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Multi Commodity Exchange of India Ltd
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Ladies and gentlemen, good day, and welcome to the Multi Commodity Exchange of India Q2 FY '21 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded.I now hand the conference over to Mr. P.S. Reddy, Managing Director and Chief Executive Officer. Thank you, and over to you, sir.
Thank you. Welcome to the conference call on the Q2 results. Good afternoon, ladies and gentlemen. This quarter has been reasonably good, I would say really good in terms of ADT because in the first quarter, we had only clocked about INR 23,129 crores ADT. But in this quarter, we had about INR 38,000 crores ADT. As a result, the first half has almost [ hold base ] as against to what we achieved in the last year. We -- first half, we had about INR 30,875 crores ADT as against INR 31,055 crores in the corresponding last year, that is April to September. So that is really a good sign. Of course, it's falling short by maybe INR 200 crores or less than INR 200 crores, but it's a reasonably good catch-up done as against the last year.Now having said this, even the month of August has really done well. And of course, in the month of August, we had about INR 43,262 crores ADT. And what primarily has driven this market is the bullion and the more -- especially more so of silver, and that has done really well. And crude oil, we are still expecting some kind of, what we call, communication from SEBI for lowering the margins. It has not happened as yet. So that is -- once that happens, probably we again see some kind of adding up of numbers from crude oil. Otherwise, rest of the products are more or less doing at the same level as we had in the last year.And of course, in the case of base metals, there was an impact because the physical deliveries, especially in the first quarter, deliveries were not so effective because of the restrictions on the warehouse operations, et cetera. But in the month of, again, August, September of -- there's a huge improvement. For example, in base metals, about 7,271 tonnes of ADT clocked in August, about 6,678 tonnes in the month of September. So that's a very good number. And we are doing that progressively, and we are improving those numbers.Going forward, I'm sure we will be able to -- rather I'm hopeful of maintaining this kind of trend as we move forward also. Although the volatility in the base -- in the metal contracts -- for precious metal contracts has come down, but definitely, still, there is -- there's a lot of [ money ] to make, and it's still driving the market.This being said, now that the traded unique client codes so far, there also, we are seeing a very good trend. In the first half year, in the first half, H1, we have already clocked about 310,689 UCCs as against last year, 268,000. So that's a very, very good growth, I would say, as against what we had -- what we thought that pandemic will really hamper. Probably, had there been no pandemic, we would have done still better. That's the way I look at it. I'm sure going forward also, we'll be able to do -- better UCC numbers will be clocked.These are the few numbers that I thought I should give. And now maybe I will leave it to my CFO to speak on some of the other products. But as we go on answering the questions, I will be speaking about other developments that are taking place in this space. For example, we launched a [ bulk ] index in -- bullion index and METLDEX, which is called -- BULLDEX is called bullion index and METLDEX is metal indices futures contract. And both of them are, at this point in time, in a very nascent stage, but they are really clocking a reasonable good -- satisfactory levels of turnover and participation.And in fact, in BULLDEX about, on an average daily, 125, 130 members are participating it. And in METLDEX, about 80 to 100 participants are there in terms of member brokers. UCCs are gradually increasing it. That's a very good development.At this point in time, we are not charging. And obviously, we will not be able to do it. Maybe till 31st of March, we will not be charging. It's not going to be forever like this. I'm sure we will be charging it, then only we will be taking into consideration into our financials. But till then, yes, we need to support those contracts.This is the -- I think now I will ask my CFO, our CFO, Mr. Bolar.
