Multi Commodity Exchange of India Ltd
NSE:MCX

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Multi Commodity Exchange of India Ltd
NSE:MCX
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Price: 6 422.6 INR -0.66% Market Closed
Market Cap: 327.5B INR
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Earnings Call Transcript

Earnings Call Transcript
2022-Q3

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Operator

Ladies and gentlemen, good day, and welcome to the Multi Commodity Exchange of India Limited, MCX, Q3 FY 2022 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. On the call we have with us Mr. P.S. Reddy, Managing Director and Chief Operating Officer -- Chief Executive Officer, sorry; Mr. [ Manu Jain ], Chief Operating Officer; Mr. Satyajeet Bolar, Chief Financial Officer; Mr. [ Praveen DJ ], Head, Investor Relations. I would now like to hand the conference over to Mr. P.S. Reddy. Thank you, and over to you, sir.

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Thank you so much. Good evening, everybody. Welcome to the investor call for Q3. And as you have noticed it based on our ATP, even this quarter, not as much as we thought we should be able to do that. The only silver lining is that options contracts are doing well. And we also started to charge on options contract and the results we made about INR 10 crores in this quarter. And probably, the trend will continue and the new contracts are being introduced. Very recently we introduced in this month the, what we call, new natural gas options contract that started doing well. And in the initial 1 week itself, the volume clocked almost INR 230 crores. And I think going forward, that is another product that we can look for. And during this quarter, some -- maybe 1 or 2 regulatory important changes have taken place. One important thing is our coal thermal contract has been suspended aligned with other contracts from [ LCDS ]. And actually, we are almost getting about INR 350 crores of average daily turnover and it's doing well. And [ SEBI ] also report an options contract on that, in which we were to launch in the month of January. And we were expecting good price there because of -- the underlying contract or underlying commodities. Unfortunately, as you are aware is that the price decision has not taken place in IEX. It is in -- Malaysia, almost 98% of the product is imported, and we have no control on it, okay, yet there was a clamor for it. So that led to a suspension of the contract along with other products and especially the edible oil contracts without much application of mine, I would say this. Unfortunately, that -- it takes time for us to get it restored. It's easy to suspend, but it takes and a lot of time to bring in liquidity, restore confidence of the investors in this contracts. That is a big challenge for us, even if these -- order. That's one important thing that has taken place. Other things, of course, it was implemented with from 14th or 15th of January, but the peak margin -- which was applicable until 5:00 in the evening has been made applicable in 11:30 or 12 midnight until our contract -- until our markets, I mean, work. As a result, in addition to the up to 5:00 water peak margin calculations that we are doing and submitting to the member brokers for collection, we need to do it beyond 5:00 also. So that has also removed some operational leeway that was some brokers for enjoying maybe after the 5:00. But that is the important development that has taken place. The third, which importantly that -- the third important one is that segregation of collateral among various segments of the Exchange. So we need to segregate it with respect LNPS and LES, how much collateral a client has given that has to be uploaded on the Exchange platform. It adds to a lot of compliance, but otherwise, it doesn't, my view, is much of any transparency. Yes, as long as you know how much total money has been given by the client, that's good enough. Don't need to earmark which explain what, et cetera. And that takes away some operational leeway or added some words but then we know -- shifted from -- one segment to another Exchange segment to another segment. These are the three important things that have taken place.Apart from it, of course, SEBI has come out with the spot -- exchange, domestic exchange guidelines. And since we do not have a trading platform immediately, the Board has decided that we will have it develop, maybe TCS will only develop using the existing platform, which we are developing for that CDP, and that is commodity derivatives platform. Once the building is given for testing. Of course, I could drop too, they have given their testing and the test -- I mean, delivered on the test is going on and maybe that stabilization will take some more time. Only post that, they will take up a very platform and develop it as a spot platform. Having said this, on the International Bullion Exchange, the developments are very good, and the government has issued a notification, probably you're all aware, that any general company are in the business of jointly making or -- industry, if they have a net worth of INR 25 crores and 90% of the business is in the bullion, they are very proud to import via international bullion exchange. So many have shown interest and many applications, we're receiving it and that is, in a sense, disintermediation. Currently, there are 20, 25 -- agencies. So now people don't help import where those -- agencies. They can directly import from these international bullion exchange. You are all aware that we have about 20% stake there on all exchanges and I, myself, put up this [indiscernible] MCX. So this is another development that I must share with you. Then in terms of client participation, et cetera, yes, we are more or less keeping that client participation as last year because many are moving towards, what should I say, towards options contract. And there, the number is increasing. And we are hopeful that we will be able to shift the focus from futures to options. That doesn't mean that futures is not something that's not pursuing it. But considering some of the margins that are there, clients are choosing between the two. And wherever there are high margins are there, maybe options are better for the investors to pursue and how it is happening at this point in time. Mr. Bolar, would like to update a few on financials, and thereafter, we'll keep it open for question, answers.

S
Satyajeet Bolar
Chief Financial Officer

Okay, sir. Thank you, sir. Dear everyone. I mean, this December quarter as compared to September has been better. As MD said, we have started charging on options. We have -- the top line has increased by 5%. And we have been able to keep our costs under control, which we have been able to see from quarter-to-quarter. And thanks to that, we have a profit of around 6%. So when we compare to September '21, we are marginally better which has good signs for us. And we have kept -- more importantly, we kept our costs under control and we have started charging in options. So going forward, that's a positive trend that we see. .Yes. I'll now leave it open to question and answers. Thank you.

Operator

[Operator Instructions] The first question is from the line of Mohit Kumar from DAM Capital.

M
Mohit Kumar
Research Analyst

Three questions. Sir, firstly, sir, what is the status of elasticity derivative contracts? You heard that there's a committee, which has been set up by SEBI. Is it right? What are the kind of time line you're looking at for launching this contract?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Yes. Go ahead. You can ask me. I'm not [indiscernible].

