CONTENTS ANNUAL REPORT INDIA Message from the Managing Director & CEO Exchange Information Directors Report...

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3 INDIA 2012 CONTENTS ANNUAL REPORT Message from the Managing Director & CEO... 3 Exchange Information... 5 Directors Report Report on Corporate Governance Management Discussion & Analysis Auditors Report Balance Sheet Profit & Loss Account Cash Flow Statements Significant Account Policies and Notes to Accounts Statement Pursuant to Section 212 of the Companies Act, Reports and Financials of Subsidiaries

4 INDIA 2012 TRIGGERING INCLUSIVE GROWTH FOR OVERALL DEVELOPMENT.

5 MESSAGE FROM MD & CEO R. Ramaseshan Managing Director & CEO Dear Shareholders, The year has been a milestone year for your Exchange. We clocked an all time high Average Daily Traded Value (ADTV) figure of ` 6, crore during the year, resulting in a total turnover of ` 1,810,210 crore, the highest since inception. The revenue for the fiscal year grew by 16.3 per cent to ` 13,859 lakh, driven by increased participation. The net profits grew by 13.3 per cent to ` 3,536 lakh, though the transaction charges were rationalized to benefit smaller members and increase participation. While this can be satisfying, the external environment continues to be challenging. Perception amongst policy makers and opinion leaders continues to be, at best, non committal. While one may feel that price discovery and price hedging are critical and towards that end the Exchange has made its mark in the value chain, the key in addressing this perception amongst stakeholders is to make the Exchange and trading on its platform relevant and significant to the real economy; and our journey is no different than other economies that have passed through this phase. The much expected amendment to the Forward Markets (Regulation) Act, 1952 could help the process, but cannot be a substitute to it. We do hope that this critical Bill will get the nod of the Parliament at the earliest, paving the way for a more diversified product portfolio and a strengthened regulatory regime. I take this occasion to thank all shareholders for their support and commitment to the Exchange. It is the support of the shareholders that has helped your Exchange to rise up to the challenges and carve a niche for itself. And I look forward to your continued support as your Exchange embarks on its next phase of its growth journey. R. Ramaseshan Managing Director & CEO

6 INDIA 2012 MAKING THE SON OF SOIL THE TRUE HEIR TO ITS PROSPERITY.

7 Company Information Board of Directors Company Secretary Auditors Bankers Registered Office Corporate Office Branch Offices Registrar and Share Transfer Agents Present Directors Mr. M. Raman : FMC Nominee Director Ms. Nutan Raj : FMC Nominee Director Mr. Rabi Narayan Das : FMC Nominee Director Mr. Y. S. P. Thorat : FMC Nominee Director Mr. Sanjiv Batra : Independent Director Mr. Gaurav Arora : Shareholder Nominee Director Mr. Narendra Murkumbi : Shareholder Nominee Director Mr. Rakesh Kapur : Shareholder Nominee Director Mr. Ravi Narain : Shareholder Nominee Director Mr. Samir K. Mitter : Shareholder Nominee Director Mr. Subir K. Mitra : Shareholder Nominee Director Mr. R. Ramaseshan : Managing Director & CEO Erstwhile Directors Ms. K. S. Uma (upto April 11, 2011) Mr. Umesh Chandra Sarangi (upto June 7, 2011) Mr. V. K. Kukreja (upto August 8, 2011) Mr. V. K. Aggarwal (upto March 31, 2012) Mr. O. P. Gahrotra (upto March 31, 2012) Mr. V. C. Chaturvedi (upto April 1, 2012) Mr. M. K. Ananda Kumar M/s. S. R. Batliboi & Co., Chartered Accountants 6th Floor, Express Towers, Nariman Point, Mumbai Axis Bank Limited Bank of India Canara Bank Development Credit Bank Dhanalaxmi Bank Limited HDFC Bank Limited ICICI Bank Limited IndusInd Bank Limited Karur Vysya Bank Limited Kotak Mahindra Bank Limited Punjab National Bank Tamilnad Mercantile Bank Limited Yes Bank Limited First Floor, Ackruti Corporate Park, Near G. E. Garden, L. B. S. Road, Kanjurmarg West, Mumbai First Floor, Gayathri Towers, 954 Appasaheb Marathe Marg, Prabhadevi, Mumbai Ahmedabad: 502, Kaivanna Building, Near Panchvati Circle, Central Mall, Ambavadi, Ahmedabad Hyderabad: 606, Saptagiri Tower, Begumpet, Hyderabad , Andhra Pradesh Indore: Fourth Floor, Gold Arcade, Pent House, New Palasia Road No.1, Opposite Curve Well Hospital, Indore Jaipur: Fourth Floor, Geetanjali Towers, Bombay Walon Ka Bagh, Ajmer Road, Jaipur Kolkata: Geetanjali Apartments, Unit No.1E, First Floor, 8B Middleton Street, Kolkata Mumbai: Unit no. 9 to 13, Kailash Commercial Complex, 1st Floor, L. B. S. Marg, Vikhroli (West), Mumbai New Delhi: Second Floor, Jeevan Vihar, 3 Sansad Marg, Parliament Street, New Delhi i Infotech Limited Tower # 5, 3rd to 6th Floors, International Infotech Park, Vashi, Navi Mumbai, PIN: th ANNUAL REPORT

8 INDIA 2012 ENABLING FARMERS TO EARN THEIR TRUE WORTH

9 Directors Report Dear Shareholders, Your Directors have pleasure in presenting the Ninth Annual Report of the Exchange together with the audited accounts for the financial year ended March 31, Performance Your Exchange has witnessed improved performance during the financial year, both in terms of trading volumes and growth in volumes of certain commodities traded on the Exchange platform. During the year, the Exchange recorded the highest ever yearly Average Daily Traded Value ( ADTV ) at Rs crores. Further, breaking the previous record, the turnover on a single day crossed Rs. 11,000 crores. The summary of financial performance of the Exchange for the year ended March 31, 2012 is as under: For the year ended March 31, 2012 (Rupees in Lacs) For the year ended March 31, 2011 Total income 13,859 11,920 Total Expenditure 9,584 8,387 Profit before taxation 4,275 3,533 Profit after taxation 3,536 3,120 Dividend on Preference Shares NIL 15 Dividend on Equity Shares 608* 557 Corporate dividend tax Transfer to General Reserve Balance carried forward 10,285 7,546 * Proposed dividend The Exchange had halved its transaction fee in May 2011 as a conscious strategy to attract higher trading volume in non agricultural contracts, which explains a lower than proportionate increase in transaction revenue and the consequent profit before taxes. Review of Operations Highlights Increase in trading volume by almost 29 per cent as compared to the previous year. Recorded the highest ever trading volume of Rs. 11,291 crores on January 3, Highest ever total turnover of Rs. 18,10,210 crore (one-way) during the financial year Soya oil, guar seed, chana, rape mustard seed and soyabean remained top volume contributors by contributing to per cent of the total turnover of the Exchange. The ADTV for the year was Rs. 6,034 crore, as compared to ATDV of Rs. 4,686 crore during the previous year. 9th ANNUAL REPORT

