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Financial Technologies @ Rs 144 ~ A Story of Guts and Glory now Guttered !

Financial Technologies (FTIL)  @ Rs 144 (FV Rs 2)~ A Story of Guts and Glory now Guttered ! ?….though Jignesh Shah ,the Founder Chairman and MD of the FTIL Group (MCX,NSEL and others)states this in his message in the FY 13 Annual Report “….these are tough times the Company is facing and Financial Technologies is making all efforts to come out of such situation” 

I don’t own any shares of the FTIL Group but I do have some very good friends and associates who work for it and are extremely wise and forward thinking and manage the FTKMC admirably and who graciously invited me for the MCX Equity Exchange Launch at Hotel Trident where our FM,Mr Chidambaram in his inaugural speech lamented Insider Trading and Speculation but amusingly went on to sound the gong for the Exchange’s first and symbolic Future trade !

Media has justifiably gone to town on the NSEL and FTIL Group Plight ~Realms can be written on this and am sure a Best Seller Book too will finally be published to reveal what went wrong ! and was it a deliberate sinster plan right at the outset ! ~ and what is the extent of Political patronage at the highest level that’s keeping the Group alive and kicking till now !

For Now this is all that I’m going to say…….

From Rs 1224 on November 13,2012 last year the Share price of FTIL sank to Rs 102 on August 30,2013 and had recovered since then to Rs 160 levels

However today the Share Price intraday dropped over 10% to Rs 140 levels as yesterday on the eve of the AGM the Auditors Deloitte Haskins & Sells has announced that their report of May 30,2013 on the standalone and consolidated results of FTIL results as on March 31,2013 should no longer be relied on ! 

Remember the Satyam fiasco and how the Auditors Pricewater House had released a similar note warning that the last 39 quarters of their audited results should not be relied on ! ~ this went all the way back from 2009 to 2001 !

FTIL’s EPS for FY 13 was Rs 70 ~ It’s June Q 1 FY 14 shows Rs 17 ~ but Deloitte now tells us not to rely on their report !

FTIL owns nearly 100% of the troubled National Spot Exchange Ltd (NSEL) which is embroiled in a Rs 5600 crs payment crisis ~ there is more than meets the eye in NSEL ~ FTIL has already lend Rs 173 crs to NSEL to fund payouts to smaller investors ~How in Hell did this hole in NSEL go undetected for so long !? ~ the answer is suspected to lie in that there was hardly any internal control and deliberately so ~ there was no eternal regulation worth mentioning~ the Operators or Borrowers,the Exchange Administration,the Directors and FTIL as the near 100% Owner  were all seemingly colluding parties ~thousands of crores of borrowed monies were created for the benefit of just a chosen few ,and some were director related parties,through scheming financial structured products,supposedly backed by physical comfort of commodities in warehouses ~ these products were aggressively hawked to high networth investors by a network of brokers,including leading names like Motilal Oswal,Anand Rathi and India Infoline, for a few additional interest points and rolling commission or brokerage ! ~ Most of these funds  are suspected to be diverted away from the exchange

When the top heads of a Leading Brokerage had approached me with such a scheme last year I had asked them some leading questions on how does it really work ~ the documentation,the security,the costs,the liquidity,counter parties,exchange regulation ~ they had mumbled in whispers and suggested it was on faith and they had a strong reputation  to maintain ! ~ they were far from convincing and they clearly were not the masterminds who clearly were the Borrowers ! ~ I had warned others not to deploy in such schemes

Now we have the EOW,the FMC ,Auditors and the Ministry of Corporate Affairs and many other Government Agencies investigating the FTIL Group and NSEL Operations ~ very soon it should unravel into into a huge scam that it clearly appears to be !

Directors have been resigning in the FTIL Group scared they would be held responsible for what has happened or will happen !

Where are the Borrowed Monies of Rs 5000 crs + ? where are the Physical Commodities in the Warehouses  that were supposed to back this figure !? ~ Why are the few defaulters borrowers saying they really do not owe the NSEL and some say it owes them ! ?  

I’m going to leave you with just this amusing timing……yesterday FTIL released this to the Stock Exchanges

Note Point (d) where they state that the NSEL Incidence came to the notice of FTIL only on July 31,2013 

Now relate this to the Bulk Deals where immediately on the next day on August 1,2013,Reliance Capital Trustee Ltd through various Reliance Mutual Funds Schemes sold  4.18% of the FTIL Equity or 1929925 Equity Shares leaving itself with just 1.58% holding of  729212 Shares !

The Shares were sold on NSE and BSE through Brokers,CIMB,Nomura and Morgan Stanley at average realisation of Rs 212.51 

On July 31,2013 FTIL was quoted at Rs 550 levels ~ On August 1,2013 it opened just under Rs 500 and sank to Rs 180 before closing at Rs 191 ~ at month end August 30,2013 remember it recorded a low of Rs 102 !  

Does this establish any connection between the FTIL Group and the ADA Reliance Group !? Instant Communication !? Instant Execution!? such communications are not relayed by junior personnel and such decisions are not taken by junior fund managers !  

Surely SEBI should have questioned Reliance Capital Trustee Ltd on the timing of this bulk deal ! 

However I am ,as all of you should know by now, on the softer side and an eternal optimist and hope for all things wonderful ~ Hope God gives all involved a Second Chance and that NSEL is able to clear all dues ! and FTIL revives back past Rs 500 ! ~ That’s not an advice to buy though ! !!? ~ BNP Paribas made a killing on MCX when it fell and revived ! ~ Any Takers for FTIL at Rs 144 !?

Just a caution ~ Be Aggressive if inclined but not Foolishly so !


5 thoughts on “Financial Technologies @ Rs 144 ~ A Story of Guts and Glory now Guttered !”

  1. Hi Gaurav, why then not look for MCX … it it not comapratively safer play with dividend of 36 lasy year and no financial obligation to NSEL scam

  2. I mean MCX is great economic moat business as seen “No change on volume traded on MCX when NSEL scam broke out in public” AND if at all change in promoters happen, its ice on cake …. Is it not like “MCX = American Express, SaladOil=NSEL, GauravParikh=WB”

  3. You may have a point Sameer but MCX at Rs 418 is not exactly cheap with FY 13 EPS at Rs 58 but Q 1 FY 14 at Rs 11…..FTIL owns 26% of the equity while rest is held by over 150000 shareholders….FIIs hold more than FTIL….FTIL itself has less than 50000 shareholders with Promoters Jignesh Shah holding 18% equity and La- Fin just under 27% of equity….FMC has demanded that MCX constitute its board as per guidelines and thus Joseph Massey has just withdrawn his reappointment as Director of MCX

  4. Thanks Gaurav for your thoughts … FTIL really good bet … My q. is doesn’t FTIL have any financial obligation towards NSEL scam??

  5. Sameer,FTIL is holding at Rs 170….they have already transferred Rs 173 cars to NSEL to honour the earlier payouts…Now FIRs are out for many in the Group….Jignesh Shah needs a Miracle to get out of the mess….irony is that they created the Storm and now they’re crying when it rains !

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