Thank you, Mr. Reddy. Good evening. Our top line for this quarter as compared to the last quarter, there's an increase of 12%. As Mr. Reddy said, this quarter has been very kind to us. With this turnover, we have been able to clock for the first time since the introduction of CTT transaction income of more than INR 100 crores in this quarter. So that is, for us, a significant milestone. We hope going -- that we'll be able to maintain a reasonable trend going forward.Expenses have been -- have increased as compared to the last quarter, mainly on 2 accounts. We have made a provision for variable pay in this quarter, which will not be in the first quarter. So there's a provision for variable pay for Q1 as well as Q2. And we have also incurred certain additional expenses for the -- in connection with the launch of the -- our BULLDEX. So there are certain marketing expenses that we have incurred. And we have made additional provision for tax.So net-net, as compared to June, on a consolidated basis, we are almost marginally ahead. On a stand-alone basis, they have dropped. But from the warehousing income, there's been a substantial increase in warehousing income from the Clearing Corporation side. Otherwise -- and the Clearing Corporation side, as we mentioned in the last meet, from June onwards, we have been consolidating the accounts on a line-to-line basis. And accordingly, the treasury income that they earn on margin funds is also included in the revenue from operations.The tax has been a bit -- on a stand-alone basis, a bit high this time. But going forward, we'd like to keep it at around 25 -- 20 -- between 23% to 25%. So at this time, it has been a bit high because of some short provision made in the earlier quarter. So we have made a provision in this quarter.But expenses have been under control, excepting for the variable pay as well as for the advertisement, marketing expenses that we've incurred. And last time, we had a substantial gain in our treasury income, which was a one-off case, as we discussed last time. It was a one-off case which we -- I mean when we were discussing in the call, we agreed that it would be very unlikely that we will be able to continue with this such incremental gain that we got in June '20.So I mean, this quarter, we are not -- because interest rates being what they were in this quarter, they were very tight and there was hardly -- so there's hardly any notional gains that we made on our investments in tax-free bonds. Even in the mutual fund, we did not earn much notional gains. Therefore, we ended up flat at around INR 17 crores on our treasury income as compared to around INR 50 crores that we made in our Q1. So that's why there's a drop in other income. Otherwise, as I mentioned, thanks to the ADT for Q2, operational income has grown substantially.I take it -- I'll leave it now to Mr. Reddy.
I think now we will keep it open for questions and answers.
[Operator Instructions] We have a first question from the line of Sujit Jain from ASK Investments.
Compliments for a good set of numbers. But in terms of the structural drivers that we've spoken about, which we are trying to develop, bank brokerages, et cetera, what is the progress? One can see bank brokerages such as ICICI Securities put out commodity products on their portal. What is the portion of stand-alone brokerages currently in the total volume? What is the contribution that is coming from PMSs mutual funds and including the bank brokerages if they have started?And a few quick queries on what are the delivery volumes. What is the current margin in crude? What is the progress in option volume? And as well as you spoke about warehousing income and marketing spend, if you can quantify it.
Okay. On the mutual funds, 2 of them have already started. It's about INR 80 crores is their open interest that they have in this, okay? And I'm not able to -- I will not be able to disclose exactly as on who is holding what, et cetera. But it's about INR 80 crores is the open interest that they have. And 2 of them have started, as I said.And still to take place because there are about -- 7, 8 of them are there who have an exposure to commodities, especially the precious metals. And for them to change the existing schemes, they have to go back to their investors or unitholders. So it's not happening. Probably when they launch the multi-asset funds or new fund offerings, then probably they will be able to provide for this. This is one.And the brokerages, especially the institutional brokerages, as you rightly pointed out, ICICI has already started. They are ramping up. And it will take time. Time means, of course, they have their own targets to fulfill, no doubt about it. And because of the -- some of the changes that we have implemented, that is in terms of 0 negative pricing related, also the software developments that we have deployed, and some of the changes are being deployed at the brokers front end, they have to do that in the back offices also. Some of them are not done, but then as a trading system, we have done it. So some of those developments are taking place in some of these institutional brokerage houses also. So that is the reason why some of them have not been able to launch. And so that's a priority #1 for me, activating institutional participants.And the AAFs, yes, there are already a number of -- the AAFs are already there on the exchange platform. I'm not disclosing all that numbers as such. As I say, they are not going to create volume, okay? They are going to have open interest and stay there because they have an exposure. That's all. They are not the traders in that sense. So they have -- they are participating.PMS have not come as yet, okay? The most important -- maybe 1 or 2 are there, but then I'm not saying a good number that have come. That is the reason I'm not taking them into consideration as if they have come. And one major important issue is that the GST, because if they take any commodity delivery and then cash and carry, if they do it, the GST is an issue. And we already presented to the government to make the GST -- especially the IGST, we wanted them to issue it, make it applicable so that the players being -- wherever they are, the IGST is good enough.But then under the GST rules, because the warehouses are located at Thane or wherever it is, probably both the seller and buyer is treated as if they are the local in that particular state where the warehouse is. So they have to issue that GST. And they may not have GST registration in that particular state. So these are the issues which have already taken up to the government to simplify this. And we are hopeful that they will address these issues.But again, on the crude oil margin, as I said that I think it's about 130% there as of now. And it will -- I'm sure -- yes, 130% crude oil, and we have applied to, as I said, SEBI. And this is likely to -- we are likely to hear their decision maybe early next month. That's the way we are looking at it.On the issue of warehousing income, that goes into the -- what we call the Clearing Corporation. It's almost about INR 4 crores. That is the way it is. That was INR 3.25 crores. Okay. INR 3.25 crores. And new charges are also being now recently levied from administrative charges. Probably that is not seen as yet because just recently it was enforced. Once that also started collecting, maybe you will see some more revenue coming. But it's not a very big number, but then, yes, little by little makes a great difference for us.On the warehousing deliveries you are asking, do you have the deliveries numbers?