M
Mohit Kumar
Research Analyst

Sir, can you please explain once again, the peak circular, which you said that has -- it has to work beyond market hours? How does it impact the margins? And is there an adverse impact of this on this current quarter? And when was applicate [indiscernible]? And third is on the spot bullion exchange. Pardon my ignorance, but can you launch this in the current form? Or do you need to set a separate bullion exchange? And what is the category for setting up this bullion exchange? What is the kind of time line we are looking at for launching this? There are three questions.

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

See, on the electricity derivatives, there is a joint committee or a working group of CERC and SEBI has been set up under the agreement signed with -- filed with consent -- filed with Supreme Court. So they have set a joint committee. And they are the ones who have to evaluate the contract specifications and accordingly, they have to take a decision. Funding that, we are organizing a lot of awareness programs both from European, what you call participants, some of them who are in the industry. And -- open exchange also, we have already done that. And we have also done with the -- just a week before, U.S. Energy Department has conducted a program where we also participated to CDC. And the state regulators are also there -- regulators, to all of them. And IEX has also participated. So the co-system development is going on. But apparently, our application is with still with SEBI. And I can't put any time line, but we have been changing them constantly to give you approval for specific derivatives. This is one part of it. The peak margin, the application. Okay. Now the peak margin, what does [indiscernible] 5x snapshot. And at that time, what is the open interest of the client? And what is the margin collected by the broker from the client? And is there any shortfall? Obviously, penalty will be -- if the open -- if the margin is option, no problem.Now instead of giving five snapshot, we will be giving eight snapshots. Probably you are aware that some of our contracts are international prices, they track, like your bullion as well as the LFG contracts. So they're mostly have to post 5:00, 6:00 updates. And so even if I have the -- so when is that we'll be giving the snapshot from those clients, but not for those clients for everybody at that point in time that is at 7:00, maybe 9:00 and 11:00 or something like that, there are some timings up there.And accordingly, the margins have to be collected by the brokers. Earlier, this was not the case. If they have complied by 5:00, that is stopped, point number one. Second, the argument that we have also advanced if I entered into a contract at 5:00, I had to my position and I'm done. I paid fully the margin. I don't --. But then if the prices move up in the maybe at 8:00, 9:00, then the brokers have to -- will call me and then ask me to give additional margin because the valuation has gone up -- open interest valuation has gone up, and I need to bring in additional margin, although the position may be in profit by the way, okay? Still, I have to pay margin because 10% of the open interest value is what is counted and accordingly, one has to bring in the 10% or whatever is the margin that is applicable for that commodity. So that is applicable from 14th or 15th of January. Mr. Praveen, you can correct me, of this month. As of now, we are not seeing so much of impact but I'm not too sure about it at this point in time it will impact.But definitely, it is a negative, what you call, characteristics for trading in the Exchange. And mind you, we are the most active Exchange in the post 5:00 because -- almost on -- trading they have it. And this is one part of it. Coming back to the bullion spot exchange, that is domestic exchange I'm talking about. SEBI has come out with an option for anyone to go for a separate exchange. If you are to go for a separate exchange, separate exchange will have the same conditionalities like no single entity can take more than 15%. And only certain entities are allowed to take 15% or [ turnaround ] up to 5%, et cetera, et cetera. Okay. Now if -- within the Exchange segment, like you have a current segment in [ NSBS ] or like that if you want to start in a separate segment, probably you need to have a separate -- separate membership. But you don't need to have a separate network requirement and separate, what should I say, the Boards and all acting -- the cost of [indiscernible]. So we are planning to have only a separate spot, what you call, a segment. Now what is the time line? We're looking around September, is the framework that we are looking at it, but it's only [ '22 ]. We are not as you formed it up because what we just started and SEBI has come out with its regulations, just about 10, 15 days ago. Having said this topic, I must also say that it will be traded in [indiscernible], EDRs, electronic gold deposit receipts. Now there is a, what we call -- the -- security. But once you start people delivering, then it will be GST is applicable. So there are certain GST challenges that needs to be addressed, and government is not able to address as yet, [indiscernible] the GST council, et cetera. And that is something which is -- could take time. So that is why we are hopeful it may not evenly pick up, even if there is some head stop delay. That's what we are looking at.

Operator

[Operator Instructions] The next question is from the line of Devesh Agarwal from IFFL Securities.

D
Devesh Agarwal
Assistant Vice President

Sir, just wanted to understand, there were some talks of -- within the margin requirement also, the different components that are there in terms of BG cash and others. There may be certain limit. And the cash component can go up significantly from a Feb onwards. Is that correct? And if that happens, would that further impact the volume? What is your assessment on the same, sir?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

There is already -- limit is there. I think the other cash and cash equivalent cannot be less than of certain percentage. The securities components, it cannot be 100%. Securities can be -- with haircut can be only 50% of the total margin given, et cetera? I think that system is being put in place. That is also there in -- to some extent, already in place. But the bifurcation for exchange-wise, segment-wise, is not there. So what issue will be if the client has given -- one client has given more cash and some other client has given more security, although we consider brokers -- what was the broker use as the collateral for me because that is not transferred to me, the client's money, except securities which are pledged. I can -- I have to portion -- brokers have the portion how much margin limit has to be given subject to those ratios, that is cash versus noncash ratio. So that is adding complexity to the entire operations. And the SEBI is -- I think that is implementable from 28th February, 2-8. So that is something which is work in progress. And we have also discussed with SEBI. I think it's only complicating the issue. So let us see what will happen -- booking industry also is represented collectively on this.

D
Devesh Agarwal
Assistant Vice President

Okay. But just to understand it better, sir, currently, the cash component will be under 10% of the total margin requirement and that can increase to, say, 40%, 50%? Is the regulation -- go to as it is?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

It is. What I'm saying it. Currently, we are taking only from the member brokers, okay? We don't take directly. So we don't manage client collections at our end. So it is the broker who has to collect the margins. So those ratios will alter -- from the brokers or from the clients.