10 Directors Report Trading Volumes and Contracts The ADTV on a quarter-to-quarter basis during the year as compared to the previous year was as under: Quarter ADTV Financial Year (Rupees in crore) ADTV Financial Year April June 4,715 2,628 July September 6,549 3,978 October December 5,878 5,107 January March 6,969 7,024 ADTV 6,034 4,686 As of March 31, 2012, the Exchange offered 32 contracts comprising 21 agricultural commodities, 6 in bullion, 2 in metals, 2 in energy and 1 polymer (PVC) contract. Product and Business Development The year witnessed robust trading in oil and oilseeds complex with soyabean, refined soya oil and rape mustard seed reporting a significant growth, essentially due to higher hedging interest and wider participation. Easing the hedge documentation process for large processors contributed to the increased open interest, which triggered and sustained the higher trading interest. Refined soya oil become the flagship product of the Exchange, clocking a total volume of about 620 lakh tonnes valued at Rs. 4,15,762 crores. This contract also recorded the highest daily turnover of Rs. 4,201 crores on January 3, As a component of the oil and oil seeds complex, rape mustard seed also exhibited a remarkable increase in trading and clocked its highest volume of Rs. 2,831 crores on February 27, Trading interest in Soyabean increased during the year and the contract recorded the highest trading volume of Rs. 1,687 crores on March 30, Revision in the specifications of this contract to encourage deliveries resulted in an impressive jump in the quantity delivered in the Exchange. The Exchange witnessed a near total hold on the open interest and trading volume of castor seed and cottonseed oilcake. Liquidity and participation in these contracts increased substantially during the year, primarily due to emphasis on the quality of the stocks deposited in accredited warehouses and smoothening the delivery process. In the spices complex, liquidity in the coriander contract improved and the ADTV increased at an astounding 214 per cent to Rs crores. In the grains complex, Chana emerged as the major commodity traded on the Exchange platform, with a significant increase in both open interest and turnover. The guar complex, namely guar seed and guar gum, attracted attention in the latter half of the year. A strong demand due to a spurt in drilling for oil and gas, resulted in increased exports of guar gum, causing a significant increase in the price of both guar and guar gum in the physical 8 9th ANNUAL REPORT

11 Directors Report market. These contracts attracted a lot of trading interest and due to inadequate availability of goods in the physical market, the Exchange closed trading in these contracts in March, 2012, as advised by the Forward Markets Commission ( FMC ). Crude oil continued as major non agricultural commodity traded on the Exchange. On metals front, steel was the main contributory. Other liquid non agricultural commodities include copper, gold and silver. Membership As on March 31, 2012, there were 844 members registered with the Exchange. The members spread across the length and breadth of the country, including small towns and villages. Technology During the year, the Exchange successfully migrated its trading system from an old PA-RISC processor based hardware platform to a modern Intel-based hardware platform. As a result, the capacity of the Exchange to handle incoming orders has increased by over three fold. The Exchange commenced its Point-to-Point 2Mbps service to connect to the trading system. This has helped members to upgrade their existing network connections from 64Kbps to 2Mbps, thereby providing better bandwidth and lower latency, apart from addressing the poor connection quality problem. As part of its efforts to improve the quality of its network, the Exchange has done away with its Points-of-Presence (PoPs) at New Delhi and Kolkata and shifted these network connections to MPLS or leased lines as may be chosen by members. With this, the Exchange offers a truly vendor neutral network connectivity to its members. Customer Service The Customer Service Group conducted several operational and compliance training programmes for the benefit of members at important locations to sensitise members on compliance related matters. This also created a platform for members to provide feedback on the issues faced by them while dealing with the Exchange. Arbitration To facilitate faster resolution of the disputes between members and their clients or members and members inter se in a judicious manner, the Exchange has set up arbitration facility in accordance with its regulations. The Exchange provides required administrative support to the arbitration panels. The speed and quality of support provided by the Exchange had been well appreciated by empanelled arbitrators and also by the parties using the arbitration mechanism. Human Resources The Exchange is as good as the employees working in it. Recruiting the best available talent, retaining them and ensuring their development is a major challenge in the present business environment. The Exchange has been able to meet this challenge effectively. Total number of employees on roll as on March 31, 2012 stood at 177, duly supported by 62 9th ANNUAL REPORT

12 Directors Report outsourced employees. Employee attrition during the year was at overall 23 per cent as compared to 26 per cent in the previous financial year. The Exchange maintains very cordial relations with all its employees. Dividend and Appropriations For the financial year ended March 31, 2012, your Directors have pleasure in recommending a dividend of 12 per cent on the equity shares issued by the Exchange. Dividend on equity shares, when approved by the shareholders would amount to Rs crore (exclusive of Corporate Dividend Tax). After appropriation of the dividend and transfer to reserves, the balance of Rs crore is carried forward in the books. Future Outlook Notwithstanding the emerging challenges due to the global slowdown and the policy glare arising out of the sensitivities in handling agricultural commodities, the Exchange is confident about retaining its dominant position in trading in agricultural commodities in the coming years. The Exchange has also initiated action to make a foray in select non agricultural commodities in the ensuing financial year. Share Capital As on March 31,2012, the total paid-up equity share capital of the Exchange stood at Rs.50,67,60,000/-. The details of the share capital are furnished as under: Authorised Capital : Rs. 70,00,00,000/- comprising - 6,00,00,000 equity shares of Rs. 10/- each, aggregating Rs. 60,00,00,000/- 1,00,00,000 preference shares of Rs. 10/- each, aggregating Rs. 10,00,00,000/- Paid-up Capital : 5,06,76,000 equity shares of Rs. 10/- each, aggregating Rs. 50,67,60,000/- Public Deposits The Exchange has not accepted any public deposits and, as such, no amount towards repayment of principal or payment of interest was outstanding as on March 31, Details of meeting of Shareholders The Eighth Annual General Meeting of the Exchange was held on June 30, It is proposed to hold the Ninth Annual General Meeting of the Exchange on Monday, September 3, 2012 at 11:30 a.m., in Mumbai. Statutory Auditors M/s. S. R. Batliboi & Co., Chartered Accountants, are the Statutory Auditors of the Exchange for the financial year They hold office until the conclusion of the ensuing Ninth Annual General Meeting and are eligible for reappointment. 10 9th ANNUAL REPORT

