Annual Report: 2021
NCDEX Annual Report 2020-21 Summary:
The NCDEX (National Commodity & Derivatives Exchange Limited) annual report for the financial year 2020-21 highlights a challenging yet transformative year for the organization and the country, influenced by the COVID-19 pandemic. Despite these challenges, NCDEX maintained 100% uptime of its trading platform and continued investing in strengthening its technology infrastructure by upgrading its core trading system (CTCL - NEXTRA) and significantly upscaling its Primary Data Center to a Tier 4 facility.
Corporate Overview: NCDEX offers 24 commodities, one indices, and options for trading. It has 357 members, 3.494 million clients, and 9,491 terminals. The storage capacity is 6.60 Lakh MT with 155 WRDA (Warehousing Development and Regulatory Authority) approved warehouses. There were 135 FPOs (Farmer Producer Organizations) traded, and 322 FPOs registered. A record daily turnover of ₹2,736.28 Crore was achieved on March 10, 2021. The Average Daily Trade Value (ADTV) was ₹1,270.17 Crore, with an Average Daily Open Interest (ADOI) of ₹2,711.94 Crore. A total of 5,32,255 Tonnes of commodities were deposited, and 4.18 Lakhs Tonnes of commodities were delivered, also on March 10, 2021.
MD & CEO's Message: Arun Raste, MD & CEO, acknowledged the impact of lockdowns on the physical economy, affecting the Average Daily Turnover (ADT) to ₹723 Crore in the first quarter. However, participation gradually recovered, leading to subsequent quarterly ADTVs of ₹1,069 Crore, ₹1,557 Crore, and ₹1,706 Crore. NCDEX maintained leadership in the agri-derivatives segment with a 74% market share. They emphasize Indian farmers are at the core of NCDEX’s socio-economic objectives. The FPO tally reached 322, with 135 actively trading. FPOs traded over 56,000 tonnes in 18 commodities, and the exchange aims to register 1 million farmers through FPOs. India's first tradeable commodity index, AGRIDEX, was launched. The Exchange launched a novel scheme for FPOs to lock in selling prices for rabi crops, receiving excellent response in key states. NCDEX e-Markets Ltd (NeML) procured 10 million tonnes of farm produce worth ₹500 Billion through the E-Samridhi portal. National e-Repository Ltd (NERL) saw loans against electronic Negotiable Warehouse Receipts increase five-fold, with total pledge loan portfolio increasing to over ₹700 Crores. Arun Raste highlights the potential of the three farm laws to revolutionize agriculture and enhanced allocation for agri-infrastructure spending as opportunities.
FPO Highlights:
Directors' Report: Total income on a standalone basis was ₹6,324 Lakhs, down 23%. Total expenses were ₹9,648 Lakhs, down 6%. A loss before tax of ₹3,358 Lakhs was recorded. A loss after tax of ₹2,488 Lakhs occurred. The company's share of net profit from Rashtriya e Market Services Private Limited (ReMS), a joint venture between the State Government of Karnataka and NCDEX e-Markets Limited (NeML), for FY 2020-21, was ₹49 Lakhs as compared to ₹432 Lakhs in FY 2019-20. The share in net profit from the PXIL for FY 2020-21, was ₹320 Lakhs as compared to ₹523 Lakhs in FY 2019-20. Exceptional items included provisions for doubtful debts and reversals of impairment losses. AGRIDEX was launched as India’s first tradeable commodity index. Options in Goods were also introduced, enabling FPOs to lock in selling prices. NCDEX e-Markets Ltd (NeML) achieved a milestone of procuring 10 Million tonne farm produce worth ₹500 Billion through E-Samridhi portal. There were 357 members on the Exchange platform as of March 31, 2021. The Exchange website was revamped, and processes for authorized person transfers simplified. The Exchange proposed a dividend of 5%, amounting to ₹253 Lakhs. 322 FPOs were on-boarded. There was 56,188 MT FPO traded across 18 commodities. The Exchange conducted 145 IEPs and 119 investor awareness programs, and 14 webinars for institutional participants. Options Familiarization Program was implemented to enable farmers to use market tools to hedge price risk. NABARD is collaborating with the Exchange to connect primary producers. The trading engine NEXTGEN was upgraded, and an enhanced version of NEXTRA launched. The Exchange participated in and won the AIMA Innovation Practitioners Award 2020.
The Exchange has filed a Draft Red Herring Prospectus (DRHP) with SEBI for an initial public offering of equity shares. 357 members as of the year's end. The Authorized Share Capital is ₹70,00,00,000.
CSR Activities: The Exchange's Corporate Social Responsibility (CSR) policy focuses on the social and economic development of farmers by providing access to markets. CSR activities centered around creating awareness among farmers about post-harvest management activities and improving farm gate quality. For FY 2020-21, because of a negative average net profit balance, no funds were statutorily available for CSR, however, ₹25 Lakhs was spent on empowering farmers through equipment, and this was approved by the shareholders.
Board & Committees: Ashish Bahuguna became Chairman. Manikumar S, was appointed Shareholder Director. The Seventeenth Annual General Meeting of the Exchange was held on September 25, 2020. The Audit Committee, Nomination and Remuneration Committee, and other Board committees were discussed.
Risk Management: The Exchange is focused on a transparent trading platform, strengthening risk management. An independent risk governance structure is in place, overseen by the Board and a Risk Management Committee (RMC) comprising Public Interest Directors and External Experts.
NCDEX Subsidiaries: Four subsidiary companies are mentioned, including NCDEX e Markets Limited (NeML) and National Commodity Clearing Limited (NCCL). NeML continues its mission of positively impacting lives of both the smallholder farmers and bottom-of-the-pyramid citizens dependent on Government support for their food security. The NCCL was granted recognition by SEBI to act as a clearing corporation.
Management Discussion & Analysis: This section covers industry structure, development, and specific financial details. The industry saw the impact of COVID-19, and the measures taken to mitigate economic crises. The discussion focuses on the performance, opportunities, and threats in the agricultural sector. There were significant shifts in the financial market and related statistics. The government impetus helped to facilitate growth for farmers and in turn NCDEX.
Financial Statements: The report includes detailed standalone and consolidated financial statements, including the balance sheet, statement of profit and loss, statement of changes in equity, and statement of cash flow. Independent auditor’s reports and significant accounting policies are also provided.
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