D
Devesh Agarwal
Assistant Vice President

Right, sir. And in terms of, sir, the operating expenses during the quarter, is there a certain element of expense towards TGS in the software charges because the number looks slightly higher than what the formula would have given out to be? [indiscernible] expense for TGS?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

No, there are some expenses, okay? No doubt of working. But all that -- what the -- some of the expenses are, what should I say, one-off expenses in the month of December, November, we have incurred. Mr. Bolar, you can explain whether...

S
Satyajeet Bolar
Chief Financial Officer

I'll explain. We had certain building repairs in the premises. So we had one-off expenses. Also, there were some marketing expenses that we incurred. That's why there's a slight dip in our expenses. There's nothing that were paid to -- extra that were paid to anyone in connecting software or anything like that.

D
Devesh Agarwal
Assistant Vice President

Understood. And sir, can you quantify this onetime expenses on overall basis?

S
Satyajeet Bolar
Chief Financial Officer

Around -- less than INR 1 crore.

D
Devesh Agarwal
Assistant Vice President

Less than INR 1 crore, okay. And this migration that we are looking for is from September onwards. So you did said that we are -- the testings are in progress. So are we on track to migrate to the TCS platform from September onwards?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

As of now yes. That's what the confidence TCS gives to us.

D
Devesh Agarwal
Assistant Vice President

Okay. And sir, how much have we spent on this contract so far? .

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

I don't think we are giving out those numbers as of now next way because it's a hardware comes software. We have already acquired the hardware and some software has got some phases. Accordingly, we will be paying them. And yes, that's the way it is at this point in time -- go ahead.

D
Devesh Agarwal
Assistant Vice President

Yes. And last one, sir, the other income looks slightly lower. Are there any M2M losses or anything in the quarter in treasury [indiscernible]?

S
Satyajeet Bolar
Chief Financial Officer

Not really. I mean, I'll take this P.S. Reddy. As we discussed in the last meeting, we said that we had some tax reform. So we have exited fully from tax reform, and we have parked temporarily in short term and ultra short-term mutual fund scene. And as you know, in December, the yields had gone up -- 10-year yield has gone up. So there was -- but there's no loss business. There's no loss that we have booked.

D
Devesh Agarwal
Assistant Vice President

Okay. And I think the tax adjustments are likely to be done only in 4Q. So for the first 9 months, we have not done any tax adjustment towards MAT.

S
Satyajeet Bolar
Chief Financial Officer

No. So I mean, as we mentioned earlier, whatever adjustments we had to do, we will do it in March. But since we're...

Operator

Ladies and gentlemen, I would request you to please stay connected. We are just trying to reconnect the management back to the conference. Requesting you all to please stay online.

D
Devesh Agarwal
Assistant Vice President

Are you there on the line?

Operator

Yes, sir.

D
Devesh Agarwal
Assistant Vice President

Mr. Bolar, are you there?

Operator

Sir, they just closed the line for the Boardroom [indiscernible] allow me a minute, please. In the meanwhile, would you like to take the question now sir as I'll connect the boardroom?

D
Devesh Agarwal
Assistant Vice President

Yes. On the MAT credit and the long-term losses, I think we have almost all exhausted all that. Maybe we will maybe moving to a different tax rate now. For FY '22, the effective tax rate will be -- our earlier guidance was around 18%. Do we hold that guidance? Or there will be -- guidance for effective tax rate for FY '22?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

I think in the last quarter, there could be some change, that's what [indiscernible]. Yes. Yes. Mr. Bolar, he's asking what will be the effective tax rate? Will it change in the fourth quarter? Or last time, you've given a guidance about 18% is the effective tax rate, whether that holds good? That's what he's asking.

S
Satyajeet Bolar
Chief Financial Officer

It will be a bit more than 18% because we have exited from tax reform.

Operator

The next question is from the line of Sanketh Godha from a Spark Capital.

S
Sanketh Godha
Vice President

Sir, just wanted to understand, out of the total volumes, what happened at the Exchange, what percentage of the volumes happen on an average during 5:00 -- even 5:00 to 11:30 where now the new peak margin rules are getting implemented. So we are there, probably it has no impact in the past. So can we see some margin volume downwards? Or if you can quantify what percentage of on an average volumes happen during those hours compared to the entire day?

S
Satyajeet Bolar
Chief Financial Officer

See, earlier, we used to have earlier used to have about 50-50 to begin with, okay, prior to [indiscernible] is 50%. Your second [indiscernible] is 51%, something like 49%, 51%, like that. And subsequently it moved to almost all 55%, 45% kind of thing, 45% in the morning and 55%. And now again, coming back to maybe 50-50.

S
Sanketh Godha
Vice President

Okay. Okay. Got it, sir. And sir, what will be our average realization in the options contract? I mean, in future -- INR 2.07 per [ lag ]. Then in options, will it be closer to INR 4.50 as per the premium turnover?

S
Satyajeet Bolar
Chief Financial Officer

As for the premium turnover, I would say it is 45 -- INR 45 or INR 50 -- INR 40, [ INR 50 ] is the average you can take INR 45 per 1 lakh of premium. Praveen, you can correct me. .

D
Dalvani Ganapathi Praveen

Yes, sir, that's right. It is between INR 40 to INR 50 [indiscernible] you can take it at INR 45.

S
Sanketh Godha
Vice President

Okay. Sir, just asking a very fundamental question, see, whatever growth we are seeing in the options is probably at the expense of futures. And in futures, the realization for the same ADC is far superior compared to the options because they daily charge a premium turnover instead of total turnover. So honestly, if you want -- if that is a trend or that is a new reality, then the options volume ideally should be growing at multi-x levels compared to what we are seeing now. So that it becomes revenue neutral. So sir, just wanted to understand your view of this basically given the options we charge premium not out on the ADT [indiscernible]?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

You're absolutely right in the previous meeting also, I said, 1:3 ratio, this follows. Now 3x of turnover in options will be equaling to time of futures turnover. That's the way it in. So currently, we have INR 10,000 crores ADT in options turnover, okay? That is equivalent to INR 3,300 crores of fees just turnover. I mean, whatever the future turnover of INR 3,300 crores revenue comes out of that is equal to, what, INR 10,000 crores of options turnover. That is the -- so we need -- right, we need to ramp up the options volumes.So if the [ INR 30,000 ] options volume, then we will get -- as good as we are getting INR 10,000 crores. And my view is options are going to pick up. It is happening, and we have seen more and more participants, brokers and all those are coming into [indiscernible].