Deliveries as a percentage of overall volume.
Well, that -- yes. I have it, one minute. I have an absolute number. Okay. Well, it will be 1% or 2%. It should not be very big. That much I can tell you that.And the volume in the sense of open interest you are talking about. Is that correct? Open interest? So not in traded, traded is this one. But in terms of metric tons, I can tell you, and this is...
That's okay, sir. You've given us a fair idea as to what percentage of the overall volume.
And as an exchange, we are supposed to be a last -- delivery is a last resort for those hedges. And just to ensure that the prices are in sync with the spot market prices, especially when the contract is expiring, it may -- that is the way that delivery -- cutoff delivery will make these prices converge. That's the way it is.What are the other -- any other questions?
Marketing spend on BULLDEX.
Yes. Marketing is about -- the INR 96 lakhs has been spent on this one because about 15 days are -- 15 days before and then after. And so is METLDEX. We have been incurring expenditure. So, so much is there. That's right. It's INR 96 lakhs.
And one quick question is on -- who are the top players on the exchange? We presume they're stand-alone brokerages.
When you say stand-alone, I do not know what you are exactly meaning.
National brokerages such as Motilal, Edelweiss, IIFL, Angel, et cetera.
Yes, that's right. In that sense, they are also listed companies, and some of them are -- yes, such are the members. Yes, you're right. But there also algo players are there. Again, maybe stand-alone, but then very big international algo players are also there. So -- and a huge retail broker is also there. They also come in the top 5 brokers. That's the way it is. It's very good. Yes.
And one quick clarification. You said that the negative pricing is still not incorporated, hence they're not getting contract...
We have done that. The brokers -- some of the brokers have not done it, I'm saying. We have done that.
We have next question from the line of Yash Nerurkar from PPFAS Mutual Fund.
I just wanted to understand the progress done in terms of the gold contracts. You just mentioned something about the bullion and silver doing well. So I just wanted to understand the gold, the Mini and the Petal contracts that you have.
Well, see, all the futures contracts are doing very well. There is absolutely no problem on that. It's only the Gold Mini options which we have introduced. Of course, LES has also introduced recently. And BSE, NSE also launched LES in the same contract, identical contract. So that's where -- we are looking at not great traction in that. But otherwise, our bullion contract is doing well. For example, in the first half current year, the bullion has clocked about INR 19,000 ADT, of which INR 8,900, now that's almost INR 9,000, is by the gold and INR 10,000 is by silver. So they're doing well in the first half.
All right. Got it. And secondly, I just wanted to check with the progress which you have on Mjunction because in the previous call which you had, you mentioned that MCX will be signing sort of a MoU of 50-50 JV between Steel Authority and then Tata Steel. So how is that progress coming along?
No, no. It's like this. Mjunction is promoted by Tata Steel and SAIL. Okay. Now with Mjunction, we said we will sign an MoU, we have already signed. Now that we are preparing jointly as for the MoU feasibility study report on that and complete, end-to-end including the financial viability, et cetera, et cetera. All that is -- target date is sometime in January. Okay. Once this is done, I will take it to our Board, and thereafter the next steps, we will take it.
Okay. Got it. And a last question. In the previous call, again, you had mentioned about how MCX wants to be a recognized brand as similar to LME. And a lot of initiatives were taken. So like, what is the progress of that? And is there anything else that we have sort of done for that?
Yes. See, we have already put up on our website for refiners, both the gold refiners as well as the lead refiners, to apply. We have received applications. And technical audits have been completed in the case of gold. And in the case of lead, technical audits are under progress. In the case of lead, once again, after the technical audit is completed, testers, auditors does not -- tester reports are required. That means almost all about 30, 35 tonnes of lead is to be sent to some consumer who will use this metal and then certify, for his consumption, this material is meeting his requirements, their requirements. That's the way it is. So that is called testers.And most of the testers will be inverter manufacturers, battery manufacturers, et cetera, big ones. Then after this is received, we will be empaneling them. So this process, for gold, it was to complete by the end of November. That's what our target date we have kept it. And for lead, it is December. So it's progressing as per the time lines, and we will be announcing it by that time line.
[Operator Instructions] We have next question from the line of Mohit Balakrishnan (sic) [ Rohit Balakrishnan ] from VRDDHI Capital.
