Also read: MCX-SX now controlled by FIs, not Financial Tech: GK Pillai
Less than a year later, Shah has lost control over the exchange and will never be able to make it back.
To add to his woes, the new Board of MCX-SX will soon review the close ties that exist between the parent firm Financial Technologies (India) Ltd ( FTIL ) and the exchange.
Shah had to step down as the chairman and that place was taken former Home secretary Gopal K Pillai, a vastly experienced administrator with long stints in crucial government departments including that of Commerce.
Pillai, along with other public interest directors appointed by the Securities and Exchange Board of India (SEBI) are now steering the loss making exchange. A new chief executive officer has been selected and his announcement awaits clearance from the stock market regulator.
Pillai told CNBC TV18 that Shah will never be able to come back to the stock exchange. "The former promoters are now out of MCX-SX. Shah is a minority shareholder and the stock exchange is now looking at being arms length from Shah", he said.
MCX-SX suffered a major loss of investor consequence due to the scandal at NSEL. With nearly two dozen investors including banks and financial institutions, it is clear that the stakeholders will seek a greater say. Pillai says the institutions will get a place on the Board as shareholder directors. There is also the possibility of inducting a strategic investor in the future.
So, while he has lost his place at the stock exchange, Shah will have to contend with several other consequences of the exchange slipping out his grasp. The key among these is the review of the business relationship that exists between FTIL and the stock exchange. Pillai said the Board is looking at the business pacts in great detail and would review them at its next meeting sometime mid-December.
"Certain provisions in the contracts favour FTIL. For instance, the cancellation clauses one-sided", he said, adding that he was sure that FTIL would be willing renegotiate the clauses. This process is likely to be initiated in the new year and be over by March 2014.
Financial Tech stock price
On November 28, 2013, Financial Technologies closed at Rs 168.45, up Rs 1.05, or 0.63 percent. The 52-week high of the share was Rs 1197.90 and the 52-week low was Rs 102.05.
The company's trailing 12-month (TTM) EPS was at Rs 71.19 per share as per the quarter ended June 2013. The stock's price-to-earnings (P/E) ratio was 2.37. The latest book value of the company is Rs 580.93 per share. At current value, the price-to-book value of the company is 0.29.
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