National Commodity & Derivatives Exchange Shares

Annual Report Summary

The NCDEX (National Commodity & Derivatives Exchange Limited) Annual Report 2022-23 highlights the performance and activities of the exchange, focusing on building an inclusive commodity ecosystem.

Corporate Overview:

• Financial Performance: The report presents both standalone and consolidated financial results for FY 2022-23. The Exchange's standalone total income decreased by 39% to ₹4,884 Lakhs, while total expenses increased by 4% to ₹10,302 Lakhs. The NCDEX Group's consolidated total income decreased by 12% to ₹13,557 Lakhs, and total expenses increased by 11% to ₹19,624 Lakhs. The average daily traded value (ADTV) decreased to ₹834 Crores, and profit/loss after tax resulted in a loss of ₹4,445 Lakhs standalone and a loss of ₹4,237 Lakhs consolidated.
• Commodity Derivatives: NCDEX maintained its leadership in the Agri derivatives ecosystem, increasing its share in Agri commodity derivatives to 97% from 86% in the last financial year. The exchange has a 6% increase in average daily open interest (ADOI) from ₹1,947 Crores to ₹2,069 Crores.
• Commodity Trading Statistics: The Exchange offered trading in 23 agricultural commodities and 1 non-agri commodity with 6 options in agricultural commodities as of March 31, 2023. The top five traded commodities were Guar Seed, Guar Gum, Cotton Cake, Jeera, and Castor Seed.
• Membership: NCDEX had 309 members, 3,611 terminals, and a client base of 5,368,028 million.
• FPO Engagement: NCDEX onboarded 95 new Farmer Producer Organizations (FPOs), bringing the total to 500 FPOs from 16 states, representing over 10,67,700 farmers. 39 FPOs from seven states hedged eight commodities with a cumulative volume of 13,114 metric tons. 15 FPOs made delivery in five commodities for a volume of 1,295 MT. 166 FPOs have traded in 18 commodities and hedged about 1,19,690 Lakh tons of their produce since 2016.
• Physical Settlement: NCDEX facilitated physical settlement for BIS grade Steel and had flawless physical settlements of contracts with no delivery concerns in the last financial year.
• Innovation and Product Offerings: The exchange forayed into non-Agri space by launching Steel Futures and focused on developing products like Isabgol, Groundnut, Rubber, and Carbon Credits.

MD & CEO's Message:

• The message emphasizes the commitment to innovation, exploring new avenues, and leveraging emerging technologies to redefine commodity trading. Despite challenges like contract suspensions and global uncertainties, NCDEX focused on empowering farmers, strengthening industry connections, and advocating for commodity derivatives.

Strategic Initiatives & Updates:

• Policy Advocacy: NCDEX engaged with relevant ministries, creating awareness and connecting with stakeholders through research-backed and value-added engagements.
• Farmer Empowerment: The exchange worked with agriculture universities, financial institutions, and government departments to connect with 1,300 new FPOs, marking a milestone by connecting 500+ FPOs to commodity derivatives. NCDEX is exploring opportunities to manage e-commodity price risk using put options supported by SEBI.
• Technology Updates: The trading system uptime was 100%. BCP/DR capabilities were strengthened to restore operations from the Disaster Recovery site within 35 minutes.
• Digitization: Introduced NEST, a user-friendly application for investor grievances, and a digitized process for member documentation.
• Awards and Recognition: Won several awards for technology innovation and HR excellence.

Subsidiaries and Associate Companies:

• NCDEX e Markets Limited (NeML): NeML is engaged with State and Central Government organizations for procurement and disposal remits, and NeML has also identified ESG as a key driver of its growth for the future.
• National Commodity Clearing Limited (NCCL): A summary of trading, settlement and collaterals processed during the FY 2022-23 is given.
• NCDEX Institute of Commodity Markets and Research (NICR): NICR realigned its focus on Consultancy, Research, and Education & Awareness.
• Rashtriya e Market Services Private Limited ('ReMS'): ReMS has progressively introduced its UMP in 162 regulated markets in the State of Karnataka for competitive price discovery of the produce brought by farmers in to markets.
• Power Exchange India Limited ('PXIL'): PXIL is one of the three power exchanges operating in the country and total market share of PXIL was 9.38%.

Corporate Governance and Compliance:

• The report includes details on the Board of Directors, Board Committees, meetings held, and compliance with various regulations (Companies Act, SECC Regulations, Listing Regulations).
• Auditors: Khandelwal Jain & Co. were appointed as Statutory Auditors, and Makarand M. Joshi & Co. served as Secretarial Auditor. Compliance with Secretarial Standards was maintained.
• The Exchange has in place a Nomination and Remuneration Policy. The policy deals with matters like Directors' appointment and their remuneration, criteria for determining qualifications, positive attributes and independence of director, remuneration of Key Managerial Personnel and other employees.
• The Authorized Share Capital of the Exchange is ₹70,00,00,000, comprising: 7,00,00,000 equity shares of ₹10/- each. The Issued, Subscribed and Paid-up Capital.

Financial Statements Analysis:

• A detailed breakdown of the Standalone Balance Sheet and Statement of Profit and Loss for FY 2022-23 is provided with comparative figures from FY 2021-22.

This summary provides a comprehensive overview of NCDEX's performance, strategies, and future outlook, highlighting its role in promoting commodity derivatives and empowering stakeholders within the Indian agricultural ecosystem.