Sir, just -- I have a few questions. So one, we've launched these index futures, bullion and metal. So we can see the volume, the entity that is there on the website. But just wanted a sense, I mean, on BULLDEX especially because that's been launched more than a month now. So how have you seen in terms of what has been the reception? Is it along with -- along the expectation that you had? And when do you think that you can start charging? At what threshold levels you have in mind for both BULLDEX and METLDEX, if you can just walk me, share that? So that was the first question.Should I list all the questions or...
Go ahead, ask.
Okay. The second question was, sir, in the earlier con calls, you've also mentioned about probably having a spot exchange for bullion. So I just wanted to understand that as well. I was reading somewhere that some World Gold Council is probably planning to set up a spot exchange in India. So I just wanted to understand where are we on that and if there any competitors on that.The third question was, sir, on this technology platform. So we have this contract with 63 Moons. I just wanted to know when will this end. And once that ends, what is the next step we have? Any plans to [ install ] the technology and maybe do it on our own?And the last question was, sir, on the numbers. One is the -- I mean there's been a significant decrease in the other current financial liabilities of about INR 200-odd crores, which has led to a decrease in the cash flow from operations. It's become negative this quarter, which is our new look for our business. So just wanted to understand what has happened back on that. These are my questions.
Okay. Just 3 questions for right now I will answer. One is the government has decided to float a spot exchange in the GIFT City. And so the -- we have waited for regulations to come. I believe yesterday or day before yesterday, the GIFT City authorities, IFSCA, has finalized or approved the regulations. We have not heard on those regulations. We have not seen because they are not uploaded as it on the website. So definitely, we will be there in that place, in the GIFT City, no doubt about it. That's what our desire. We want to be.And so let me see the regulations, and then accordingly, we will do that. As of now, we are not too sure whether one person will be -- only one entity will be allowed or multiple entities are allowed. But whichever way it is, that we would like to have a role in this, that's what's our desire. And we do not know how they will partly follow this if there's only one player. But it is too early for me to say on that, but we have an aspiration to be there.Now World Gold Council, whether they will participate, they will definitely. If they are there, they will be there in GIFT City, not in the domestic area in the -- within this -- not in -- however, they will play only in GIFT City, not otherwise. Obviously, it's not permitted in the inland market. So if they are there, it's fine. We are already in discussion, not for any spot exchange. We're in discussions in terms of what is their thought process on it, how do we -- if we have to set up exchange, what kind of planning needs to be done, all that stuff. We have been -- it's happening for the last many months, I would say. So it's not new. They are also discussing with everybody else also. So it's not for any setting up of -- themselves setting up any exchange. That's the way it is.Then comes to the BULLDEX volumes, BULLDEX and METLDEX volumes charging. As I said, till 31 March, we will not be charging. Only yesterday, at the Board meeting, they have approved it. Initially, they approved for 3 months. Then we are seeing that it's in a nascent stage. It requires support because currently, the cross margin benefit is not given by SEBI. And they said that you apply after 6 months. So once the cross margin benefit comes, almost all, 75% of the cost of margin will be reduced if they have an exposure in the underlying products also. Then it will be a big play.So as of now, it's not there. Like they are a stand-alone product just as they are trading. They are -- the participants are dealing with it. So we are very keen to have this cross margin benefit. Then obviously, it will fly. Till then, we want to reduce the cost of trading. That's why we thought we should not charge the transaction fees. So is the case with METLDEX. Of course, METLDEX has been launched just recently on 19 October.Then it comes to the technology platform. On the technology platform, the -- we are already floating our RFP. The existing contract will end in September '22. And the RFP is there on the website, and good response we are getting it. Let us see. The RFP, it will -- I mean in terms of process, it has to be completed by end of January. And we have to sign the contract. That's the way the time lines we have set out. So let's wait and see what will happen.
In regard to the cash flow -- the cash outflow, this is basically -- I mean in our Clearing Corporation, we receive a lot of cash margins from our members. So during the quarter, I mean, when you do a comparison from March to September, so we have -- members have taken back cash margins. So the cash margin has reduced in the Clearing Corporation. We are presently at around INR 480 crores as compared to an earlier figure of March of around INR 700 crores in cash. Yes. Thank you.
I hope that answers your question.
Yes. Sir, just one follow-up I had on this technology platform. So that means we are not going to have an in-house technology. Is that understanding fair?