13 Directors Report Conservation of energy, Technology Absorption, & Foreign Exchange Earning and Outgoings Since the Exchange does not have any manufacturing activity, disclosure of information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 regarding conservation of energy and technology absorption is not applicable. During the year under review, the Exchange did not have any foreign exchange inflow. There has been foreign exchange outgo to the extent of Rs. 102 Lacs on account of professional consultancy charges, traveling, other expenses and dividend. Particulars of employees required to be furnished under Companies (Particulars of Employees) Amendment Rules, 2011 Detailed information pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Amendment Rules, 2011, and under Section 217(1)(e) of the said Act, read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 to the extent applicable are set out hereto. Information required to be furnished pursuant to Section 9(2) of Forward Contracts (Regulation) Act, 1952 read with Rule 12 of the Forward Contracts (Regulation) Rules, Detailed information pursuant to Section 9(2) of Forward Contracts (Regulation) Act, 1952 read with Rule 12 of the Forward Contracts (Regulation) Rules, 1954 is enclosed as Annexure I. Directors Mr. Ravi Narain and Mr. V. K. Kukreja, Directors, retired by rotation at the previous Annual General Meeting held on June 30, 2011 and were re-appointed. In terms of the provisions of Forward Contracts (Regulation) Act, 1952, FMC, during the year nominated Mr. V. C. Chaturvedi in place of Ms. K. S. Uma, on the Board of the Exchange with effect from April 11, Thereafter Ms. Nutan Raj was nominated with effect from April 2, 2012 in place of Mr. V. C. Chaturvedi. Further, in terms of the Forward Contracts (Regulation) Act, 1952, FMC appointed Mr. M. Raman as Director on the Board representing FMC with effect from October 24, The FMC also appointed Mr. Rabi Narayan Das and Mr. Y. S. P. Thorat, on the Board of the Exchange with effect from April 25, 2012 and June 5, 2012 respectively. During the year, Mr. R. Ramaseshan, Managing Director & CEO of the Exchange was re-appointed as Managing Director & CEO for a period of three years with effect from April 29, The tenures of Mr. V. K. Aggarwal and Mr. O. P. Gahrotra expired during the year and they demitted office as directors on the Board on March 31, The Board wishes to place on record its sincere appreciation for the valuable advice, guidance and services rendered by the outgoing directors. 9th ANNUAL REPORT

14 Directors Report Mr. Subir K. Mitra joined the Board as a representative director of National Bank for Agricultural and Rural Development with effect from January 6, Further, Mr. Samir K. Mitter joined the Board as a representative director of Life Insurance Corporation of India with effect from January 13, The Exchange has received a notice in writing for the election of Mr. Samir K. Mitter, who was appointed as additional director, for election on the Board of the Exchange as a director whose term of office will be liable to retire by rotation. Pursuant to the provisions of Section 255 and 256 of the Companies Act, 1956, Mr. Rakesh Kapur and Mr. Narendra Murkumbi will be retiring by rotation at the ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment as directors at that meeting. The directors recommend the names of Mr. Rakesh Kapur and Mr. Narendra Murkumbi for reappointment as directors of the Exchange. Subsidiary Companies NCDEX Spot Exchange Limited ( NSPOT ) The year witnessed increased trading in NSPOT. The Mandi modernization programme, initially started in Gulbarga district of Karnataka gained momentum. Over 5.50 lakh MT of Tur and 1.20 lakh MT of Chana valued at over Rs. 250 crores brought to the market by farmers have been auctioned through the NSPOT s platform, giving an average of 500 MT of Tur and 100 MT of Chana every day. The system is very closely aligned to the physical auction that was in vogue, due to which all participants in the market have easily adapted to the process. NSPOT submitted a more ambitious plan to the government to expand this across the state and the budget for the year has made specific references to the plan of NSPOT. Encouraged by the acceptance, NSPOT has initiated preliminary discussions with Rajasthan and Maharashtra, which in course of time would cover other states as well. Procurement for public agencies was another new initiative in the year. Tur dal (and later palm oil) for the midday meal scheme, hitherto being procured through the traditional tender process was brought in under the reverse auction platform, resulting in substantial savings to the government. For the first time, quality sampling was introduced. A similar process for Gujarat is expected to commence shortly. NSPOT intends to expand this across the country gradually. Pledge finance for farmers and traders, contracts aligned to NCDEX quality specifications and direct buying from farmers, to name a few were some new concepts introduced on an experimental basis during the year. Coming years would witness business expand on these fronts. Traded value of agri commodities on NSPOT were Rs. 52,231 Lacs for the F.Y as compared to Rs. 31,922 Lacs for the F.Y During the year NSPOT has launched 62 New Agricultural contracts and the transaction charges have risen from Rs Lakhs in the F.Y to Rs Lakhs in the F.Y th ANNUAL REPORT

15 Directors Report A preliminary effort to increase the paid up capital commenced during the year. This is necessary to garner resources for the expansion plans of the NSPOT and to have a more diversified shareholder base. M/s. Frontier Growth Advisors Private Limited have been retained for this purpose and the exercise would be completed in the ensuing year. NCDEX Institute of Commodity Markets & Research ( NICR ) NICR is a wholly owned subsidiary of the Exchange. Being a company licensed under Section 25 of the Companies Act, 1956, NICR is dedicated to promoting research and awareness in commodity markets. During the year, NICR entered into two tie-up arrangements, one with Factiva, a Dow Jones Company ( Factiva ) and the other with Indian Institute of Financial Markets ( IIFM ). The Memorandum of Understanding with Factiva, permits Factiva to distribute daily, weekly, monthly and occasional research reports of the Exchange to all subscribers of Factiva positioned world-wide. Research reports brought out by the Exchange are being accessed and read by more than 1 million subscribers of Factiva which will assist in brand building of the Institute. NICR and IIFM have jointly developed a course on financial markets named as Gold at 18, targeted at students who wish to pursue career in commodity markets. The NCDEX Commodity Certification is an integral part of the course, which contains two modules covering subjects like macroeconomics, basics of markets, fundamental and technical analysis, futures and options, market psychology, trading strategies and the like. At present, the course is made available in Mumbai and Delhi and IIFM is actively involved in the marketing of the course. Directors Responsibility Statement Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors Responsibility Statement, it is hereby confirmed: i. that in the preparation of accounts for the financial year ended March 31, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii. iii. that the directors have selected such accounting policies and applied them consistently and made judgement and estimates that were responsible and prudent so as to give a true and fair view of the state of affairs of the Exchange at the end of the financial year and of the profit of the Company for the year under review; that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Exchange and for preventing and detecting fraud and other irregularities; iv. that the Directors have prepared the accounts for the financial year ended March 31, 2012 on a going concern basis. 9th ANNUAL REPORT

