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Home / Market / Mark-to-market /  Is FTIL’s cash cow drying up?

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 7.01 crore, about 90% lower than the 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 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 2,000 crore by end-September, from around 900 crore at the end of March. The recent sale of the company’s stake in Indian Energy Exchange Ltd helped it raise another 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 5,600 crore on the NSEL platform. It’s little wonder the company has a market capitalization of merely 863 crore, even though the value of its cash itself is more than three times that amount.

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