No, no. That's not the way. If you look at the RFP, the way that we have said is we are looking for a source code kind of thing. So instead of developing a brand-new application, probably it is better to take something which is already tested elsewhere, okay? And if that comes, we -- to the source code or a perpetual license something, then we will go on building on that. That's the way it is. So we don't have a vendor dependence going forward. Okay. But at the same time, we want a resilient flat top. That's the way it is.
[Operator Instructions] We have next question from the line of Deepak Agarwal (sic) [ Deepak Agrawal ] from Axis Mutual Funds.
Yes, sir, I wanted to understand on the broker concentration. So is our understanding right, so like Angel Broking got listed recently. And in their PPT, they say they are almost 28.4% of the commodity volumes in India. So first of all, is our understanding right, that they are so big as a percentage of our overall volumes?
Well, I will not be able to disclose any individual this one. For me, the top 5 as of the corresponding period of last year, it was only 40% of files on current year -- current -- for first half, that is from April to September, 47.59%. So the concentration has increased, okay? And that's the way it is at this point in time.
And are there any restrictions because I don't know whether that at a particular level, they need to be capped as a percentage of the total turnover of the exchange? Because, frankly, I'm coming from a concentration risk perspective. Are there any cash they're selling?
No, no. There are no concentration at that stage. There is a concentration, client level, what we call -- limits are there, broker-level limits are there for each product, okay? It's not the [ overall ]. No.
Okay. Okay. So technically, it can still -- at this 47.59% of the top 5 guys can still keep on going up, right? Because at least there should be something at -- what are the limits? So like at the client level, it can be what certain percentage of open interest of that particular commodity, right?
Yes. It's not even the open interest. Every year, there is some calculations takes place as to what is the total production, what is the domestic -- the imports. So together they look at is the total, this one. All that -- the limits are decided. So much only can have an open interest. That is further broken into the client level, this one.
We have next question from the line of Aksh Vora from Raj Financial (sic) [ Praj Financial ].
I just wanted to know, how is the options segment doing in last couple of years since we launched? We were pinning down some hopes on the big volumes on that front. Is that playing out well? Or it's still in a nascent stage and we still think that big volume is still far away?
Yes. One minute, I'll tell you. Well, the ADT in the first half is about INR 900 crores. And the corresponding period is about INR 1,300 crores. And this includes almost COVID period also. That's the way it is. No, I'm sorry, corresponding was INR 906 crores last year. And this -- the second quarter, in fact, it has done really well, about INR 1,300 crores, INR 1,100 crores, INR 1,300 crores like that. That is the reason why the Q2 was INR 1,147 crores. Although the first half or the first quarter was INR 651 crores, second was INR 1,147 crores. So the average happened to be INR 908 crores.And the clients are increasing. The clients' participation almost like 24,000, they have participated. So as against the last year is about 17,000. So that's a good number of growth in the UCCs. That's the way it is.
Right. But overall, sir, as we see in the last couple of years, we have done something very remarkably in all the categories, like, say, bringing out some very good products and from SEBI side also, the participant -- participatory has been increased. So we're still not able to see that volume traction going up the curve as it should go aggressively, probably. I am not getting what's stopping or what's impacting the volume? Should it be a gradual growth we see or -- we'll be able to see? Or it will be some spark that should be visible in a couple of years?
See, if you see currently, again, I'm drawing the equity markets, it is an index options, which are maybe occupying a large chunk of the trading that is taking place in those exchanges, okay? So we just launched index futures contract, okay? And maybe it will take some more time for us to launch index options. Then probably you can expect a substantial growth.But when it comes to the specific individual product growth, it is all depending on the relative volatility in the underlying products and the cost of trading in that, et cetera. So yes, it also keeps me on my toes, especially the growth in these option contract -- performance of these option contracts. We are trying our best to see that it grows. That's why we introduced LES in 100-gram gold because the 1 kilo bar means in terms of duration, it is a bimonthly contract, tenure is longer, and it is 10x more than this. So we thought it is a smaller one will fly, but then other competition has also imitated the identical contract. So that is option on goods. And the underlying remains the same, gold. So we have an LES, but let us see, it's not still doing as well as we expected it.
All right. Right. And sir, just last one, you didn't touch upon -- like, do we see -- once that probably the index options products or -- we were expecting such kind of volume spike in options when we launched it. So do we finally see those kind of big volumes jump or aggressive volume growth coming in next couple of years? Or the growth part would be similar to what we have seen in the last 6, 7 years of -- probably or somewhat a gradual growth?
It is too early for me to say about option on index futures because that's not even permitted at this point in time by SEBI. And we have just launched index futures contract. And let us take it forward and then grow, then we can definitely look at the other aspects of it. But at this point in time, it's not permitted [ index ].