16 Directors Report Acknowledgements Your Directors express their gratitude for the support and advice received from FMC, Ministry of Consumer Affairs, Food and Public Distribution and other ministries of the Government of India and various state governments. The Directors gratefully acknowledge the support provided by software and hardware support providers, bankers to the Exchange, the clearing and settlement banks, warehouse service providers, depository participants, grading and assaying agencies, the media, both print and visual, and all other service providers, the Exchange has been working with. The Directors also acknowledge the immense contribution made by the employees of the Exchange for its continued growth and progress. By order of the Board of Directors, Place : Mumbai Date : June 22, 2012 R. Ramaseshan Rakesh Kapur Managing Director & CEO Director 14 9th ANNUAL REPORT

17 Annexure I to Directors Report Information required to be furnished pursuant to Section 9(2) of Forward Contracts (Regulation) Act, 1952 read with Rule 12 of the Forward Contracts (Regulation) Rules, 1954 RULE 12 (a) A survey of the year giving an analysis of the movement of prices and mentioning special benefits, if any, conferred by the forward market on the trade, during the year. Commodity Analysis During the period , the global economy witnessed a slowdown marked by dampened consumer confidence and domestic business environment on the back of deepening sovereign debt crisis in Euro-zone. Global commodity prices, particularly those of food and metals, softened from high levels as in case of wheat, which was trading at around $7.595 per bushel at the start of year and slipped nearly by 13 per cent, ending the year at $ per bushel. Crude oil prices remained elevated throughout the year with Brent crude oil trading at around $ per barrels at the beginning of the year and rose nearly by 4 per cent to end the year at $ per barrels. The CRB commodity index fell nearly by 11.5 per cent in the year This was the result of the growing uncertainty over the global economic recovery controlled by macro events starting with the natural disaster in Japan, geo-political tension in Middle East and North Africa, political wrangles over the US debt ceiling, fragile economic growth in US and China, in addition to the persistent worries over the Euro-zone debt crisis leading to a climate of uncertainty and low consumer confidence. Moreover, credit rating agencies have been quite active in 2011 as they downgraded many countries and sectors. This uncertainty saw the crude oil prices going for a roller coaster ride while gold prices rose nearly by 17 per cent, closing at $ per troy oz from $ per troy oz at the beginning of the year. In , inflationary pressure was clearly evident across the globe with consumer price inflation in the emerging and developing economies rising to 7.2 per cent from around 4.5 per cent in the previous year, while that in advanced economies was around 2.7 per cent. The domestic commodity prices which can be gauged through headline inflation and as measured by the wholesale price index (WPI) remained in an elevated zone at over 9 per cent through the year but started falling since December 2011 and ending the year at 7.7 per cent, largely due to lower food prices as a result of bumper domestic food grains production, slowdown in the global economy and the impact of monetary policy tightening with RBI adjusting its policy rates 13 times since March The Indian rupee made a new life time low of which had a negative impact on the imported commodities as our import bill surged to $485 billion in , a jump of 38.2 per cent from the previous year. In case of crude oil, with India almost completely dependent on imports we witnessed an increase in the import bill by around 40 per cent to a record $140 billion in th ANNUAL REPORT

18 Annexure I to Directors Report The price movements of some of the commodities are captured in Fig.1. The two major cropping seasons of the country based on the time of sowing and harvesting i.e. kharif and rabi season, determine the production and growth of agriculture in the country, which in turn influences prices. Kharif Season (June/July to September/ October) The kharif season holds an important place in the Indian agriculture as it contributes more than 50 percent of the annual agricultural production. The Southwest monsoon season which runs from June to September is considered as the most crucial annual climatic event as the country receives over 75% of the annual rainfall during this period and a favorable rainfall activity has a huge bearing on the kharif crop production. During the period of , the Southwest monsoon was normal and the country received a seasonal rainfall of 102% of the long period average. The onset as well as the progress of the monsoon was good with even distribution of rainfall across most parts of the country thus improving the productivity of the kharif crop sown. As per the 3rd advance estimates, the country has produced record level of kharif food grains during , at million tonnes which is higher than the final estimates of million tons recorded during Rabi Season (October/ November to March/April) The withdrawal of the Southwest monsoon in was delayed considerably which resulted in unseasonal rainfall activity even in the month of October that delayed the winter season crop sowing but improved the moisture content of the soil resulting in improved yield levels. As per the 3rd advance estimates, production of the rabi food grains during is estimated at million tonnes which is close to the final estimates of million tons recorded during th ANNUAL REPORT

19 Annexure I to Directors Report Record agriculture production in As per the 3rd advance estimates by the Ministry of Agriculture, India managed to achieve a record food grain production of million tonnes in the surpassing the earlier record production of million tonnes in A record production was seen in cereals, sugarcane and cotton. RULE 12 (b) Changes in rules, regulations and bye-laws During the year, there have been no changes in Rules, Regulation and Bye-laws. RULE 12 (c) Changes in the composition of the governing body During the financial year , the following changes took place in the composition of the Board of Directors (governing body) of the Exchange: 1. Ms. K. S. Uma, Mr. Umesh Chandra Sarangi and Mr. V. K. Kukreja resigned from the Board of the Exchange with effect from April 11, 2011, June 7, 2011 and August 8, 2011 respectively. 2. Following Directors were appointed as Shareholders Nominee Directors a. Mr. Gaurav Arora Jaypee Capital Services Limited With effect from April 27, 2011 b. Mr. Subir K. Mitra National Bank for Agriculture & Rural Development With effect from January 6, 2012 c. Mr. Samir K. Mitter Life Insurance Corporation of India With effect from January 13, Mr. V. C. Chaturvedi and Mr. M. Raman were appointed as FMC Nominee Director with effect from April 11, 2011 and October 24, 2011 respectively. RULE 12 (d) Sub-committees set up, changes in the composition of existing ones and the work done by the sub-committees The following are the Committees of the Board of Directors of the Exchange: 1. Audit Committee 2. Board Governance and Compensation Committee 3. Business Strategy and Risk Management Committee (Upto January 19, 2012) 4. Business Strategy Committee 5. Risk Management Committee 6. Nomination Committee These committees were re-constituted during the year. Two new committees namely Business Strategy Committee and the Risk Management Committee were formed during the year and one Committee was suspended during the year. 9th ANNUAL REPORT

