Newsviewer Exclusive
FMC finds huge disparity in open position and trade volume

The commodity market regulator says the ratio of open position with the volume of trading in some commodities is very high compared with international practices in national exchanges

New Delhi: Commodity market regulator the Forward Markets Commission (FMC) has found huge disparity between the ratio of open interest and the volume of trading in some commodities traded on five national commodity exchanges, reports PTI.

In futures market, 'Open Interest' is the number of outstanding contracts that are held by market participants at the end of trading day. Globally, trading volume and open interests go hand-in-hand on exchanges.

"The Commission has done a preliminary analysis ... And it has been observed that the ratio of open position with the volume of trading in some commodities is very high as compared to the international practices in national exchanges," the FMC said in a circular.

The disparity indicates that the day trading volumes and speculation are far in excess of open interest positions, which is not in line with the avowed purpose of use of commodity futures market as a hedging platform, it said.

To understand the situation better, the regulator has directed national commodity bourses -- MCX, NCDEX, NMCE, ACE and ICEX to submit month-wise and year-wise details regarding ratio of open interest with the volume of trade in the top 15 commodities for 2009-10, 2010-11 and 2011-12 fiscal in a week.

It has also asked these exchanges to submit a road map to to bring such ratios at par with the international standards.

Trade analysts said that the trend of high trading volumes and low open interest is not healthy.


Top 895 companies increase net sales, operating profits and net profits despite margin pressures

Contrary to the gloom and doom prevailing, a Moneylife aggregation of 895 companies shows surprisingly good results for the March quarter

A majority of the companies have reported their March quarter results; we now have the data of 895 companies in the Moneylife sample of 1,150 companies whose results have come out. At first glance, sales, for the final quarter of the 2011-12 fiscal, increased by 19%, year-on-year (y-o-y), to Rs10,68,167 crore. Operating profits has increased by 12%, y-o-y, to Rs1,60,068 crore while net profits increased even more, by 18%, y-o-y, to Rs99,039 crore. This is highly impressive since there has been a severe pressure on margins. An analysis of 895 companies saw margins have actually shrunk a bit, on a y-o-y basis, at 9.27%, when compared to 9.36% recorded last year. The margins have somewhat stabilised now instead of worsening, which is good news.

Out of the 895 companies that reported results, a whopping 72.29% of the companies saw their fourth quarter sales increase over the corresponding period last year. While cost pressures continue to remain, the largest of the companies have managed to increase sales, operating profit as well as net profit, which is a positive sign of the Indian economy ability to withstand difficult times.

As many as 38% (343 companies) of the sample actually recorded higher net profit margin over last year's March quarter. The aggregate results have been somewhat skewed by the performance of a few larger companies. We will discuss the detailed performance once all the results of Moneylife sample, comes in.


Public Interest Exclusive
MSRDC ‘doubtful’ of recovering Rs6.1 pending dues

The information was revealed after Pune-based activist Sanjay Shirodkar sought details from MSRDC on the sundry debtors/bad debts for 10 years along with the name of the party and the outstanding amount

Maharashtra State Road Development Corporation (MSRDC) is ‘doubtful’ of recovering Rs6.1 crore, of the total outstanding dues of Rs25.4 crore as of 31st March 2012, from toll collection centres, construction companies and other commercial entities, revealed a Right to Information (RTI) application. 

Pune-based RTI activist, Sanjay Shirodkar, sought information from MSRDC on the sundry debtors/bad debts for 10 years along with the name of the party and the outstanding amount.  

According to the RTI reply, of the total pending dues, Rs12.2 crore is by toll companies including Rs4.2 crore which is outstanding for more than six months. Some of them includes Thane Municipal Corporation for the toll station at LBS Road that has a pending dues of more than Rs93 lakh; Jai Bhavani toll station at Fursungi (Pune) has pending dues of about Rs1.07 crore; HB Pandhare, for toll station Ughadi, of Rs21.8 lakh; Balaji Enterprise toll station, at Pune-Jalgoan Road, is yet to pay its dues of around Rs23.8 lakh; while Senhship Construction for its toll station at Nakshatra Wadi (Aurangabad) owes Rs50.5 lakh to MSRDC. These dues are pending for the more than six months and MSRDC is doubtful of the recovery. 

The RTI reply also revealed that more than Rs23 crore is pending from other commercial entities. These includes Rs41 lakh from Adlabs Advertising at Airoli Toll Plaza, Rs63 lakh from Bharti Airtel, Rs4.2 lakh from Power Grid Corporation, Rs59 lakh from Reliance Communication, Rs2 crore from Rajdeep Publicity Pvt Ltd for advertising at Mahim and Rs59 lakh from The Deccan Retreat (Hotel Sanjgaon) among others. The pending dues from the commercial entities also include Rs10.8 crore from sundry debtors. However, no break-up for this was furnished in the RTI copy but MSDRC has mentioned that it is doubtful about the recovery of Rs1.5crore from sundry debtors. 

Speaking to Moneylife Mr Shirodkar said that, “I was wondering that only toll companies are connected to MSRDC, but here I could see lot of individuals as well as commercial parties as well. A recent report suggested that toll companies are earning 4% to 6% higher than their estimates. But the RTI query clearly shows that they are not paying their dues on time”

Moneylife reported that CRISIL Research, in its study of 23 of nearly 100 build-operate-transfer (BOT) toll road projects operational in the country, found that out of these projects, 17 are likely to earn equity returns higher than the typical equity return of 16% that developers target while bidding. Only three of the 23 projects are likely to record equity returns lower than 14%—project-specific factors such as delays and changes in engineering design have escalated the costs of these projects.



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