New products help IEX achieve higher profits in Q1

M Ramesh Chennai | Updated on July 30, 2020 Published on July 30, 2020

Despite the Covid-induced slowdown in the economy, IEX has reported a higher net profit for the first quarter of the current year. The energy exchange company, which has a 97 per cent share of the market, today announced that it made a net profit of ₹42.88 crore for April-June 2020, compared with ₹39.59 crore in the corresponding period last year.

This was essentially because more electricity was traded through the exchange during the period — 14.878 billion units in Q1 2020-21, versus 12.99 billion units in Q1 last year — resulting in higher revenue of ₹81.09 crore compared with ₹69.66 crore previously.

This included 515 million units traded under the ‘real-time market’ (RTM) facility, introduced in June, for which IEX says it received “overwhelming response from customers”. Under the RTM facility, one could buy or sell electricity for any period beginning the next one hour; till the RTM was introduced, buyers (such as large industries and electricity distribution utilities) and sellers (electricity generators) would only offer and accept bids for 15-minute intervals of the following day, or in the ‘day-ahead market’.

While the RTM helped increase traded volumes, one sees a rise in volumes even without the RTM. This means that during the pandemic slowdown, electricity buyers preferred to buy through the exchange, where the prices were typically cheaper.

Lower trasmission charges

What also helped was that in May 2020, the Central Electricity Regulatory Commission (CERC) notified new regulations on Inter-State Transmission Charges and Losses, enabling transactions on the exchange to be treated at par with intra-State transactions — meaning lower transmission charges for inter-state supply of power, if contracted on the exchange. This incentivised discoms to further optimise their power purchase through exchange and increase viability on the sell side as well.

During the quarter (June 15), IEX launched a platform for trading in natural gas — the Indian Gas Exchange, or the IGX. In the first 15 days of the launch, the platform traded 9,600 MMBTU of gas, a press release from IEX said.

The company expects to invest ₹15 crore in technology and process innovations which will lead to a better user experience, ease of trade, new functionalities for all participants and a faster time to market for new products.

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Published on July 30, 2020
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