ICEX (Indian Commodity Exchange) Limited Unlisted Shares

Annual Report Summary

The annual report for Indian Commodity Exchange Limited (ICEX) for the financial year 2020-21 outlines the company's performance, operations, governance, and financial statements.

Overview of the Company:

ICEX is a recognized commodity exchange regulated by the Securities and Exchange Board of India (SEBI). It aims to provide a transparent and efficient platform for commodity derivatives trading, aligning with the objectives of the National Agricultural Policy. ICEX was the first exchange worldwide to launch Diamond Derivative contracts. In December 2019, ICEX launched ICEX MF Platform, a mutual fund platform to facilitate transactions in Mutual Funds. The company has 14 commodity derivatives contracts available for trading on its platform. It operates with 134 SEBI registered members and 1114 authorized persons, reaching 341 cities/towns across India.

Financial Performance:

• The operating income for FY 2020-21 was ₹1.42 Crore, compared to ₹3.23 Crore in FY 2019-20.
• Other income decreased from ₹4.84 Crore in FY 2019-20 to ₹2.42 Crore in FY 2020-21.
• The net loss after tax for the year was ₹25.67 Crore compared to ₹42.32 Crore the previous year.
• The net worth as of March 31, 2021, stood at ₹103.70 Crore, including the Exchange's initial Settlement Guarantee Fund contribution.
• The average daily turnover during FY 2020-21 was ₹6.54 crores (single side), with a total turnover of commodity futures traded on the Exchange standing at ₹1,666.17 crores.
• The authorized share capital stood at ₹368,00,00,000, while the issued, subscribed, and paid-up share capital was ₹266,75,37,380.

Business Strategy & Outlook:

ICEX is focused on launching innovative contracts that benefit commodity users and is committed to exploring the Indian commodity derivatives market's full potential. Despite challenges such as Covid-19-induced lockdowns and a SEBI-directed forensic audit, ICEX is actively looking for ways to raise capital, cut down operating costs, and focus on businesses with immediate financial benefits.

The Exchange proposes to enhance its transaction volume from 1.2 crores to 15.19 crores per annum through the mutual fund transaction platform and proposes to generate a transaction fee of Rs. 45.56 crores at the end of FY 2025-26.

However, the commodity segment of the Exchange is kept in abeyance for a limited period, while the Exchange focuses on the mutual fund transaction business, subject to regulatory approvals.

Board of Directors and Key Personnel:

The Board included:

• Vijay Kumar Sharma (Chairman, Public Interest Director)
• Chitra Shringare (Public Interest Director)
• Suresh Kumar Agarwal (Public Interest Director)
• Suresh Babu Konakanchi (Shareholder Director)
• Vaishali Kale (Shareholder Director)
• Sanjit Prasad (Managing Director & CEO).

During the year, some PIDs and the Shareholder director Mr. Ajit Mittal resigned. New PIDs and a Shareholder director were appointed to replace them.

Governance and Compliance:

• The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India.
• The Company is in compliance with the requirements stipulated under Regulation 17 to 27 read with Schedule V and clauses (b) to (i) of sub-regulation (2) of Regulation 46 of the Listing Regulations, to the extent as applicable.
• The Company had a high attrition of staff from strength of 108 as on March 31, 2020 to 51 as on March 31, 2021.

Investor Protection:

• ICEX has established an Investor Protection Fund Trust (ICEX - IPF) to protect investors' interests.
• The company has also set up an Investor Service Fund (ISF) as per SEBI directives, for providing minimum facilities at Investor Service Centres.

Financial Controls and Risk Management:

• The Company has sound internal financial controls commensurate to its size and nature of business.
• A Risk Management Committee is in place to monitor and review risk management plans.
• A Whistle Blower Policy is implemented to enable stakeholders to report genuine concerns.

Other Key Points:

• The Directors confirm compliance with the provisions of the Companies Act, 2013, and have taken proper care for maintaining accounting records, safeguarding assets, and preventing fraud.
• The Auditors' Report does not contain any qualification, reservation, or adverse remark.
• The trading technology of the Exchange has been provided by Millennium Information Technology which is part of London Stock Exchange. ICEX trading platform is designed for High Availability.
• ICEX is the only Exchange in India which has the feature of implementing Primary and DR sites in HOT-HOT (Active – Active) mode.

The notice of the Annual General Meeting included resolutions for the appointment of Ms. Vaishali Kale and Mr. Suresh Babu Konakanchi as Shareholder Directors, the re-appointment of Mr. Sanjit Prasad as Managing Director & CEO, and keeping the commodity segment under suspension while continuing with mutual fund operations on a stand-alone basis.