We have next question from the line of Pranav Mehta from Valuequest Investment Advisors.
Yes, just a follow-up question on this RFP for the new trading software. So as you said, like you are looking for an open source code kind of a thing where you can build on it and the aim is to reduce vendor dependence. So this is what I got from your comments. So does that mean that we have like decided that we are not going to renew the existing contract with 63 Moons in terms of the existing software? Or can they also be part of this RFP process? That's the first thing. And secondly, does this also mean that eventually, like whoever we decide to go ahead with, so eventually, we will end up owning the IP for the software and we won't have these kind of licensing arrangements that we have currently?
I think it is too early for me to say what it is, what -- how it is going to be negotiated, okay? And I may be asking for X, but then everybody may not be willing to share with the X, but then they may give a Y. That's the way it is.And so 63 Moons are also eligible to apply, and I'm sure they too will participate. That's the way it is. So once all the bids are evaluated, then accordingly, there is a criteria, technical competence and the financial bid. There is some weight that has been given. And that is all disclosed in the RFP document, and detailed RFP document is given.The open source is -- what you are talking about, is essential to mitigate the cost of licensing of -- like your Microsoft licenses or Oracle licenses. This kind of things will not be required to go on -- for the maintenance of that kind of product. That is the reason open source is being asked for.But we do not know how many will give license, how many will give source code, how many will not give, how many agree for perpetual license, how many agree for a tenure-based license. I don't know. It's too early for us to say anything. We have asked for it. That's the way -- the requirement has been specified. But let's see as we go along.
We have next question from the line of Haresh Kapoor from IIFL AMC.
Sir, just complementing for the quarter as such, I think a couple of things. One is your other income being lower, why is that? And what should be the trend? Second, tax rate has been higher. You have kind of, I think, taken some more [ math ]. You kind of recognized that part. So how should we kind of look at that?Third, you kind of spoke about some part of employee costs, some part of the other expenses and even tax, which you couldn't recognize in Q1, recognize in Q2. If you could just quantify it and just talk through what have you done, what is the thought process there. And fourth, on the crude side, I think we've been hearing about you're trying to get the approval so that -- from SEBI, et cetera, so that you could reduce the margin requirement and all of those things. But it's kind of down now. So you've been trying to do it previously, too. So could you just comment why is there a delay? And why has this not really started right now?
I'll answer the last 2 questions, okay? The other 2 Mr. Bolar, we'll ask him. On the crude oil thing, look, there is almost maybe 100 or 200 scenario analysis go on, okay, in the test results. The scenarios are -- there are different scenarios. And SEBI has been asking us different scenario analysis we will create and then give them. This is the way it looks like, and this is the kind of margin that is needed to mitigate the risk in the system.So this back and forth is happening. And meanwhile, we have also sought some details from CME, Chicago Mercantile Exchange, and they took time for -- to give some information with regard to negative pricing handling, et cetera, in their risk management system. So -- and so all these kind of discussions are happening. And also other exchange, how they [ based it ], maybe in Dubai or in Moscow, in Singapore Exchange, et cetera.So these kind of discussions have taken time. And obviously, the SEBI will take a considered view after taking all these inputs. I think it has come to a final stage of dispensation. I'm sure we will have, as I said, early November, early means in the next -- in the month of November, we will have the -- their judgment in this regard. So once that is there in place, I'm sure we will be able to get that contract going also. And regarding...
Sorry, sir, just one follow-up on this before we just finish this part. Sir, this November, you seem to be more confident now on the time line. So is it that more or less the back and forth that was happening in terms of their requirement that has been submitted and it's just about the last leg of communication that is pending? Or there are some more back and forth that still have to be done?
No, no. That's what -- that's -- almost all done like kind of thing, okay? So that communication is done. Now the final decision has to be taken, okay?Now on the employee provisioning, if you look at this, when we -- because of COVID sometime in the month of May, we had a Board meeting. And in fact, COVID impact also we have announced. So looking at that, we thought we shouldn't provide for the variable pay for the employees, performance-linked bonus or whatever you call it. And provisioning only, not that it is paid or anything. We will decide payment, obviously, after achieving the targets whatever the Board has set that. So that's a separate part of it.But -- so in the first quarter, it was not provided. And together, it is provided in the second quarter, which happens to be about INR 4 crores on that. Now -- so the last year also around the same volume of -- I mean has been spent -- about INR 8 crores and INR 8.5 crores has been spent. So this year also, it has been provided on a similar line, expecting that kind of thing. Yes.
INR 8.5 crores for the first half has been provided in Q2. Is that right?