S
Sanketh Godha
Vice President

So currently, sir, the mix is 80 -- 20-80, 80% future and 20% is options in AGT terms. So we can assume that, but in a year or 2-year period, it will be more like 50-50 so that it becomes revenue neutral? Or you're very confident that 3x growth in the option is going to sustain going ahead also...

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

That's the way I look at it. That's the way -- that's what we -- our efforts are all towards.

S
Sanketh Godha
Vice President

Okay. Okay, sir. And finally, on the spot bullion exchange. So basically, we need not apply for a separate thing with SEBI. Whenever the spot bullion exchange starts, we will start it as a separate segment. So only product approval is needed from SEBI, nothing more than that. So -- and it is true for every activity, maybe like [ MSCI ], if they want to follow the same approach the way you are trying to say, sir right?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

[indiscernible] Have to apply for a segment approval, not just product approval segment also because segment will have its own [indiscernible]. Segment will have its own, what we call, membership.

S
Sanketh Godha
Vice President

Okay. No, but sir, does it mean that there will be more than one exchange operating in the spot exchange -- spot bullion exchange, too?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Could be. Could be. Could be.

Operator

The next question is from the line of Sameer Dalal from Natverlal & Sons.

S
Sameer Dalal

So my question is regarding this change in software that's happening to the new TCS software from September. I wanted to understand -- I mean, we've discussed this in the past, of course, but what kind of savings per quarter or -- can we expect once we do this -- once the shift happens?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

See, currently, there is a, what we call, a transaction linked revenue sharing. That is -- okay? So that is done away with point number one. Structurally speaking, in terms of contracts.Okay. The second one is it is a fixed for a period of 6 years. So what order we have entered into agreement that is for a period of 6 years. One year is warranty and the rest of the 5-year -- contract. And thereafter, we have to pay in AMC, which is less than. I mean, it's a single-digit figure. That's what I've been saying here.

S
Sameer Dalal

No, this single-digit figure is per quarter, you're saying?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

No, no, no. single digit is for the entire year -- per annum.

S
Sameer Dalal

Per year. And that will be after the 6 years?

S
Satyajeet Bolar
Chief Financial Officer

After the first year.

S
Sameer Dalal

After the first year. So what is the total investment that we'll be going into this entire hardware plus software, which you mentioned? And of course, that will be depreciated. But if you can just give us some thought process on is -- like I said, it will be single digit. It could be 6, 7, 8, 9. I mean, I don't have a number. So if you could just give us some particular guide, so we can try to...

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

The contractual obligations do not allow us to reveal the numbers, honestly, okay? Probably as we go along when we start depreciating, you will see the numbers coming in [indiscernible].

S
Sameer Dalal

Okay. Now the other point you were discussing about the turnover criteria, that 3x the turnover of the options were equal to onetime that of futures, correct, on the revenue front. This is on the daily notional turnover, not on the premium turnover, if I'm correct.

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

No, no. Yes. Yes.

S
Sameer Dalal

Okay. So at the moment, if we are doing about INR 8,600 crores of turnover, which you did in Q3 on an average basis on the option side, that you're saying is roughly equal to about, say, INR 2,700 crores or INR 2,800 crores worth of future contract, correct? That's a fair assessment?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Yes. Yes.

S
Sameer Dalal

Okay. That's -- okay. That's one clarity. And you said that you are of the view that option contract is expected to grow. But if that grows, do you think that could hamper our futures contract also on the negative side because like we discussed that it is cannibalizing to a certain extent the futures contract as well, right?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

No. See, there are one set up of players who write options. There are -- setup players who play -- who are buyers, okay? Now the retailers mostly are on the other side. The writers need hedging also at this point. For the writers, the hedging instrument is features, okay? Have I made myself clear? For writers, option writers also need to hedge themselves. And for them, the hedging instrument is the futures contract.

S
Sameer Dalal

So you are saying, overall, you are expecting a growth in both sides, if the option...

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Yes, that's right.

Operator

The next question is from the line of Aman Shah from Jeetay Investments.

A
Aman Shah
Equity Research Analyst

Sir, my question is the earlier were actually talking of settlement guarantee fund -- funds has not yet allowed. So we had to at least, in times of high volatility there, we had to increase margins because withdrawal of funds from AGF was not in a [indiscernible]. What's the situation there, sir?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Okay. Very good question. I really appreciate this focused subject. You're absolutely right, HGF has become a constraint for us. And we are willing to contribute as long as we are allowed to -- put out the fund size in pumping from both the funds as needed. .Now just on 27th of December, we had a risk management committee meeting in SEBI, where the working group facings has made a presentation under its report. So with that report, we -- the SEBI is considering it. The risk management SEBI wanted to give it us in the next meeting. And thereafter, we will have the final decision on that will be taken. But otherwise, currently, we have INR 510 crores of AGF and our contribution is almost all [ INR 400-odd crores ] and INR 400 crores, both in CX and CCL contribution. And the rest is all penalties, which have been accruing over the several years [indiscernible].

A
Aman Shah
Equity Research Analyst

Okay. And post that effect actually leads to a favorable thing for us is -- positively of volumes because we can then change...

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

We can reduce the margin in crude oil contract. Currently, it's about 24%. We can bring it down to 10%, whatever is the minimum initial margin request. And so is on gold, we have additional 2% margin extra. Now the natural gas options are increasing. And even the opto ins also require more HCF cover as well.

