Financial Technologies (FTIL) India's leading technology solutions provider for capital, commodities and forex markets, reported 30% rise in sales to Rs 121.75 crore for the quarter ended March 2012 on standalone basis.

OPM improved by 1080bps from 46.3% to 57.1% on the back of decline in employee costs as well as rent costs (as % of sales) resulting in 61% increase in operating profits to Rs 69.53 crore.

During the year, in terms of the compliance of FMC equity Structure Guidelines dated July 29. 2009, the Company offered part of its investments aggregating 2,643,916 equity shares of Rs 10 each of Multi Commodities under offer for sale consequent to Initial Public Offer (IPO) of the said company at a price of Rs 1,032 per equity share of Rs 10/- each. The resultant profit was Rs 249.8212 crore [net of directly attributable expenses of Rs 20.9158 crore]. Subsequent to dis-investments, the Company is holding 26% in the equity share capital of MCX. There was gain of Rs 248.59 crore against loss of Rs 9.3 crore at other income level excluding forex and despite higher interest costs and depreciation charges, PBT before EO grew from Rs 29.35 crore to Rs 295.85 crore. However, EO which includes only forex (gain of Rs 1.66 crore) in the current period against forex (gain of Rs 3.56 crore) + loss on sale (Rs 209.17 crore) in the prior period led to turnaround show at net level with profits at Rs 282.73 crore against loss of Rs 116.66 crore despite tax provisioning of Rs 14.78 crore against credit of Rs 59.6 crore.

FY12 net profit jumped from Rs 91.93 crore to Rs 478 crore as revenues growth by 19% to Rs 425.55 crore was further assisted by OPM which improved by 1260bps from 45.5% to 58.1% which led to 52% increase in operating profits to Rs 247.16 crore. Other income (tripled from Rs 103.8 crore to Rs 312.4 crore) and EO loss in the prior period (Rs 209.17 crore) also led to sharp jump in net profits.

The average daily turnover for the year ended March 31, 2012 in the group company exchanges are as under.

1. MCX - Rs 50313 crore, an increase of 57% over FY 11 daily average. The highest daily turnover recorded was Rs 111.666 crore.
2. IEX (Day Ahead Market) - 37,702 MWh, an increase of 17% over FY 11 daily average. The highest daily turnover recorded was 58,324 MWh.
3. DGCX - USD 835 million, an increase of 97% over FY 11 daily average. The highest daily turnover recorded was USD 1960 million.
4. SMX - USD 352 million, an increase of 2045% over FY 11 (w.e.f. Oct 1. 2010) daily average. The highest daily turnover recorded was USD 937 million.
5. JGBOT - USD 33 million, an increase of 63% over FY 11 (wet Nov 1, 2010) daily average. The highest daily turnover recorded was USD 65 million.

The Company has investments aggregating to Rs 480.4531 crore and debts and other recoverables aggregating Rs 264.0373 crore as of March 31, 2012, in certain subsidiary companies and a joint venture, which presently have accumulated losses, but are expected to be recovered, and have their values unlocked in the near future since these entities are at various Stages of executing their business plans and yet to break even. On an evaluation of the business plans for these entities, a provision for other than temporary diminution of Rs 17.3726 crore is considered to be adequate.

During the quarter, the company has made additional long term investments aggregating Rs 18.9071 crore in various subsidiaries.

Quarterly Performance (Standalone)

On Y-o-Y basis, for the quarter ended March 2012, FTIL reported 30% growth in net sales to Rs 121.75 crore.

The operating margins shot up by 1080bps to 57.1%. As a percentage of sales, rent costs were down by 158bps to 1.59%, employee costs by 82bps to 26.41% and other expenses by 820bps to 14.26%, traded goods purchase costs were down by 22bps to 0.62%. The resultant operating profits grew 61% to Rs 69.53 crore.

During the year, in terms of the compliance of FMC equity Structure Guidelines dated July 29. 2009, the Company offered part of its investments aggregating 2,643,916 equity shares of Rs 10 each of Multi Commodities under offer for sale consequent to Initial Public Offer (IPO) of the said company at a price of Rs 1,032 per equity share of Rs 10/- each. The resultant profit was Rs 249.8212 crore [net of directly attributable expenses of Rs 20.9158 crore]. Subsequent to disinvestments, the Company is holding 26% in the equity share capital of MCX. Other Income jumped from loss of Rs 9.3 crore to gain of Rs 248.59 crore, which includes loss of Rs 27.46 crore of diminution in value of investments as against loss of Rs 32.1 crore in the corresponding quarter previous year, jump in profit on sale of investments from Rs 2.74 crore to Rs 257.45 crore, other gains were up 19% to Rs 9.29 crore and dividend income was down 24.1% to Rs 9.3 crore. Interest costs were up from Rs 0.24 crore to Rs 17.03 crore and depreciation charge increased by 20% to Rs 5.23 crore. PBT before EO for the quarter was thus up from Rs 29.35 crore to Rs 295.85 crore. EO which includes only forex (gain of Rs 1.66 crore) against forex (gain of Rs 3.56 crore) + loss on sale (Rs 209.17 crore) stood at gain of Rs 1.66 crore against loss of Rs 205.61 crore as a result of which PBT after EO turned from loss of Rs 176.26 crore to Rs 297.51 crore.