No, no. INR 8.5 crores is provided for the total last -- entire last year, okay? And the INR 4 crores and odd has been provided [indiscernible].
INR 4 crores provided for H1.
So in H1, they provided INR 4 crores, and the entire burden came in Q2. I hope we clarified that. The second query that you had was with regard to other income. As we mentioned in the last con call, June was -- we have invested in tax-free bonds, INR 263 crores, okay? So because of the tax -- the interest rate that took place in June, the firming of interest is we earned substantial gains, notional gains on a tax-free investment as well as in our mutual fund investment.Unfortunately, in September, and as we discussed in the last con call, there's no way we would be able to earn such gains going forward again and again in every quarter, isn't this? That would be very unlikely. So actually think that what they have booked in this quarter is actually what we have received in -- either where -- when we redeemed the investments in mutual funds or the interest income on our tax-free bonds or on interest income in PSU bonds. So basically, we have received all this. They've actually booked the income.Going forward, I would expect -- I don't -- unless we see RBI cutting rates further, which looks unlikely at this point of time when we read the RBI minutes with regard to the credit policy. It looks unlikely that they would cut rates further at this point of time. So I would take the stand that we would expect these amounts to remain going forward at these rates that we have booked in the second quarter.And with regard to the tax, when we closed June, we had short booked around INR 2.8 crores as -- in tax for the first quarter. So we have booked that in this quarter. And in the previous quarter, if you have seen a detailed presentation that we've given to the exchanges, we had taken an excess provision of INR 1 crores that we had made in earlier years in the tax. So that impact, obviously, is not paid.And going -- this quarter also we have booked, we utilized MAT credit of INR 2.85 crores. So hopefully, going forward, we'll keep utilizing the MAT credit. As of now, we have around INR 17 crores left of MAT. So once we utilize that fully, maybe, I think, at this rate, it would take another 5, 6 quarters. Once we close that, then we'll go to the present taxation rate.
And last thing, if I can just ask, sir, just in terms of the broker case regarding the crude aspect, which is there. Now could you just provide an update where you are on that and what has been the development? We know that a couple of brokers have filed it. So it's kind of been a while. But if you could just update where we are on that right now? As the [ year have ] begun, have some development there?
Sure. Sure. Now the cases gone to Supreme Court, we filed in Supreme Court for consolidation of all cases because in various high courts, it's scattered. Then Supreme Court has given an order, interim order, all hearings should be stayed.And the second thing is they also said that all -- every applicant should be given a notice. So the notice has been served. The court will hear about consolidating all cases for hearing in Mumbai. That's what our ask was. So did SEBI. SEBI also has asked them for the same player. So that's the way it is. At this point in time, it is -- hearing is awaited in Supreme Court. And thereafter, the consolidation part will be decided. As such, the case will be heard by one of the high courts. That's the way it is.
So we have next question from the line of [ Ankit Gupta ] from Alchemy Capital.
So you said that [indiscernible]
Ankit, your voice is not clear.
Okay. Just a second. Yes. Hello? Margins numbers have drawn some INR 200 crores of margins. Is that a minimal requirement to trade on the exchange? Or how can we interpret it?
No, no. What Mr. Bolar was saying is brokers had given a cash margin, okay? They've withdrawn the cash margin, they may have given bank guarantees or fixed deposits, some other collateral, they may have given it. That's what the point he was making. So it is not for any single broker so much is the requirement. No, it's not the case.
We have next question from the line of Mohit Kumar from DAM Capital.
Sir, just 2 questions. The first is on the electricity derivatives. Is there any progress, sir, which you can share? And secondly, do we have any plans to enter into gas exchanges?
Okay. On the electricity derivatives, we are very active. We will be in the forefront. That's the way I can say. And probably maybe in a day or 2, you will hear some news about it also, okay?
And on the gas exchange, sir, are we interested or we don't want to enter into the domain?
We are very much interested on the gas exchange. But how to go forward in doing it, we will -- we are yet to figure out as to the approach to that. We don't want to have -- it's crowded also. And at this point in time, we are seeing the volumes on IGX. Let us see how we will move in that direction.But I don't know -- we have it anyway, the gold spot exchange is something which we are keen to participate. And as somebody said, it's already there in the GIFT City, and 2 days before they formed the regulations, we'll be working on that.
So if I may ask, which are the -- which are your growth -- which are the likely products which can give you growth in the sense -- the additional products which can give you growth in FY '22 as...