A
Aman Shah
Equity Research Analyst

Okay. And secondly, sir, on this domestic spot bullion exchange Basically, just want to understand how does it like this -- that we will be doing here, which participants we will be serving? First thing. Secondly, what will be our advantage compared to the physical spot bullion market right now, mainly the this intermediation benefit that will be there, which can pass on to participants? And like just how big the potential is and output can be actually captured?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

On the domestic spot exchange, our view is there's a lot of a nontransparent transactions that are taking place in domestic spot -- domestic fiscal market, okay? Now does it all get eliminated. There are many people who prefer transparency. There are many people who want accounting to be done properly. And there are many investors who wants quality start to be received by them and et cetera, et cetera. For example, a lot of investors want to collect the -- take gold in small denominations and then save. And at the end of maybe accumulation of 500 grams or a kilo, probably they want to take delivery of the, what you call, the jewelry post making. So they can transfer it seamlessly, those EDRs and made the payment of GST as well as the -- charges. So today -- is going around in the Javeri Bajad country, they all will be flocking tools to this exchange platform. Number two, even in many small towns, they go to jewelry shop and they don't have any guarantee of the metals that they are getting. They are not sure of the quality whether it's 24-carat or it is still lesser, et cetera. So this will really help in bringing -- or integrating this nontransparent market into kind of media transplant market. This is a major development. The third, which is equally important to you, my team right is the kind of thing is also there in this market, okay? And big fish eat small fish kind of thing. But when they come out to the exchange platform -- equal -- pricing and small jewelers and small bullion people also can buy it on the exchange, take delivery and be happy about it.But having said this, there are also arbitrage opportunities that will emerge. Currently, that arbitral opportunities are not facilitated in a -- through an institutional mechanism. The spot exchange versus the future section that we have will -- a lot of synergies between the two platforms, sorry. Go ahead. I'm done.

A
Aman Shah
Equity Research Analyst

So basically, what we are saying is like apart from all the qualitative part where the quality is a transparency is there, and arbitration benefit will be there, which is your main quantitative benefit of this intermediation. Would that be your right assessment?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Yes.

A
Aman Shah
Equity Research Analyst

Okay. And what is the regulatory road blocks in this? One, as you said of the ADR, when it is deliveries taken [indiscernible] an issue.

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

What I was saying is -- and the one in -- gold, and I convert into -- and when I sell it in the market. Now the DDR -- security, the other party, which is buying it doesn't pay any GST and right up to the chain. But the guy who first time -- he needs to get his GST credit, isn't it, because he paid GST and then [indiscernible].Now if the end party takes delivery takes out of the world after 1 year, then the payment of GSE will happen only after 1 year. Will that first-party wait until then? My answer is no. So there must be some solution for the first party, which is depositing the gold initially to get the benefit of GST, the moment they sell it in the first time on the exchange.

A
Aman Shah
Equity Research Analyst

Okay. Sure, sir.

U
Unknown Executive

So Reddy, sir, I'll add one more point for Aman. Aman, to query on spot exchange and its future potential, this is Manoj -- Manoj Jain beside. So yes, you are right, seeing India is getting launched first time. So naturally, you would want to understand that what are the events, what parameters, how it will pan out. So to give you a very easy and a readily available information, you can look at China. China has a very well thriving spot and futures market on gold. And as you know, I mean, we are so demographically related amongst the largest consumers, importers of gold. And obviously, in India also, government is very keen to grow this market, which is, again, a similar thing which happened in China. You can look at their past history, they're -- one of the largest exchanges involved on spot trading in gold. And we expect that you'll see a lot of similarities in our growth cycles also in India. It will be a huge -- and it is available on a huge data trends over the last few years. You'll get wealth of information there.

Operator

The next question is from the line of Sri Karthik from Investec Capital.

S
Sri Karthik Velamakanni
Lead Analyst of Banks

Sir, if you could speak a bit about the operational issues that you have to go through for the -- making the technology transition? And what would happen in the event of any delays with respect to time line involved here?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

So at this point in time, we are -- we're not initiating any delays at this point in time. And we are confident, PCSC's confident, and they are assuming that they will deliver it. So we are not debated that [indiscernible]. And yes, MCX has right to use the software -- the current software perpetual license that we have. We'll not be getting your support. That's the one way for looking at things. But yes, that is the way it is at this point in time. We don't expect to offshore the time lines.

S
Sri Karthik Velamakanni
Lead Analyst of Banks

And is the mark testing already taking place?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

As I said, the drop through has been delivered and the testing is going on. And we are engaging with all the vendors -- the back office vendors who provide solutions to the member brokers. We are actively involved, file formats have been released and the API based, obviously, all of them [indiscernible].

Operator

The next question is from the line of Mohit Kumar from DAM Capital.

M
Mohit Kumar
Research Analyst

Sir, one question, sir, on the option trading. How do these option trading for the other international commodities in this? And second question was that -- I mean, the -- primarily happening on the energy, right, side? Is there any -- do you think the bullion will pick up in the near future for the options?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Could you please repeat. I couldn't hear your...

M
Mohit Kumar
Research Analyst

Am I audible now? .

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Mohit, you're audible. There's no problem. I had a cough. So bad cough [indiscernible].

M
Mohit Kumar
Research Analyst

I repeat, sir. So how is the option trading compared to future stating for the other international commodity changes, if you can comment on that. Secondly is that we see the offshore volume is picking up only [indiscernible], right? Do you think option volume for bullions or other materials will pick up in the near future?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Yes. See, on the options, internationally, you're absolutely right, they are not great, okay? And peculiar to India, even in equities, you're seeing, how the option contracts have been doing maybe several times with the multiplier they're trading. So the same trend is seen -- in India also. So that is the reason why we are more in line with what's happening in the markets. Now coming back to the gold and silver, why they're not doing it. I think we are amending the contract specifications. Currently, the gold contract, 1 kilo is -- bimonthly, and it's long. So as a result, the premium is also very large. Now -- because these are options and features. The development the features contract before the underlying is expiring. So we have just had a product advisory company meeting where we are breaking it into two contracts of monthly option contracts, which will devolve into the underlying futures contract, okay? So it's a -- contract? So futures contract is bimonthly, but one option contract will expire in the end of March and the option contract will expire at the end of April. As a result, the premium may become off than what it is currently. So that -- I think we are making an application to SEBI -- the necessary regulatory pools within the sales. We just had last week, the product -- committee, which has approved this change. So similarly, we have also got an approval for introduction of 100-gram gold -- I mean, option on silver, gold [indiscernible]. So earlier, we had introduced option on goods on the under 100-gram gold, but that will take off. Now we are making it optional futures as -- on goods. So these two, we expect to do well, and that will pick up better contracts.

