to do so, but NSEL was doing that. NSEL tried to implement the change, but because its appeal was to investors and members who were not interested in spot trades, it eventually had to suspend all trading.

Subsequent investigations have highlighted the possibility of fraud and, according to the Forward Markets Commission (FMC), the involvement of promoters. On 14 August 2013, NSEL proposed a payout plan, but it has been unable to stick to the schedule and has not made a single successful payout ever since.

FMC in its order dated 17 December 2013 said that FTIL, the promoter and anchor shareholder holding 26% of the paid-up capital of the commodity exchange MCX, is not 'fit and proper person' to continue to be a shareholder of 2% or more of the paid-up equity capital of MCX as prescribed under the guidelines issued by the Government of India (GoI) for capital structure of commodity exchanges post 5-years of operation.

FTIL's net profit rose 27.6% to Rs 34.48 crore on 10.97% decline in net sales to Rs 79.97 crore in Q3 December 2013 over Q2 September 2013.

FTIL is among the global leaders in offering technology IP (Intellectual Property) and domain expertise to create and trade on next generation financial markets.

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