Event Date: August 8, 2024
The document is an Independent Auditor's Review Report on the Consolidated Unaudited Financial Results of the National Commodity & Derivatives Exchange Limited (NCDEX) and its subsidiaries (the Group) for the quarter ended June 30, 2024. This report adheres to Regulation 33(1) of the Securities Contracts (Regulation) Regulations, 2018, in conjunction with Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended. Khandelwal Jain & Co., Chartered Accountants, conducted the review and presented their findings.
Introduction: The reviewed statement encompasses the consolidated unaudited financial results of NCDEX ("the Parent" or "the Holding Company") and its subsidiaries. It includes the share of net profit after tax and total comprehensive income of its Associate and Joint Ventures for the quarter ended June 30, 2024. The statement was prepared by the Parent's Management, approved by its Board of Directors, and complies with Indian Accounting Standard 34 ("Ind AS 34") and other recognized accounting principles generally accepted in India.
Scope of Review: The review was performed according to the Standard on Review Engagements (SRE) 2410, which requires planning and execution to obtain moderate assurance that the Statement is free of material misstatement. It involves inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. The review is substantially less in scope than an audit and does not enable the expression of an audit opinion. Procedures were also conducted in accordance with SEBI circulars under Regulation 33(8).
Entities Included: The consolidated financial results incorporate the unaudited results of the following entities:
Conclusion: Based on the review and procedures performed, and considering the review reports of other auditors, nothing came to the auditor's attention that would cause them to believe that the accompanying Statement does not comply with Regulation 33 of the SECC Regulations read with Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, or that it contains any material misstatement.
Emphasis of Matter: The report highlights a matter relating to future contracts of pepper, where the Holding Company paid Rs. 1,696 lakhs in earlier years for cleaning pepper stock in warehouses and other costs. These payments are considered receivable. While the High Court of Kerala has allowed the Holding Company to clean the stock and recover costs, an interim order restricts the Exchange from taking coercive actions against holders. Management believes it has a fair chance of recovery due to court orders and considers the receivable good and recoverable, with a provision of Rs. 260 lakhs already made. The auditor's conclusion is not modified in respect of this matter.
Other Emphasis Items from the Consolidated Unaudited Financial Results:
Sale of PXIL Stake: The sale of 8.87% stake in Power Exchange India Limited (PXIL) for Rs. 5,656 lakhs, resulting in a profit of Rs. 4,766 lakhs, is shown as an exceptional item.
NERL Shareholding: The Company continues to hold 67.22% of NERL's paid-up share capital, exceeding the 51% or less stipulated by the Warehousing Development and Regulatory Authority (WDRA).
Suspension of New Contracts: Suspension on launch of new contracts and no fresh positions of major commodities from August 17, 2021 to December 20, 2024, resulted in losses and reduced net worth. However, management believes the holding company maintains net worth, is capable of meeting current liabilities, and there is no impact on the carrying value of its assets.
Deferred Tax Assets: The holding company continues to recognize net deferred tax assets of Rs. 4,074 lakhs based on future taxable profits.
NEML's GST Investigation: Reference is made to an Emphasis of Matter paragraph in the Independent Auditor's Review Report of NCDEX e Markets Limited (NEML) regarding an order received from the Director General of GST Investigation (DGGSTI) Delhi North for alleged non-payment of Tax Collected at Source (TCS) on GST. Management is confident of a favorable outcome based on legal assessment.
Unaudited Financial Results of Subsidiaries: One subsidiary's consolidated unaudited financial results show revenues of Rs. 767.93 lakhs, a loss after tax of Rs. 425.78 lakhs, and a total comprehensive loss of Rs. 430.71 lakhs. The auditor's conclusion on the statement is based on the report of other auditors. Two Joint Venture Companies of this subsidiary had losses, but these are not material.
One subsidiary's unaudited financial results reflect total revenues of Rs. 19.73 lakhs, profit after tax of Rs. 1.08 lakhs and total comprehensive income of Rs. 1.08 lakhs. This subsidiary's results are not material.
GST on ReMS Transactions: In respect of Rashtriya e-Market Services Private Limited (ReMS), goods and services tax ('GST') is not applicable on the transaction charges billed by ReMS. The financial impact, if any, due to applicability of GST on profit for the quarter ended June 30, 2024, of jointly controlled entity is Rs. 20.46 lakhs. The financial impact on the Consolidated Unaudited Financial Results is Rs. 10.23 lakhs (50% of 20.46 lakhs). The cumulative financial impact as on June 30, 2024, if any, is Rs. 967.02 lakhs (50% of Rs 1,934.04 lakhs).
Share of Profit from Associate: The Group's share of net profit after tax and total comprehensive income from one Associate Company are Rs. 311 lakhs and Rs. 310 lakhs, respectively.
Consolidated Unaudited Financial Results: The Statement includes the Consolidated Unaudited Financial Results for the quarter ended March 31, 2024, being the balancing figure between audited figures in respect of full financial year ended March 31, 2024 and the Consolidated Unaudited Financial Results for nine months period ended December 31, 2023 which were subject to limited review.
The auditor's conclusion is not modified in respect of any of the aforementioned matters.
Financial Results Summary (Consolidated Unaudited):
Other Key Points:
The report, signed by Narendra Jain, Partner, Khandelwal Jain & Co., Chartered Accountants, and dated August 08, 2024, also includes segment information, including revenues, profit/loss, assets, and liabilities for various business segments of the NCDEX group. The Managing Director & Chief Executive Officer (Arun Raste) of NCDEX has authorized the report's issue.
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