20 Annexure I to Directors Report Changes in the composition of the Board Committees and the work done by it 1. Audit Committee Sl. No. MEMBERS AS ON MARCH 31, 2011 MEMBERS AS ON MARCH 31, Mr. Rakesh Kapur (Chairman) Mr. Rakesh Kapur (Chairman) 2. Mr. V. K. Aggarwal Mr. V. K. Aggarwal 3. Mr. O. P. Gahrotra Mr. O. P. Gahrotra Mr. M. Raman Terms of reference The Committee s main function is to oversee the audit function and the quality of internal control and financial reporting. The Committee oversees matters like - l l l l l Appointment and/or replacement of auditors; Approval of and changes to accounting policies; Giving of Guarantees or indemnities by the Exchange or the charging of the assets of the Exchange; Commencement of legal proceedings other than those in the normal course of business; Monitor the operating results achieved, from both qualitative and financial perspectives. 2. Board Governance and Compensation Committee Sl. No. MEMBERS AS ON MARCH 31, 2011 MEMBERS AS ON MARCH 31, Mr. V. K. Aggarwal (Chairman) Mr. V. K. Aggarwal (Chairman) 2. Mr. Rakesh Kapur Mr. Rakesh Kapur 3. Mr. Ravi Narain Mr. Ravi Narain 4. Mr. V. K. Kukreja Mr. Gaurav Arora 5. Mr. Narendra Murkumbi Mr. Narendra Murkumbi Mr. M. Raman The Board Governance and Compensation Committee oversees and approves policy framework relating to good corporate governance and best practices to be adopted by the Exchange and also prescribes management development measures. The Committee basically deliberates on matters like compensation policies for the Board and employees of the Exchange, management of the Employee Stock Option Scheme, performance evaluation of Managing Director & CEO and key matters pertaining to human resources. 18 9th ANNUAL REPORT

21 Annexure I to Directors Report 3. Business Strategy and Risk Management Committee (Upto January 19, 2012) Sl. No. MEMBERS AS ON MARCH 31, 2011 MEMBERS AS ON MARCH 31, Mr. Ravi Narain (Chairman) Mr. V. K. Aggarwal Mr. Umesh Chandra Sarangi Mr. Rakesh Kapur Mr. V. K. Kukreja Mr. O. P. Gahrotra Mr. R. Ramaseshan Mr. Narendra Murkumbi -- The Business Strategy and Risk Management Committee gives direction and oversees medium and long range business strategies, risk and control measures that are needed to be built into the system and at periodic intervals, monitors their compliance and suggests 4. Business Strategy Committee Sl. No. MEMBERS AS ON MARCH 31, 2011 MEMBERS AS ON MARCH 31, Mr. Ravi Narain Mr. Narendra Murkumbi Mr. Gaurav Arora Mr. Rakesh Kapur Mr. Sanjiv Batra Mr. O. P. Gahrotra Mr. R. Ramaseshan Terms of reference l l l l l l Evolve business goals and business policies; Consider and approve annual business plans, budgets and other cross functional business initiatives; Allocate resources, both Capital and revenue; Monitor market, competitive and regulatory developments and provide feedback; Any other functions, specifically directed by the Board; Perform any other act, duty as stipulated by the Companies Act, FMC or any other regulatory authority, as prescribed from time to time. 9th ANNUAL REPORT

22 Annexure I to Directors Report 5. Risk Management Committee Sl. No. MEMBERS AS ON MARCH 31, 2011 MEMBERS AS ON MARCH 31, Mr. O. P. Gahrotra Mr. V. K. Aggarwal Mr. Ravi Narain Mr. R. Ramaseshan Mr. Samir K. Mitter Mr. Subir. K Mitra Terms of reference l l l l l l l l Identification, measurement and monitoring of the risk profile of the Exchange (including business risk, default risk, settlement risk, market risk, legal risk, operational risk, technological risk and delivery risk); Overseeing Exchange s integrated risk measurement system and review the risk models as developments take place in the markets; Overseeing of Risk and Control measures that are needed to built into the system and at periodic intervals, monitoring their compliance and suggestions for improvement; Formulation and periodically reviewing of the Company s financial and risk management policies; Determination of maximum exposure limits and borrowing limits of the Company; Determination of framework to limit exposures of the Exchange to members, commodities and geographies; Review of investments of the Exchange funds; Any other function, specifically directed by the Board. 6. Nomination Committee Sl. No. MEMBERS AS ON MARCH 31, 2011 MEMBERS AS ON MARCH 31, Mr. O. P. Gahrotra (Chairman) Mr. V. K. Aggarwal 2. Mr. Ravi Narain Mr. M. Raman 3. Mr. V. K. Kukreja Mr. Sanjiv Batra 4. Mr. R. Ramaseshan Mr. Narendra Murkumbi Mr. Subir K. Mitra Mr. Samir K. Mitter The functions of the Nomination Committee include developing criteria for selection of directors, recommending appointment of directors, finalising and recommending contractual matters for engagement of directors and succession planning for the Managing Director and Chief Executive Officer. 20 9th ANNUAL REPORT

23 Annexure I to Directors Report RULE 12 (e) Admissions, re-admissions, deaths or resignations of members and the total number of members and their distribution among the different classes and panels, if any, as at the end of the year Total number of members as on March 31, 2012 was 844 out of which 708 were Trading cum Clearing Members ( TCM ), 102 Trading Members ( TM ), 3 were Professional Clearing Members ( PCM ) and 9 were Strategic Trading and Clearing Members ( STCM ). The distribution of the Members as on March 31, 2012 as compared to the membership count as on March 31, 2011 is as given below Total Members TCM TM PCM STCM Members as on March 31, Surrenders during the year* * New members added Conversion from TM to TCM Members as on March 31, * *Surrendered members were 26 and 2 members were expelled during the year. RULE 12 (f) Details of Disciplinary action taken against members The Exchange imposed fines/penalties on members for violation of the circulars issued by the Exchange or directives of FMC. In addition, the Exchange expelled M/s. Bhavishya Advisory & Comtrade (India) Private Limited from the Membership of the Exchange with effect from June 10, 2011 as disciplinary action for non-payment of dues of the clients and misconduct. The Exchange also expelled M/s. Contact India Commodities Private Limited from the Membership of the Exchange with effect from July 26, 2011 as disciplinary action for the failure to furnish books of accounts, records and other material and such statements and information as required for inspection and nonpayment of dues of clients. RULE 12 (g) Arbitration of other disputes relating to quality (number, passings and rejections) During the year, there were no Arbitration cases relating to quality. 9th ANNUAL REPORT