Tax provisioning stood at Rs 14.78 crore against credit of Rs 59.6 crore and PAT thus changed from loss of Rs 116.66 crore to profit of Rs 282.73 crore. PAT excl EO jumped from Rs 21.78 crore to Rs 282.72 crore.

For the year ended March 2012, FTIL reported net sales of Rs 425.55 crore, up 19%.

The operating margins expanded by 1260bps to 58.1%. As a % of sales, staff cost declined 583bps to 26.43%, other expenditure 399bps to 12.73% whereas rent decreased 265bps to 2.1% and purchase of traded goods was down 12bps to 0.66%. The resultant operating profits grew 52% to Rs 247.16 crore.

During the year, in terms of the compliance of FMC equity Structure Guidelines dated July 29. 2009, the Company offered part of its investments aggregating 2,643,916 equity shares of Rs 10 each of Multi Commodities under offer for sale consequent to Initial Public Offer (IPO) of the said company at a price of Rs 1,032 per equity share of Rs 10/- each. The resultant profit was Rs 249.8212 crore [net of directly attributable expenses of Rs 20.9158 crore]. Subsequent to disinvestments, the Company is holding 26% in the equity share capital of MCX. Other income increased by 201% from Rs 103.8 crore to Rs 312.4 crore, which includes loss of Rs 38.82 crore of diminution in value of investments as against loss of Rs 32.1 crore in the corresponding previous year, jump in profit on sale of investments from Rs 69.35 crore to Rs 268.91 crore, other gains were up 47.87% to Rs 32.06 crore and dividend income was up 12% to Rs 50.25 crore. The interest cost jumped from Rs 0.70 crore to Rs 30.44 crore and depreciation charge increased 56% to Rs 17.3 crore. PBT before EO was thus up 101% to Rs 511.81 crore.

During the year ended March 2010, the company had sold 7.19 crore equity shares of Rs 1 each in MCX-SX for an aggregate consideration of Rs 251.56 crore to a financial institution (purchaser). The said sale was subject to a price reset and interest. During the last quarter of the year ending March 2011, the purchaser exercised its right and the company accordingly paid an amount of Rs 179.69 crore as price reset and Rs 29.48 crore as interest which is treated as EO. Consequently tax provision of Rs 71.09 is written back. EO was gain of Rs 17.64 crore (only forex) against expense of Rs 203 crore which includes forex gain of Rs 6.17 crore as a result of which PBT after EO was up from Rs 51.72 crore to Rs 529.45 crore.

Tax provisioning of Rs 51.42 crore against tax credit of Rs 40.21 crore in the previous year reduced the jump in PAT to 420% from Rs 91.93 crore to Rs 478 crore. PAT excl EO grew 3% to Rs 478.03 crore.

Management Comments

Mr. Dewang Neralla, Whole Time Director,

We are pleased to announce audited financial results for the quarter and year ended March 31, 2012. On the Standalone basis, Income from operations was at Rs.4,126.5 million up by 23%. This growth is fuelled by scale up in operations on the technology front backed up by strong fundamentals supporting our business model. Net profit booked was Rs. 4,780.3 million; up by 420%.

During the quarter ended March 31, 2012, MCX successfully completed IPO and became the first listed exchange in India. It received overwhelming response from domestic, international as well as retail investors. The issue was oversubscribed 53 times. FTIL along with other shareholders participated in IPO which was pure offer for sale. Post the IPO, FTIL's shareholding in MCX stands at 26%.

During the year, SMX and GBOT completed one year of operations. SMX recorded 2045% growth in average daily volumes as compared with the previous year and GBOT witnessed 63% growth in average daily volumes for the same period.

On the domestic exchanges front, group exchanges have maintained the dominant position. MCX became world's 3rd largest commodity derivatives exchange and lead the commodity markets in India with over 86% of the market share. The average daily turnover grew 57% over last year. IEX lead the electricity markets with dominant share of 93% in day ahead trading and 95% in Renewable Energy certificates trading. NSEL recorded average daily turnover of Rs. 991 crore; up by 277% as compared to last year.

On ecosystem front, NBHC tied up with two more banks to offer collateral management funding thus having total 37 banks on this platform. NBHC facilitated cumulative collateral management funding of over Rs. 24,700 crore.

Shareholding Pattern

As of March 31, 2012, Promoters hold 45.69% (45.69% at the end of sequential quarter), FII's hold 22.05% (22.54% at the end of sequential quarter), DII's hold 8.58% (8.79% at the end of sequential quarter), and others hold 23.68% (22.98% at the end of sequential quarter). None of the shares of promoter/promoters group shares are pledged.

The shares of FTIL closed at Rs 599.75 on BSE (31/5/2012),

Financial Technologies (India) : Standalone Results