Operator

The next question is from the line of Amit Chandra from HDFC Securities.

A
Amit Chandra
IT Analyst

So my question is on the institutional participation. So we have not seen that actually going up and also on the index volumes. So I think the institution and the index volumes are somehow linked because the index is actually cash -- so what factors you think that it will actually boost the institutional participation and also the index options and the index futures contract because if I see index options in the product, which is very popular in India?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Yes. The institutional participation, yes, it is coming in bits and pieces. That is something which has been on the top of our mind, and we have been working with the most of the mutual business. One is -- not as we fund this taking delivery of -- participating on the expense by taking exposure for a part of the gold or gold ETFs that they have.The reason being, there are 2, 3 reasons, which we have already addressed through SEBI, asking them to understand this. The -- under the expand what our regulations are something what they have, we're supposed to have LBMA approved gold only. Now we have introduced the India -- bullion recall also, that's what the government wants us to do it. We have done it. So the custodians are having reservation of taking delivery on the exchange platform. The reason being that they may end up India total to standard but not LDL. So that requires a change, which we have addressed to SEBI. Similarly, on recently, the -- a lot of effort even from our side also, silver ETFs were permitted. A lot of mutual funds have already opened enough force. Some -- to close. So these funds are looking at -- at this point in time, what SEBI -- it must be [ 30k ]. Now in the case of silver, it may vary about 200% plus, minus. There's a tolerance limit. It will not come in -- exactly. The weight keeps varying it. So we have represented to SEBI, please remind this regulation. Don't say that they should get it only in a particular bar. It could be plus or minus what the tolerance as per contract specifications are there.And one more thing is that some of them, as I explained, don't have even set up a desk for commodities which they consider is an expensive thing at this point in time because they are not into commodities. And I think that -- is happening gradually, probably by -- in the next maybe 6 months' time, we should be able to see some more, high -- greater degree of participation. And probably, the FIS and others joined as SEBI decided to permit probably the institutional participation also will pick up is our view.

A
Amit Chandra
IT Analyst

And sir, on the index side, what factors you see on both -- especially on the India office side?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Yes. One is that on the index volumes, the open interest limits are just 1,000 lots. Now 1,000 lots versus the underlying contract 17x, I repeat 17x. For example, gold, underlying, you can have 17x more than what you can take index contract. So we have represented to SEBI, there are times where the people have already exhausted the 1,000-lot limit. And so please expire this because they need a minimum, what we call, volume size. And unless the volume increases, how much these limits are relaxed, we will not be able to grow. So that is where our representation is and SEBI said they will consider and come back on that. Second, in some of these contracts, especially the energy contracts or -- contracts, SEBI has also introduced, what we call, pre-expiry margins. Okay. Now pre-expiry margins, in addition to higher margins that they are doing it, 5 days before, the pre-expiry margin starts so that people are moved away from the contract to the next contract, okay? Now as a result, the number of trading days are coming down. Although assets they are monthly contracts. In a month, we have 22 trading days. Over and above, you have a 5 days killed by way of this kind of rule -- the expiry market. Okay. So the liquidity is impacting because of this regulatory hurdles.

A
Amit Chandra
IT Analyst

Okay. And sir, on the -- like crude margins. So we were expecting that to come down, but it has actually gone up. So what are the factors, which we are actually deciding to increase the crude margins? And also on the top 10 concentration of our members. So is it coming down Y-o-Y? Or is it going up?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

See, top 10 numbers is by and large remain the same, around almost 55% to 60%. Mr. Praveen, you can comment on that. You have it, concentration of members, top 10?

D
Dalvani Ganapathi Praveen

Yes. It's around 60%, top 10.

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Top 10 accounts for 60%. Has been there earlier also. So that is one part of it. Second thing is the crude and margin primarily, it depends on the open interest, how much it will bring in, how much it will make our HGF requirement increases. So if it increases our HGF requirement, MCX and then CCL has to contribute in the ratio of 25 to 75. And this is where I pointed out one gentleman asked 1%, whether if you can contribute taking and take in time -- I mean pump, pump out the money which we have been looking for SEBI is helping that. If that happens, we would like to lower the margin, pump in more funds, allow the liquidity to build and that's the way it is. And we don't need to show that as a permanent loss to SGF. That fund can be taken back once the -- comes down or concentration comes down.

Operator

The next question is from the line of [ Disensa ] from Omada Capital.

U
Unknown Analyst

So the way I see it, domestic exchanges are now in a competition for MCX. And volumes are very -- in a business like this. However, global exchanges where most of the costs are hedging themselves. Is the customer segment for orders MCX plan to grow the market share overall?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

I'm sorry, I couldn't get you the question clearly.

