National Commodity & Derivatives Exchange Shares

Annual Report Summary

Here's a comprehensive summary of the PDF document:

Overview

The document is the Annual Report for FY2021-22 of the National Commodity & Derivatives Exchange Limited (NCDEX), highlighting performance, key initiatives, and corporate governance aspects. NCDEX positions itself as an integral part of the Agri ecosystem, aiming to develop market-driven tools.

MD & CEO's Message

The MD & CEO's message emphasizes the relevance of commodity derivatives in the backdrop of post-pandemic demand shocks, supply bottlenecks, and rising energy costs. The message states that despite temporary suspensions of some top-traded contracts (Chana, Mustard Seed, Soybean, Refined Soybean Oil and Wheat), the exchange maintained its leadership in agricultural derivatives.

• The Average Daily Turnover Value (ADTV) increased by 47% to ₹1,857 Crores, exceeding pre-pandemic levels. NCDEX maintained its leadership position in the agricultural derivatives segment with an 80% market share. The MD & CEO further acknowledges government efforts to double farmers income and NCDEX's role in complimenting those efforts. As such, the Exchange is linking over 400 Farmer Producer Organizations (FPOs) with over one million farmers. NCDEX also highlights technological upgrades like migrating its live trade data centre to a Tier-IV facility. The message expresses hope for the revocation of commodity suspensions and increased government participation in price risk management.

FPO Highlights for FY 2021-22

• The Exchange engaged with 89 promoting and resource institutions.
• Over 1 million farmers are members of FPOs supported by these institutions.
• NCDEX noted participation from 150 FPOs from 14 states.
• 420,995 Farmers represented on NCDEX platform.
• 255 FPOs have opened accounts but are yet to trade.
• 1,06,576 MT of commodities traded across 18 commodities.
• 12,282 deliveries based trades.

Company Information

The report lists the Board of Directors, Chief Financial Officer, Company Secretary, Statutory Auditor, Secretarial Auditor, Bankers, Registered Office, Branch Offices, and Registrar and Share Transfer Agents. Key personnel include Mr. Ashish Bahuguna (Chairman), Mr. Arun Raste (MD & CEO), and Mr. Atul Roongta (CFO).

Directors' Report

• Performance: The total income of the Exchange increased by 27% to ₹8,060 Lakhs, driven by higher ADTV. However, due to increased expenses, the Exchange incurred a loss after tax of ₹1,376 Lakhs. The highest turnover achieved in a day was ₹3,730 Crore. The top traded commodities were Soy Oil, Guar Seed, Guar Gum, Soybean, and RM Seed.
• Operations Review: Despite commodity suspensions, NCDEX maintained leadership in agri futures, holding ~79% market share. Physical deliveries increased by 18% to 4.72 Lakhs MT. Sectoral indices for Guar and Soy complexes were launched, and Refined Castor Oil was added to the product basket.
• FPO Connect: Over one million farmers were connected through FPOs. NCDEX actively works with NABARD, SFAC, NRLM, and other institutions to promote financial inclusion. SEBI waived regulatory fees for FPOs.
• Technology Upgrade: NCDEX migrated its live trade data centre to a Tier-IV facility.
• Awards and Recognition: NCDEX received technology awards for digital transformation, including recognition for its data centre migration and Options familiarization program. The MD & CEO was awarded 'CTO of the year - NBFC category’ by Quantic Group.
• Capital Structure: The authorized share capital is ₹70,00,00,000, and the issued, subscribed, and paid-up capital is ₹50,67,60,000.
• Membership: As of March 31, 2022, there were 339 members on the Exchange platform.
• Customer Service: The Customer Service Group (CSG) implemented improvements to enhance customer experience.
• Dividend: The Directors recommend a dividend of 5 per cent on equity shares.
• Board of Directors: Lists appointments and retirements/cessations of directors during the year.
• Statement on Declaration by Independent Directors: Confirms that all Independent Directors meet independence criteria.
• Annual Evaluation: Formal annual evaluation of Board, Committees and Directors was conducted.
• Board Meetings: Eight Board meetings were held during the year.
• Audit Committee: The Exchange has a constituted Audit Committee.
• Corporate Social Responsibility: The CSR activities focused on improving post-harvest quality and returns for farmers. The Exchange assisted several resource institutions with seed cleaning and grading machines. In FY22, ₹25 Lakhs was spent voluntarily on CSR activities.
• Auditors: K. S. Aiyar & Co. completed their term, and Khandelwal Jain & Co. were appointed.
• Secretarial Auditor: Makarand M. Joshi & Co. served as Secretarial Auditor.
• Internal Auditor: KPMG Assurance and Consulting Services LLP" served as Internal Auditor.
• Compliance with Secretarial Standards: Confirms compliance with applicable Secretarial Standards.
• Particulars of Loans, Guarantees or Investments: Disclosed in financial statements.
• Related Party Transactions: All transactions were at arm's length and disclosed in financial statements.
• Risk Management: The Exchange has a risk governance structure overseen by the Board and a Risk Management Committee.
• Subsidiary and Associate Companies: NCDEX e Markets Limited (NeML), National Commodity Clearing Limited (NCCL), NCDEX Institute of Commodity Markets and Research (NICR), and National E-Repository Limited (NERL) with details.
• NCDEX e Markets Limited (NeML) In e-Markets for the agricultural sector turnover increased 52%. NeML is also at the forefront in integrating its platform with the VAHAN eRegistry of the Ministry of Road Transport & Highways to explore the opportunities arising from the newly announced rules for End of Life Vehicles and seamless lending to its participants.
• National Commodity Clearing Limited (NCCL): Summary statistics of trading, settlement and collaterals processed are given.
• National E-Repository Limited (NERL): Offers digital platform for eNWRs. Banks crossed INR 2,000 Crores finance against eNWR since inception.
• NCDEX Institute of Commodity Markets and Research (NICR): Offered certification courses, educational and training programs, data analytics, research and consultancy projects.
• Power Exchange India Limited (PXIL): One of two power exchanges in India. Volumes traded increased by 27%.
• Awards & Recognition: The Exchange takes pride to inform that various Digital Transformation initiatives implemented by the Exchange has been very well recognized by the Tech Industry and the Exchange has received four Technology awards in FY 2021-22.