24 Annexure I to Directors Report RULE 12 (h) Arbitration of disputes (nature, number and manner of disposal) Status of Arbitration of cases for the year Type of cases 1) Nonpayment of dues by clients 2) Non refund of money by Member 2. Number of cases referred for arbitration 105* 3. Number - Cases of Nonpayment of dues by clients Number Cases of Non refund of money by Member 101* 5. Number of Cases in which Award is passed 104* 6. Number of Cases in which case is withdrawn before Award 01** 7. Number of Cases in progress on *Cases include bulk of 100 cases against Bhavishya Advisory and Comtrade (India) Private Limited. **Case withdrawn before award and before appointment of the sole arbitrator. RULE 12 (i) Defaults committed by members such as non-payment of differences, failure to tender and the like There were no permanent defaults by any member resulting in shortages of funds to the Exchange. RULE 12 (j) Forward and ready prices during the year The futures prices and the spot prices (ready prices) are available for all contracts of all the commodities traded during the year on the website of the Exchange i.e., under the category Market Data. RULE 12 (k) Settlement rates, amounts of differences cleared, due date rates and tendering differences SYMBOL Expiry Date Delivery Options OI on Expiry Day OI Value on Expiry Day (Lakhs) Allocated Quantity Direct Delivery Quantity Total Quantity (Allocation + Direct Delivery) Value of Allocated Quantity (Lakhs) Quantity Cash Settled Value of Cash Settlement (lakhs) Final Settlement Price GOLD 4-Apr-11 STAGGERED DELIVERY BRENTCRUDE 14-Apr-11 INTENTION MATCHING CRUDEOIL 18-Apr-11 INTENTION MATCHING BADAM 20-Apr-11 COMPULSORY DELIVERY BARLEYJPR 20-Apr-11 COMPULSORY DELIVERY CASTORSEED 20-Apr-11 COMPULSORY DELIVERY CHARJDDEL 20-Apr-11 COMPULSORY DELIVERY CHLL334GTR 20-Apr-11 COMPULSORY DELIVERY COCUDAKL 20-Apr-11 COMPULSORY DELIVERY DHANIYA 20-Apr-11 COMPULSORY DELIVERY GARGUMJDR 20-Apr-11 COMPULSORY DELIVERY GARSEDJDR 20-Apr-11 EARLY DELIVERY GOLD100AHM 20-Apr-11 COMPULSORY DELIVERY JEERAUNJHA 20-Apr-11 COMPULSORY DELIVERY KACHIGHANI 20-Apr-11 INTENTION MATCHING MAIZE 20-Apr-11 COMPULSORY DELIVERY POTATO 20-Apr-11 COMPULSORY DELIVERY PPRMLGKOC 20-Apr-11 EARLY DELIVERY th ANNUAL REPORT

25 Annexure I to Directors Report SYMBOL Expiry Date Delivery Options OI on Expiry Day OI Value on Expiry Day (Lakhs) Allocated Quantity Direct Delivery Quantity Total Quantity (Allocation + Direct Delivery) Value of Allocated Quantity (Lakhs) Quantity Cash Settled Value of Cash Settlement (lakhs) Final Settlement Price RBRRS4KOC 20-Apr-11 EARLY DELIVERY RMSEED 20-Apr-11 COMPULSORY DELIVERY SILVER5AHM 20-Apr-11 INTENTION MATCHING STEELLONG 20-Apr-11 EARLY DELIVERY SUGARM Apr-11 COMPULSORY DELIVERY SUGARS Apr-11 COMPULSORY DELIVERY SYBEANIDR 20-Apr-11 SELLERS RIGHT SYOREFIDR 20-Apr-11 INTENTION MATCHING TMCFGRNZM 20-Apr-11 COMPULSORY DELIVERY WHTSMQDELI 20-Apr-11 COMPULSORY DELIVERY GASOLINE 25-Apr-11 INTENTION MATCHING HEATINGOIL 25-Apr-11 INTENTION MATCHING NATURALGAS 26-Apr-11 INTENTION MATCHING COALWANI 29-Apr-11 COMPULSORY DELIVERY COPPER 29-Apr-11 SELLERS RIGHT CRDPOLKDL 29-Apr-11 INTENTION MATCHING KAPASSRNR 29-Apr-11 SELLERS RIGHT LEAD 29-Apr-11 INTENTION MATCHING MENTHAOIL 29-Apr-11 EARLY DELIVERY SHANKRKPAS 29-Apr-11 INTENTION MATCHING NICKEL 29-Apr-11 INTENTION MATCHING ZINC 29-Apr-11 INTENTION MATCHING SILVER 3-May-11 STAGGERED DELIVERY BRENTCRUDE 16-May-11 INTENTION MATCHING CRUDEOIL 19-May-11 INTENTION MATCHING BADAM 20-May-11 COMPULSORY DELIVERY BARLEYJPR 20-May-11 COMPULSORY DELIVERY CASTORSEED 20-May-11 COMPULSORY DELIVERY CHARJDDEL 20-May-11 COMPULSORY DELIVERY COCUDAKL 20-May-11 COMPULSORY DELIVERY DHANIYA 20-May-11 COMPULSORY DELIVERY GARGUMJDR 20-May-11 COMPULSORY DELIVERY GARSEDJDR 20-May-11 EARLY DELIVERY GOLD100AHM 20-May-11 COMPULSORY DELIVERY JEERAUNJHA 20-May-11 COMPULSORY DELIVERY KACHIGHANI 20-May-11 INTENTION MATCHING MAIZE 20-May-11 COMPULSORY DELIVERY POTATO 20-May-11 COMPULSORY DELIVERY PPRMLGKOC 20-May-11 EARLY DELIVERY PVC 20-May-11 COMPULSORY DELIVERY RBRRS4KOC 20-May-11 EARLY DELIVERY RMSEED 20-May-11 COMPULSORY DELIVERY SILVER5AHM 20-May-11 INTENTION MATCHING STEELLONG 20-May-11 EARLY DELIVERY SUGARM May-11 COMPULSORY DELIVERY SUGARS May-11 COMPULSORY DELIVERY SYBEANIDR 20-May-11 SELLERS RIGHT SYOREFIDR 20-May-11 INTENTION MATCHING TMCFGRNZM 20-May-11 COMPULSORY DELIVERY WHTSMQDELI 20-May-11 COMPULSORY DELIVERY GASOLINE 25-May-11 INTENTION MATCHING HEATINGOIL 25-May-11 INTENTION MATCHING NATURALGAS 25-May-11 INTENTION MATCHING COALWANI 31-May-11 COMPULSORY DELIVERY CRDPOLKDL 31-May-11 INTENTION MATCHING LEAD 31-May-11 INTENTION MATCHING th ANNUAL REPORT

