Multi Commodity Exchange (MCX) reported a substantial decline in earnings for a second consecutive quarter. For the three months to December 2013, both, the topline and the net earnings of MCX plunged as trading volumes fell by nearly 65% compared to the same period last year.
MCX- India's biggest commodity derivatives exchange- reported a 55% drop in its yoy operating revenue in the September quarter to Rs 55.8 crore while its net earnings declined by 71% to Rs 21.8 crore compared to last year. The earnings per share (EPS) declined by more than Rs 10 for a second straight quarter and for the third quarter stood at Rs 4.3.
The earnings were also impacted by the new guideline on the Settlement Guarantee Fund (SGF) by commodity market regulator Forward Market Commission (FMC) that demands that 5% of gross revenue be apportioned to the SGF. For the latest quarter, MCX earmarked close to Rs 4 crore to SGF. In the previous quarter MCX had allotted Rs 13.2 crore.
The deteriorating financial performance of the company since the last two quarters is attributed primarily attributed to the application of commodity transaction tax (CTT) although a Rs 5600 crore scam at the group entity NSEL ( National Spot Exchange) also impacted the sentiment of even MCX members believe market participants. Previous quarter performance reflected an impact of the imposition of an additional margin of 5% on trading on commodities like gold, silver, crude oil and copper in the month of September.
MCX data shows that, the average trading volume in the third quarter of the fiscal fell to 10.8 lakh contracts compared to 30.6 lakh contracts last year. The average turnover in the period has dipped to Rs 4.36 lakh crore from Rs 12.34 lakh crore last year.