Capital Structure, Membership, Customer Service

Details on capital structure, membership numbers (339 members across the country), and initiatives by the Customer Service Group (CSG).

Dividend and Appropriations

The Directors recommend a dividend of 5% on equity shares.

Subsidiary, Associate and Related Party Transactions

Information on subsidiary companies, related party disclosures and other compliances.

Risk Management

Details on Exchange's approach to Risk management

Directors' Responsibility Statement

The Directors confirm responsibility for financial statement preparation, accounting standards compliance, and internal controls.

Auditors

Details of statutory, secretarial and cost auditors, as well as qualifications/reservations in their reports.

Capital Structure

Details of share capital, member details.

Awards & Recognition

The Exchange received four technology awards and the prestigious Golden Peacock award.

Key Developments

Highlights initiatives to promote financial inclusion for farmers and Farmer Producer Organizations.

Operational and Financial Highlights

• Total comprehensive loss of ₹1,417 Lakhs for FY22.
• Total income was ₹8,060 Lakhs (27% increase y-o-y).
• Total expenses: ₹9,916 Lakhs.
• Average Daily Traded Value (ADTV): ₹1,851 Crore (47% increase).
• Total number of FPOs on boarded for price risk management in Exchange platform is 405.
• The highest turnover achieved in a day during FY 2021-22 was ₹3,730 Crores.
• Total number of Trades is 7,369,902 and Traded Quantity is 9,832,463 Mts

Cautionary Notes and Risk Management Report makes clear that the Exchange is exposed to a variety of risks, including market and credit risk. The Company highlights also potential fluctuations to future earnings based on market conditions..

Corporate Governance Report

Details on corporate governance practices, board composition, committee structure, and compliance. In relation to Independent Directors, the code followed includes: • Formulation of the criteria for determining qualifications • To devise a policy on diversity of board of directors • To lay down policy for compensation of KMP in accordance with SEBI guidelines The report also details about a Risk Oversight Committee.. and that the Exchange complies with all applicable Secretarial Standards.

Financial Statements (Standalone and Consolidated)

Detailed financial statements for the year ended March 31, 2022, including the balance sheet, statement of profit and loss, statement of changes in equity, and statement of cash flow, along with notes to the financial statements. This includes a note about related party transactions and the statement of loans, guarantees or investments

This summary is intended to provide a high-level overview of the report's contents. Please refer to the full text for specific details and figures.