26 Annexure I to Directors Report SYMBOL Expiry Date Delivery Options OI on Expiry Day OI Value on Expiry Day (Lakhs) Allocated Quantity Direct Delivery Quantity Total Quantity (Allocation + Direct Delivery) Value of Allocated Quantity (Lakhs) Quantity Cash Settled Value of Cash Settlement (lakhs) Final Settlement Price MENTHAOIL 31-May-11 EARLY DELIVERY NICKEL 31-May-11 INTENTION MATCHING ZINC 31-May-11 INTENTION MATCHING GOLD 3-Jun-11 STAGGERED DELIVERY BRENTCRUDE 15-Jun-11 INTENTION MATCHING BADAM 20-Jun-11 COMPULSORY DELIVERY BARLEYJPR 20-Jun-11 COMPULSORY DELIVERY CASTORSEED 20-Jun-11 COMPULSORY DELIVERY CHARJDDEL 20-Jun-11 COMPULSORY DELIVERY CHLL334GTR 20-Jun-11 COMPULSORY DELIVERY COCUDAKL 20-Jun-11 COMPULSORY DELIVERY DHANIYA 20-Jun-11 COMPULSORY DELIVERY GARGUMJDR 20-Jun-11 COMPULSORY DELIVERY GOLD100AHM 20-Jun-11 COMPULSORY DELIVERY JEERAUNJHA 20-Jun-11 COMPULSORY DELIVERY MAIZE 20-Jun-11 COMPULSORY DELIVERY POTATO 20-Jun-11 COMPULSORY DELIVERY PVC 20-Jun-11 COMPULSORY DELIVERY RMSEED 20-Jun-11 COMPULSORY DELIVERY SUGARM Jun-11 COMPULSORY DELIVERY SUGARS Jun-11 COMPULSORY DELIVERY TMCFGRNZM 20-Jun-11 COMPULSORY DELIVERY WHTSMQDELI 20-Jun-11 COMPULSORY DELIVERY CRUDEOIL 20-Jun-11 INTENTION MATCHING KACHIGHANI 20-Jun-11 INTENTION MATCHING SILVER5AHM 20-Jun-11 INTENTION MATCHING SYOREFIDR 20-Jun-11 INTENTION MATCHING SYBEANIDR 20-Jun-11 SELLERS RIGHT GARSEDJDR 20-Jun-11 EARLY DELIVERY PPRMLGKOC 20-Jun-11 EARLY DELIVERY RBRRS4KOC 20-Jun-11 EARLY DELIVERY STEELLONG 20-Jun-11 EARLY DELIVERY GASOLINE 24-Jun-11 INTENTION MATCHING HEATINGOIL 24-Jun-11 INTENTION MATCHING NATURALGAS 27-Jun-11 INTENTION MATCHING PLATINUM 28-Jun-11 INTENTION MATCHING COALWANI 30-Jun-11 COMPULSORY DELIVERY CRDPOLKDL 30-Jun-11 INTENTION MATCHING LEAD 30-Jun-11 INTENTION MATCHING NICKEL 30-Jun-11 INTENTION MATCHING ZINC 30-Jun-11 INTENTION MATCHING COPPER 30-Jun-11 SELLERS RIGHT MENTHAOIL 30-Jun-11 EARLY DELIVERY SILVER 4-Jul-11 STAGGERED DELIVERY BRENTCRUDE 14-Jul-11 INTENTION MATCHING CRUDEOIL 19-Jul-11 INTENTION MATCHING BADAM 20-Jul-11 COMPULSORY DELIVERY BARLEYJPR 20-Jul-11 COMPULSORY DELIVERY CASTORSEED 20-Jul-11 COMPULSORY DELIVERY CHARJDDEL 20-Jul-11 COMPULSORY DELIVERY CHLL334GTR 20-Jul-11 COMPULSORY DELIVERY COCUDAKL 20-Jul-11 COMPULSORY DELIVERY DHANIYA 20-Jul-11 COMPULSORY DELIVERY GARGUMJDR 20-Jul-11 COMPULSORY DELIVERY GARSEDJDR 20-Jul-11 EARLY DELIVERY GOLD100AHM 20-Jul-11 COMPULSORY DELIVERY th ANNUAL REPORT

27 Annexure I to Directors Report SYMBOL Expiry Date Delivery Options OI on Expiry Day OI Value on Expiry Day (Lakhs) Allocated Quantity Direct Delivery Quantity Total Quantity (Allocation + Direct Delivery) Value of Allocated Quantity (Lakhs) Quantity Cash Settled Value of Cash Settlement (lakhs) Final Settlement Price GURCHMUZR 20-Jul-11 SELLERS RIGHT JEERAUNJHA 20-Jul-11 COMPULSORY DELIVERY MAIZE 20-Jul-11 COMPULSORY DELIVERY POTATO 20-Jul-11 COMPULSORY DELIVERY PPRMLGKOC 20-Jul-11 EARLY DELIVERY PVC 20-Jul-11 COMPULSORY DELIVERY RMSEED 20-Jul-11 COMPULSORY DELIVERY SILVER5AHM 20-Jul-11 INTENTION MATCHING STEELLONG 20-Jul-11 EARLY DELIVERY SUGARM Jul-11 COMPULSORY DELIVERY SUGARS Jul-11 COMPULSORY DELIVERY SYBEANIDR 20-Jul-11 SELLERS RIGHT SYOREFIDR 20-Jul-11 INTENTION MATCHING TMCFGRNZM 20-Jul-11 COMPULSORY DELIVERY WHTSMQDELI 20-Jul-11 COMPULSORY DELIVERY NATURALGAS 26-Jul-11 INTENTION MATCHING CRDPOLKDL 29-Jul-11 INTENTION MATCHING NICKEL 29-Jul-11 INTENTION MATCHING ZINC 29-Jul-11 INTENTION MATCHING GOLD 3-Aug-11 STAGGERED DELIVERY BRENTCRUDE 16-Aug-11 INTENTION MATCHING CASTORSEED 18-Aug-11 COMPULSORY DELIVERY BADAM 19-Aug-11 COMPULSORY DELIVERY BARLEYJPR 19-Aug-11 COMPULSORY DELIVERY CHARJDDEL 19-Aug-11 COMPULSORY DELIVERY CHLL334GTR 19-Aug-11 COMPULSORY DELIVERY COCUDAKL 19-Aug-11 COMPULSORY DELIVERY DHANIYA 19-Aug-11 COMPULSORY DELIVERY GARGUMJDR 19-Aug-11 COMPULSORY DELIVERY GOLD100AHM 19-Aug-11 COMPULSORY DELIVERY JEERAUNJHA 19-Aug-11 COMPULSORY DELIVERY MAIZE 19-Aug-11 COMPULSORY DELIVERY POTATO 19-Aug-11 COMPULSORY DELIVERY PVC 19-Aug-11 COMPULSORY DELIVERY RMSEED 19-Aug-11 COMPULSORY DELIVERY SUGARM Aug-11 COMPULSORY DELIVERY SUGARS Aug-11 COMPULSORY DELIVERY TMCFGRNZM 19-Aug-11 COMPULSORY DELIVERY WHTSMQDELI 19-Aug-11 COMPULSORY DELIVERY GARSEDJDR 19-Aug-11 EARLY DELIVERY PPRMLGKOC 19-Aug-11 EARLY DELIVERY STEELLONG 19-Aug-11 EARLY DELIVERY CRUDEOIL 19-Aug-11 INTENTION MATCHING SILVER5AHM 19-Aug-11 INTENTION MATCHING SYOREFIDR 19-Aug-11 INTENTION MATCHING SYBEANIDR 19-Aug-11 SELLERS RIGHT NATURALGAS 26-Aug-11 INTENTION MATCHING CRDPOLKDL 30-Aug-11 INTENTION MATCHING SILVERINTL 30-Aug-11 INTENTION MATCHING NICKEL 31-Aug-11 INTENTION MATCHING ZINC 31-Aug-11 INTENTION MATCHING COPPER 31-Aug-11 SELLERS RIGHT SILVER 5-Sep-11 STAGGERED DELIVERY BRENTCRUDE 15-Sep-11 INTENTION MATCHING CRUDEOIL 19-Sep-11 INTENTION MATCHING BADAM 20-Sep-11 COMPULSORY DELIVERY th ANNUAL REPORT

