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**Independent Auditor's Report and Consolidated Financial Results**
Khandelwal Jain & Co., Chartered Accountants, issued an Independent Auditor's Report on the annual audited consolidated financial results of National Commodity & Derivatives Exchange Limited (NCDEX) and its subsidiaries for the quarter and year ended March 31, 2024. The report adheres to Regulation 33 of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, read with Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended.
**Opinion**
The auditor provides an opinion on the consolidated financial results of NCDEX ("the Parent") and its subsidiaries ("the Group") and its share of net profit/(loss) after tax and total comprehensive income of associate and jointly controlled entities for the quarter and year ended March 31, 2024, along with the statement of cash flow for the year and the statement of assets and liabilities on that date.
The financial results include:
* National Commodity & Derivatives Exchange Limited (NCDEX) as the Parent
* Subsidiaries: National Commodity Clearing Limited (NCCL), National e-Repository Limited (NERL), NCDEX Institute of Commodity Markets and Research (NICR), and NCDEX e-Markets Limited (NEML)
* Joint Ventures of NEML: Rashtriya e-Market Services Private Limited (ReMS) and Meta Materials Circular Markets Private Limited
* Associate: Power Exchange India Limited (PXIL)
**Basis of Opinion**
The audit was conducted in accordance with the Standards on Auditing ("SA"s) specified under Section 143(10) of the Companies Act, 2013. The auditor believes that the audit evidence obtained is sufficient and appropriate to provide a basis for the audit opinion.
**Emphasis of Matter**
Attention is drawn to Note 3 regarding matters relating to pepper contracts. The Holding Company had paid Rs. 1,696 lakhs (net of recovery of Rs. 9 lakhs till March 31, 2024) in earlier years towards cleaning of pepper stock in warehouses and related costs. The Hon'ble High Court of Kerala allowed the Holding Company to clean the pepper stock with the right to recover these costs. An interim order dated April 13, 2018, restricts the Exchange from taking coercive actions against the holder. Management believes there is a fair chance of recovery due to court orders and considers the receivable good, with an existing provision of Rs. 260 lakhs for pepper-cleaning costs.
Note 10 addresses the recognition of net deferred tax assets of Rs. 5,186 lakh as at March 31, 2024, based on future taxable profits and the approved business plan.
Note 8 highlights the suspension on the launch of new contracts and fresh positions of major commodities between August 17, 2021, and December 20, 2024. Management believes that there is no impact on the carrying value of its assets, no material uncertainty exists, and the financial statements have been prepared based on the going concern assumption.
Note 17 references an Emphasis of Matter paragraph in the Independent Auditor's Report for NCDEX e Markets Limited (NEML), regarding an order received from the Director General of GST Investigation (DGGSTI) Delhi North for alleged non-payment/short payment of Tax Collected at Source (TCS) on Goods and Service tax (GST). Management is confident of a favorable outcome.
**Management's Responsibility**
The Board of Directors is responsible for the preparation and presentation of the Consolidated Financial Results in accordance with applicable accounting standards and in compliance with Regulation 33 of the Listing Regulations, 2015 and SECC Regulations.
**Auditor's Responsibility**
The auditor's objectives include obtaining reasonable assurance about whether the Consolidated Financial Results are free from material misstatement and issuing an auditor's report.
**Other Matters**
The auditor did not audit the consolidated financial statements of certain subsidiaries and a jointly controlled entity. Reliance is placed on other auditors' reports or unaudited information, where applicable. Specifically:
* Unaudited consolidated financial statements of a subsidiary reflect total assets of Rs. 16,796 lakhs and net assets of Rs. 6,328 lakhs as at March 31, 2024. The auditor relied on the report of other auditors.
* Unaudited consolidated financial statements of another subsidiary reflect total assets of Rs. 55 lakhs and net assets of Rs. 34 lakhs as at March 31, 2024. The auditor relied on the report of other auditors.
* The consolidated financial results include the Group's share of net profit after tax of Rs. 233 lakhs and Rs. 766 lakhs for the quarter and year ended March 31, 2024, respectively, for one associate company based on the report of other auditors.
* In the opinion of ReMS, GST is not applicable on the transaction charges billed by ReMS, resulting in a potential impact of Rs. 9 lakhs and Rs. 25 lakhs on the consolidated financial results for the quarter and year ended March 31, 2024, respectively.
The statement includes consolidated financial results for the quarter ended March 31, 2024, being the balancing figure. The report has been prepared for complying with Regulation 33 of Securities Contracts (Regulation) (Stock Exchange and Clearing Corporations) Regulations, 2012.
**Financial Results Summary (Consolidated)**
* **Total Income:** Rs. 3,392 Lakhs (Quarter ended March 31, 2024) and Rs. 13,600 Lakhs (Year ended March 31, 2024)
* **Total Expenses:** Rs. 4,669 Lakhs (Quarter ended March 31, 2024) and Rs. 18,716 Lakhs (Year ended March 31, 2024)
* **Loss before Tax:** (Rs. 90 Lakhs) (Quarter ended March 31, 2024) and (Rs. 3,320 Lakhs) (Year ended March 31, 2024)
* **Loss after Tax:** (Rs. 274 Lakhs) (Quarter ended March 31, 2024) and (Rs. 2,770 Lakhs) (Year ended March 31, 2024)
* **Earnings Per Share:** (Rs. 0.45) (Quarter ended March 31, 2024) and (Rs. 5.14) (Year ended March 31, 2024)
* Total Assets: 84,087 lakhs
* Total Equity: 47,597 lakhs
**Other Key Points**
* Pepper stock issues with warehouses being sealed and potential recovery of cleaning costs.
* WDRA has granted an extension of time to the Exchange for a period of six months from December 22, 2023 to reduce its shareholding in NERL to 51% or below.
* Suspension of fresh positions and new contracts in certain commodities impacting revenue.
* Capital raising expenses written off and recovery of pre-incorporation expense of JV.
* Board has approved the offer of 1,89,76,358 equity shares of the Exchange having face value of Rs. 10/- each at a price of Rs. 160.60 per equity share on a preferential basis/private placement for cash to identified institutional shareholders of the Exchange
* The group continues to recognize and carries net deferred tax assets of Rs. 5,186 lakh on account of business losses and unabsorbed depreciation
**Segment Reporting**
The company identifies and discloses the following operating segments: Commodity Exchange Services, Commodity Clearing Services, Repository Services, Research and Education Services, E-Market Service, Software Service, Corporate Buying/Trade Finance, Unallocable. Details on revenue, expenses, assets, and liabilities for each segment are provided.
The report is signed by Narendra Kumar R Rajkumar Jain, Partner, Membership No. 048725, and dated May 24, 2024, Mumbai. The financial results are approved by the Board of Directors and reviewed by the Audit Committee.
