Is FTIL’s cash cow drying up? Company’s results in past few quarters reflect impact of NSEL scam on its trading solutions business

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Is FTIL’s cash cow drying up?

linkedin rss LiveMint | Hindustan Times | LiveHindustan 18 November 2014 Home Companies Industry Politics Money Opinion Lounge Multimedia Consumer Specials Epaper G20 Summit Live Markets Marketinfo | Mint 50 | Mark to Market | Markets | Ask Mint Money | Calculators First Published: Mon, Nov 17 2014. 01 21 PM IST Home» Money Is FTIL’s cash cow drying up? Company’s results in past few quarters reflect impact of NSEL scam on its trading solutions business E-mailPrint Mobis Philipose Mail Me 1 inShare 1 Comments Subscribe to: Daily Newsletter Breaking News Latest News 11:45 AM IST Law Commission suggests repeal of 30 laws in its fourth report 11:04 AM IST G20 summit 11:02 AM IST Game 7 might have given Anand a psychological edge over Carlsen 10:36 AM IST India, China to court Pacific nations in Fiji 10:18 AM IST Brent slips below $79 as rhetoric heats up before Opec meeting Editor's picks The Nehruvian rate of growth The Nehruvian rate of growth Merchandise exports fall as trade deficit widens to $13.3 bn in October Merchandise exports fall as trade deficit widens to $13.3 bn in October India most attractive market; Modi key: CLSA’s Christopher Wood India most attractive market; Modi key: CLSA’s Christopher Wood States look to plug tax gaps in e-commerce States look to plug tax gaps in e-commerce Women still face choppy waters in shipping and logistics Women still face choppy waters in shipping and logistics Is FTIL’s cash cow drying up? Graphic by Prajakta Patil/Mint Financial Technologies (India) Ltd’s (FTIL’s) trading solutions business is often referred to as a cash cow, thanks to the company’s high share in the market for trading systems installed by brokers. Because replacement is an expensive proposition, the scam at subsidiary National Spot Exchange Ltd (NSEL), it was thought, hadn’t affected the group’s bread-and-butter business. But the company’s results in the past few quarters tell a different story. Headline numbers are marred because of a number of one-off expenses and incomes, but the company’s segment results show profit from the core business has fallen drastically. In the September quarter, profit from the trading solutions segment stood at Rs.7.01 crore, about 90% lower than the Rs.67.5 crore profit reported in the quarter ended June 2013, just before the NSEL scam came to light. (See chart) Also, revenue of this segment amounted to about Rs.33 crore in the September quarter, less than half of the amount of profit this segment was generating in the June quarter the previous year. For more on the woes of the company’s core business, click here. Meanwhile, the company’s cash pile has risen sharply, thanks to asset sales. Cash and cash equivalents rose to over Rs.2,000 crore by end-September, from around Rs.900 crore at the end of March. The recent sale of the company’s stake in Indian Energy Exchange Ltd helped it raise another Rs.577 crore. Of course, there remains a big question mark on how all of this cash will be used, and whether these funds will be used to repay investors who lost Rs.5,600 crore on the NSEL platform. It’s little wonder the company has a market capitalization of merely Rs.863 crore, even though the value of its cash itself is more than three times that amount. 1 inShare 1 Comments Subscribe to: Daily Newsletter Breaking News FTIL NSEL scam Trading solutions business Results Cash by Taboola Sponsored Links FROM THE WEB ‘Warren Buffett Indicator’ Signals Collapse in Stoc…Newsmax 12 Eerie Places Around the World that’ll Give you …Happy Trips When Your Employees Are Engaged, Produc…Bloomberg by Sprint Tips for Long Distance DrivingZigwheels MORE FROM THE WEBEARLIER ON LIVE MINT ‘Warren Buffett Indicator’ Signals Collapse in Stock Market (Newsmax) 12 Eerie Places Around the World that’ll Give you Goose-Bumps! (Happy Trips)


COMMENT -   The Nehruvian rate of growth The Nehruvian rate of growth Merchandise exports fall as trade deficit widens to $13.3 bn in October Merchandise exports fall as trade deficit widens to $13.3 bn in October India most attractive market; Modi key: CLSA’s Christopher Wood India most attractive market; Modi key: CLSA’s Christopher Wood States look to plug tax gaps in e-commerce States look to plug tax gaps in e-commerce Women in still face choppy waters


NAGESH DUBEY
PGDM 2ND YEAR