U
Unknown Analyst

So I'm trying to say that domestic competition has never been a competition for MCX. However -- exchanges -- would be the real competition in a business like this. So how does the management plan to grow the market share going forward?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Okay, okay. How do we increase our market share globally? Okay. Now you see, honestly, we don't have an ambition to compete with international exchanges. That's be very clear, okay? And we need to be first to grow in the domestic market. There are so many restrictions, so many restrictions within the country, which we face, but they don't face it. We, as it may be. Now if you see -- are we catering to? No international player is coming in and then hedging on Indian exchanges. It is just the domestic SMEs and domestic players who cannot go abroad and hedge their positions are digging on domestic exchanges. Now -- so our contracts are small. For example, in Mandan Metal Exchange, the -- our seats, 5 tonnes is 25 tonnes. Now obviously, 25 is not required for many of the domestic players. So that serves our contract -- our markets house that smaller segment. Now once we are able to effectively cater, as of now, we are not able to cater to all of them because of the message change in which we are the hedging is taking place. And many do not fully understand what hedging is, whether it means the loss of money or whether it is means low loss, no gain or it means gain. So people are not able to fully assess its impact. So at this point in time, our interest is to increase the domestic participation in these contracts and make it -- the purpose for which these hedging products are devised. As the domestic -- based and more and more -- increases, then we can look at others coming in. Now that is where I'm looking for greater participation of institutional investors as well as the, what we call, the FI who may bring in more liquidity to these counters and open interest. Then even some of the big players of the -- in the domestic market, you can take a look at the contract for [ Hindalcos and Balcos ] are -- they're hedging in international market, be that in ICE or in CME or LME. And they say, your contract is not liquid -- contracts are not liquid. Obviously, I can't provide liquidity. I can only provide platform for them to trade. So that is something which we are struggling with. And it's an -- situation for us. And hopefully, we'll be able to address with greater participation coming through some of these institutions and FIS and other players. Let's see.

Operator

The next question is from the line of [ Akshay Vora ] from [ Praj Financial ].

U
Unknown Analyst

Yes, I wanted to understand the client concentration that we have in our derivative volumes. And like the top 10 or top 20, how much of volume would they be giving us?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Yes, 1 minute. I'm seeing that. I just...

U
Unknown Executive

Client, I don't think we have readily it is available. In fact, we publish it on a daily basis like whatever is OI position across the top 10 client, across the commodity wise, we give it. And we don't have the exchange level, and it varies depending upon the contract to contract.

A
Amit Chandra
IT Analyst

Okay. But like an overall idea?

U
Unknown Executive

At least, I don't have the reimburse right, those numbers.

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

You have [indiscernible]

U
Unknown Executive

Yes, about if we want to give that rate, it's ]roughly 48% for the 9 months and 52% is the nominal growth, [ 28% ].

Operator

The next question is from the line of [ Jay ] from Motilal Oswal.

U
Unknown Analyst

Just one basic question with regards to your -- my existing payment to [ 197 ] out -- what rate we have to pay then in terms of the time that -- in terms of the software charges that is currently based on a formula?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

I'm sorry, whom do we pay?

U
Unknown Analyst

Sir, the software charges that we are paying right now, which has gone to be transitioned to -- that payment. Currently that is being paid to the entity. That entity -- which date do we have to pay them?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

That is the current software vendor -- is providing the software. How long do we need to pay?

U
Unknown Analyst

Yes.

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

We need to pay until September of '22 .

U
Unknown Analyst

December of '22. Okay. And the immediately afterwards, it go to TCS?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

That's right. We want to migrate it much before that.

U
Unknown Analyst

Okay. Okay. And just one very basic question again. What would be the average premium on the option for the quarter?

U
Unknown Executive

Yes, that number is already given in the presentation. I can -- roughly, I'll give you the numbers. It is about INR 11 crores for the quarter Q3 -- sorry, it is INR 180 crores -- INR 180 crores versus the premium turnover is INR 184 crores versus -- turnover sale to a fixed debt. .

Operator

The next question is from the line of Nilesh Jethani from [indiscernible]

U
Unknown Analyst

So just wanted to understand. So -- in case of driving the volumes for the options, you are planning or on the position to divide one case we contract to do 100 grams as far as the bullion is concerned.

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

No, no, no. that is not correct. We are not changing the contract. Please, features contracts remain as a 1 kilo and bimonthly contract. The options on futures, that is the option on future contract will be the monthly contract. So before the expiry of the futures contract at the end of 2 months, there will be two contracts. One will expire in the 1 month and next one will explain in the next month.

U
Unknown Analyst

Got it. So this will help to reduce the premium number also?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Absolutely. That is -- then the participation will increase.

U
Unknown Analyst

So this is already done? Or we are in the -- it could be implemented going forward?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

No, we've not done. Just we had a product adviser company meeting. It requires a lot of approvals. Then we'll take it to our regulatory oversight company, and we have to take it to SEBI. It's like that. It may take about 2 months' time.

U
Unknown Analyst

Okay. And are you planning to do this for other commodities also, say, for example crude, we have 100 barrels. So are we talking...

U
Unknown Executive

Yes. Sir, just to add to the -- it is only in case of bullion because we have bimonthly contracts. For example, if we take gold and silver, they're all bimonthly contracts. But in case of crude oil, already monthly contracts are available, whether we wanted to go for a weekly or another current presently, whatever monthly contracts, they are already doing extremely good, okay? And bullion are the ones where the participants now been asked for monthly contracts because the bimonthly because of the duration is higher and the premium is getting higher.

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

And apart from it, the value of bullion has also gone up. Now it is almost INR 50 lakhs. So INR 50 lakhs of contract. What the premium of 2 months would be?

U
Unknown Executive

So one advantage like just to add to that one, like gold mini, which happened to be earlier when it was launched at that time, it was launched, let's say, option on goods contract. And what we plan to do is we wanted to come out with a gold mini option on future contract because on our platform, the good option on features have been doing extremely good. All our contracts happen to be option on futures. .

U
Unknown Analyst

Got it. So when is this time direction where you're taking it down from 2 to 1 month? My question was on the crude side, there is an opportunity where we can reduce this number of barrels for the options contract and again, increase the volumes over there?

U
Unknown Executive

No -- regulation, what they say is there are two challenges to that. One the regulator says that we cannot have multiple variants. We need to have only one variety. Apart from bullion contract, if you look for any other contracts, we need to have only one variant. We cannot have multiple variants. So the current one...

