NSEL exposure affects quarterly earnings of Motilal Oswal

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SummaryMotilal Oswal Financial Services, the parent company of Motilal Oswal Commodities, reported a sharp decline in profits for the quarter ended September 30, due to its exposure to NSEL.

Motilal Oswal Financial Services, the parent company of Motilal Oswal Commodities, reported a sharp decline in profits for the quarter ended September 30, due to its exposure to NSEL.

Net profit for Q2 declined 75% to R5.62 crore compared to last year, due to a provision of R19.48 crore made on account of dues outstanding from NSEL. “...the company has provided for an amount of R1,948 lakh in respect of its proprietary and funded positions for the quarter-and-half year ending September 30, 2013, which is disclosed under the exceptional items,” said an exchange filing by the company. As a result, the EPS for the quarter came down to R0.45 compared to R1.6 in the same quarter last year.

Meanwhile, the operating income of the company grew 7% y-o-y to R108.4 crore, even though the total expenses increased at a faster pace of 7.7% to R86.17. While the group’s key businesses of broking and financing reported a y-o-y decline in revenue growth, the asset management and investment banking businesses reported healthy sales growth during the period.

The filing also said Motilal Oswal Group’s exposure to NSEL through proprietary positions and funded positions stands at R57.07 crore and R1.36 crore, respectively. When the R5,600-crore settlement crisis emerged at the NSEL, it was reported that the total outstanding to Motilal Oswal Commodities trade was R263 crore.

Other prominent brokers who have significant receivables from NSEL through their commodity arms include Anand Rathi Commodities (R640.8 crore), Indian Infoline Commodities (R326.23 crore) and Geojit Comtrade (R313.25 crore).

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