MSEI - The Exchange For A Changing India - AR Update

AR brief - for your perusal

The Company is a full service National level Stock Exchange with license that offers an electronic, transparent and hi-tech platform to operate in Equity, Equity Derivatives, Currency Derivatives, Debt and SME Platform.

The Company has entered in to a Memorandum of Understanding (MoU) with GMEX Group, London to explore opportunities in the areas of FPIs coming on its platform to trade and developing new products.

The Exchange continued its initiatives in the brand building exercise and holding brokers’ meet in different key cities of the country. The Exchange plans to continue these efforts which already have generated tremendous positive response from the brokers community and there is a renewed interest in the Exchange where members are showing inclination to start trading after remaining inactive for long times.

The robust technology infrastructure enables the Exchange to operate efficiently, and also facilitates fast order routing, immediate trade execution, trade reporting, market data dissemination, risk management and market surveillance.  Its subsidiary Metropolitan Clearing Corporation of India Limited (MCCIL) employs state-of-the-art Risk management systems with sizeable Settlement Guarantee Fund and zero-default record since inception.

A bouquet of product mix is already in place or awaiting SEBI approval which would highlight MSE’s positioning in the Indian Economy.

The Exchange is required to seek annual renewal of recognition from SEBI which is next falling due in September 2017. The Exchange has already applied to SEBI for the same.

Shareholders of MSEI

Banks/FIs at 23.64% which includes leading public and private sector banks like State Bank of India, Bank of Baroda, Punjab National Bank, Axis Bank, HDFC Bank etc.

Leading Corporates and institutions hold around 29.94% which includes Edelweiss Commodities Services Limited, IL&FS Financial Services Limited, Multi Commodity Exchange of India Limited, etc.

Individual Investors hold around 40.47% which includes leading investors like Mr. Rakesh Jhunjhunwala, Mr. Radhakishan Damani, Mr. Nemish Shah among others.

Close to 200 investors have become new shareholders of the Company during the year.

The Exchange is executing a business plan and a turnaround strategy which estimates ‘cash break even’ in six quarters from now on and net profits in eight quarters. The Exchange has already started its brand building and marketing campaign through placing advertisements in publications like Economic Times, conducting brokers’ meet which was attended by close to 500 participants in Mumbai and close to 350 participants in New Delhi and garnered a tremendous positive response.

During the year under review, the Company has reduced its losses by Rs. 6.36 Crore, which is 15.7% reduction year on year, to Rs. 34.11 Crore in FY 2016-17 as compared to Rs. 40.47 Crore in FY 2015-16.  During the year, Company has incurred capital expenditure of Rs. 8.2 Crore mainly on various software to support Exchange’s business requirements.

Overall, MSE’s financial condition is showing trends of improvement. Year on year, losses have been brought down from Rs. 60.12 Crore in year FY 14-15 to Rs. 34.11 Crore by the close FY 16-17, a close to 43% reduction.

The business is projected to grow at CAGR of 48% between FY18 and FY19. Average Daily Turnover Value (ADTV) is projected to grow at CAGR of 15% (between FY 18 and FY19 turnover of currency futures). Transaction fees share of operating income is expected to gradually increase at CAGR of 12% (between FY17 and FY19) and achieve industry benchmark of 80% by FY19

The Company may consider raising funds from time to time by issuing further equity shares through Rights Issue, issue of shares on preferential basis/private placement etc. to support financing of its growth plans and further including but not limited to achieving networth and other financial parameters in terms of regulatory requirements.

The Company and its subsidiary both have more than required net-worth. It also has sufficient cash liquidity and demonstrated capability of raising fresh capital every year for business needs. On all parameters of business, the Company has achieved improvement and ensured continuity.

During the year under review, the Exchange has been aggressively listing new companies on its equity platform. The count of listed companies increased from 161 in FY 2015-16 to 241 in FY 2016-17. Out of the 241 listed companies, there are 192 companies which are exclusively listed on MSE. The Exchange has attracted these companies by demonstrating various unique services especially designed for companies and reasonable fee structure.

MSE is making efforts for inclusion of large, currently underserviced niches into the broader capital market, especially banks, insurance and individual investors.

MSE’s ongoing commitment is to enhance diversification and depth in the Indian capital market, by providing liquidity and capital positioning required in the asset classes that would drive corporate and national growth.  In nutshell, company is on the verge of turnaround and management is aggressively working on it’s revival plan