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

That is why we have done it with the mini contracts. Otherwise many contracts are getting at about 30%, 35% revenue -- to this. So we had aluminum, copper, zinc, net. All of them had mini contracts. They are done with it. We had a crude mini also that is done away with it. And apart from it, the options have to result into underlying contracts -- underlying futures contract. So we can't bifurcate into a smaller one because the underlying is 100 barrels.

U
Unknown Analyst

Got it. Got it. So what kind of volumes are you guys sensing, which would be -- up because of this bimonthly...

U
Unknown Executive

No, I don't think we will give out any numbers on that. .

Operator

The next question is from the line of Aditya Yadav from [ Janssen Capital ].

A
Aditya Yadav

Sir, firstly, I wanted to ask regarding the gold in option you were talking about that you had certain disadvantages with the option on goods and you plan to reintroduce it as an option on the future. So if you could elaborate a bit on that, what kind of disadvantages we had with option on goods?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

See, we had introduced optional goods along with the -- on NES, liquidity enhancement scheme, okay? Notwithstanding the costs be given way, the people are not coming forward because the option writers have to deliver necessarily the option -- they don't know exit for them, except for delivery of the goods, okay? And the buyer also has no option but to take delivery, whereas people got used to the futures contract and there -- I'm sorry?

A
Aditya Yadav

As a cash settlement.

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

And the cash settlement and or even if -- they will get the extra days because the liquidity will be more here in the futures. So they get more time to liquidate. Before the option expiry -- I mean, option expires, if the features contract, 3 days or 5 days before future expires. So they have an option to exit. That's why the golds contract did not succeed.

A
Aditya Yadav

Okay. Okay. And sir, good discussion we had on the bullion and the energy part. And if you could talk a bit about the base metals part also that what are the challenges there? And what are the efforts we're taking to grow this market? And any kind of qualitative assessment for near term, let's say, 12, 15 months?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Yes. See, in the case of bullion contracts, One is that we are exiting the domestic -- I'm sorry, in the case of -- yes. In the case of base metals, we are taking some of the domestic refiners remaining. So that their participation is also enhanced liquidity into these products. So we are -- we have -- that is one quick decision that we have taken. And it will happen maybe next week or so, some domestic refiners that will be admitted. Now the second thing is we have introduced the multiple delivery centers in these contracts. If you look at it, some of these metals are imports. So we need to be proximity, our delivery centers should be close to the port. So we have opened additional delivery centers in Kolkata and in Chennai. And we have expanded them for other products also. And in the right of up north in the Noida area, where there's a lot of consumption of this metal takes place, we have also introduced a regional delivery center. Now the third dimension is that we are also looking at -- we have filed for a steel TMT bars approval and also for aluminum alloy. These are the two contracts that we are looking forward to...

A
Aditya Yadav

And you discussed in the last call as well that these are -- you want to introduce these soon. So any kind of...

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

We are not pursued as yet the approval. It is -- I mean, it looks as if so near, but then we missed the bus. That's the way it is. We are not getting them as yet. A lot of -- back and forth is raised. .

A
Aditya Yadav

So let's say, in the coming quarter or so, should we expect these to come on board, these contracts?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Yes. It is one contract to scale TMT, we expect to come in, aluminum and -- they are expecting the BAS to notify those certifications. Now BAS takes its whole sweet time. And so that has already approved it. But if the BAS as a standard, it's fine. If it doesn't have a standard, then whatever MCX or any exchange, we should go forward and improve it. That's the way it was based -- was taken. But still TMT, if it comes, I'm sure there we will be able to do a good business. That's what my [indiscernible].

A
Aditya Yadav

Okay. Okay. So probably soon. And sir, 1 last question I had. So with the spot exchange, the domestic one, you have discussed that the expected time line in September?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Yes, that's right.

A
Aditya Yadav

So you plan to launch it by then?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

That's what our guesstimate is rather.

A
Aditya Yadav

Okay. Okay. And with the international exchange, what are the time is?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

That is already placed and -- are taking place. I think if the government has to inaugurate there to put a date and inaugurate it. That's the way it is.

A
Aditya Yadav

Okay. The -- are taking place.

Operator

The next question is from the line of [ Sudarshan], individual investor.

U
Unknown Attendee

Sir, my question is on the broader path for the company going forward. If I see the company's profit at peak level around 2012, '13, around INR 300 crores. And we have come back with a slightly higher profit in March 2021, with INR 225 crore. And with current run rate, during current financial year, we will do INR 150 crores. So sir, despite all the initiatives taken by the management, the financials have not really improved. In fact, they are showing a declining trajectory. So sir, do you see in the next 2, 3 years, you will be able to achieve the peak profit of INR 300 crores in the next 2, 3 years?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

See, I'm not giving any number to it, but -- this happened to be a very bad year, okay? It's a very bad year. In terms of other income, that is also hammering us. In terms of regulatory tightening, that is also hammering our growth. So from all types, we are cornered in that sense. So we are hopeful maybe the new year holds a promise the way that we are moving forward and hopefully, we'll be able to achieve something in that.

U
Unknown Attendee

Okay. Sir, and my second question, sir, any clarity on the INR 20 crore that we have spent on this gold bullion exchange? Are we going to amortize it or write it off any amount in next 6 to 12 months?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

We are had to take a call on it that in this quarter, we'll be able to take that call. .

U
Unknown Attendee

That is -- you are saying by March '22 quarter, we'll be able to take the call?

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

That's right. That's right.

Operator

Thank you very much. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

S
Subbi Reddy Venkatrama Padala
MD, CEO & Additional Director

Thanks to all of you and being patient with us. And yes, we are making every effort to bring -- I mean, made best out of the worst situation that we are currently in and in terms of regulatory framework as well as well as the interest rate sector that is currently are the yields that are currently giving us. Hopefully, maybe next year, we will be able to do better. And thank you. Thanks to all of you for your interest in the company. Grateful.

Operator

Thank you very much. On behalf of Multi Commodity Exchange of India Limited, that concludes this conference. Thank you all for joining. You may now disconnect your lines.