Well, index futures is something that we wanted it to grow substantially. This is one area which we are looking for it. And I have been saying it, we are keen to pursue also some of the initiatives that we are pursuing it at this point in time, like the spot exchange projects are there. That is something that we are very keen to pursue them. These are the ones which we look forward to fuel our growth maybe in the midterm. That's the way it is. I'm not giving just for the next 1 year. But definitely, next 2, 3 years' time, definitely, it will -- spot exchange is also going to achieve the growth.
Okay. Sir, lastly, for crude oil volumes, sir, when do you expect it to get back to the normal levels? And how is it trading right now? Were they happening in October?
Well, it's about up to INR 3,000 crores is the average ADT, the crude oil. And the way that -- as I said that about almost 130% [indiscernible] there. That's why it's not flying as it used to be. In fact, if you see the corresponding period last year, the first half, if you see that, crude oil was INR 12,000 crores. Currently, it is INR 3,000 crores in the first half. That is H1, April, September at INR 2,922 crores. And the corresponding period last year is INR 12,233 crores. So there's a huge growth potential for us. We are looking for this relaxation in margins. Once they are put in place, it will definitely fly.
We have next question from the line of Mohit Balakrishnan (sic) [ Rohit Balakrishnan ] from VRDDHI Capital.
Most of the questions have been answered. So just on taking forward this question about growth over the next 3, 4 years. You talked about spot exchanges being a very critical part of it. So in your -- so I have a 2-part question here, sir. One is, so do you expect spot exchanges to start coming -- I mean trading to begin in the next financial year? I mean you're introducing products and sort of starting exchanges wherever needed. That was one. And in the spot exchange, gold is the paramount thing that you are working towards, right, if my understanding is correct?
Yes. For both the questions, the answer is yes.
Okay. Got it. Other question, sir, again, just on this overall 3- to 4-year growth cut. So sir, index futures -- and I mean how -- currently, our ADT is around INR 30,000 crores, INR 32,000 crores. This quarter was very good, obviously. But I mean -- so how much do you think index futures can really add up? Because, I mean, you gave example of equity -- in equity, both index future and options have obviously really pulling the volume for the exchanges there. But in your assessment, globally, has there been a precedent where similar kind of products in global exchanges, it's -- the success has been there for such products? If you can throw some light, that would be helpful.And what kind of volumes are you expecting? I mean in terms of -- let's say, if we have to hit ADT of INR 60,000 crores, INR, 70,000 crores a day from where we are, I'm not talking immediately, sir, I'm talking, let's say, 3 years out, so -- 3, 4 years out. So I mean is that possible? I mean how much would that be contributing from index futures? And broadly, sir -- and I mean you can change the numbers. I'm just broadly asking.
Understand. Thank you for your question. Let me tell you, global indexes, wherever they are traded, there's a difference here. Those are constructed by third parties like S&P, for example. They have constructed, taking one from -- seller from 2 from some other exchange, 3 from some other exchange, et cetera. So it's not in the same exchange, okay? That's one. So there are different time tools and that they are traded differently. And also, people don't get what we call cross margin benefits or the margin benefit as such also, okay, because they are in different exchanges. That's the way it is.So whereas here, we have this index, index is constructed based on the prices of commodity, which are traded on the exchange only, nowhere else. So with -- this kind of cross margin benefits can be given, and it will definitely fly. That's what it is.Now at this point in time, the cross margin benefit is not available. For 6 months, it will not be there. That's what SEBI's view was. There, they asked us to back test with the data and then come back, then we will consider. That's the way it is. So my view is these have a great potential to grow. That's -- there is no doubt about it, great potential to grow. I repeat that, okay?Now you want me to put a number as we go along. And more than the index futures, I'm looking for index options. Yes, it will grow, but once index options are also permitted, definitely, that will take off, okay? And so if you ask me with the global experience, again, I'm telling you, because of this kind of structure of the indices, it did not fly. And so ours is going to be a unique experience to that extent. And I'm sure we will be able to [ cross ] this kind of turnover that you are anticipating. That is also my desire, and I'm sure we should be working towards that.
Ladies and gentlemen, due to time constraints, that was the last question. I'd now like to hand the conference over to Mr. P.S. Reddy, MD and CEO, for closing comments. Over to you, sir.
Yes. Thanks to all of you for very, very, very intuitive questions. And we'll stay in touch and keeping stay invested. And as I said, we will work towards the interest of all stakeholders. And as we go along, you will hear more and more good news from the company. Thank you so much.
Thank you very much, sir. Ladies and gentlemen, on behalf of Multi Commodity Exchange of India Limited, that concludes this conference call. Thank you for joining with us, and you may now disconnect your lines.