28 Annexure I to Directors Report SYMBOL Expiry Date Delivery Options OI on Expiry Day OI Value on Expiry Day (Lakhs) Allocated Quantity Direct Delivery Quantity Total Quantity (Allocation + Direct Delivery) Value of Allocated Quantity (Lakhs) Quantity Cash Settled Value of Cash Settlement (lakhs) Final Settlement Price BARLEYJPR 20-Sep-11 COMPULSORY DELIVERY CASTORSEED 20-Sep-11 COMPULSORY DELIVERY CHARJDDEL 20-Sep-11 COMPULSORY DELIVERY CHLL334GTR 20-Sep-11 COMPULSORY DELIVERY COCUDAKL 20-Sep-11 COMPULSORY DELIVERY DHANIYA 20-Sep-11 COMPULSORY DELIVERY GARGUMJDR 20-Sep-11 COMPULSORY DELIVERY GARSEDJDR 20-Sep-11 EARLY DELIVERY GOLD100AHM 20-Sep-11 COMPULSORY DELIVERY GURCHMUZR 20-Sep-11 SELLERS RIGHT JEERAUNJHA 20-Sep-11 COMPULSORY DELIVERY MAIZE 20-Sep-11 COMPULSORY DELIVERY POTATO 20-Sep-11 COMPULSORY DELIVERY PPRMLGKOC 20-Sep-11 EARLY DELIVERY RMSEED 20-Sep-11 COMPULSORY DELIVERY SILVER5AHM 20-Sep-11 INTENTION MATCHING STEELLONG 20-Sep-11 EARLY DELIVERY SUGARM Sep-11 COMPULSORY DELIVERY SUGARS Sep-11 COMPULSORY DELIVERY SYBEANIDR 20-Sep-11 SELLERS RIGHT SYOREFIDR 20-Sep-11 INTENTION MATCHING TMCFGRNZM 20-Sep-11 COMPULSORY DELIVERY WHTSMQDELI 20-Sep-11 COMPULSORY DELIVERY NATURALGAS 27-Sep-11 INTENTION MATCHING GOLDINTL 29-Sep-11 INTENTION MATCHING CRDPOLKDL 30-Sep-11 INTENTION MATCHING NICKEL 30-Sep-11 INTENTION MATCHING ZINC 30-Sep-11 INTENTION MATCHING GOLD 3-Oct-11 STAGGERED DELIVERY BRENTCRUDE 14-Oct-11 INTENTION MATCHING CRUDEOIL 19-Oct-11 INTENTION MATCHING BADAM 20-Oct-11 COMPULSORY DELIVERY BARLEYJPR 20-Oct-11 COMPULSORY DELIVERY CASTORSEED 20-Oct-11 COMPULSORY DELIVERY CHARJDDEL 20-Oct-11 COMPULSORY DELIVERY CHLL334GTR 20-Oct-11 COMPULSORY DELIVERY DHANIYA 20-Oct-11 COMPULSORY DELIVERY GARGUMJDR 20-Oct-11 COMPULSORY DELIVERY GARSEDJDR 20-Oct-11 EARLY DELIVERY GOLD100AHM 20-Oct-11 COMPULSORY DELIVERY JEERAUNJHA 20-Oct-11 COMPULSORY DELIVERY MAIZE 20-Oct-11 COMPULSORY DELIVERY PPRMLGKOC 20-Oct-11 EARLY DELIVERY RMSEED 20-Oct-11 COMPULSORY DELIVERY SILVER5AHM 20-Oct-11 INTENTION MATCHING STEELLONG 20-Oct-11 EARLY DELIVERY SUGARM Oct-11 COMPULSORY DELIVERY SUGARS Oct-11 COMPULSORY DELIVERY SYBEANIDR 20-Oct-11 SELLERS RIGHT SYOREFIDR 20-Oct-11 INTENTION MATCHING TMCFGRNZM 20-Oct-11 COMPULSORY DELIVERY WHTSMQDELI 20-Oct-11 COMPULSORY DELIVERY NATURALGAS 26-Oct-11 INTENTION MATCHING CRDPOLKDL 31-Oct-11 INTENTION MATCHING NICKEL 31-Oct-11 INTENTION MATCHING SHANKRKPAS 31-Oct-11 INTENTION MATCHING th ANNUAL REPORT

29 Annexure I to Directors Report SYMBOL Expiry Date Delivery Options OI on Expiry Day OI Value on Expiry Day (Lakhs) Allocated Quantity Direct Delivery Quantity Total Quantity (Allocation + Direct Delivery) Value of Allocated Quantity (Lakhs) Quantity Cash Settled Value of Cash Settlement (lakhs) Final Settlement Price ZINC 31-Oct-11 INTENTION MATCHING BRENTCRUDE 15-Nov-11 INTENTION MATCHING CRUDEOIL 17-Nov-11 INTENTION MATCHING BADAM 18-Nov-11 COMPULSORY DELIVERY BARLEYJPR 18-Nov-11 COMPULSORY DELIVERY CASTORSEED 18-Nov-11 COMPULSORY DELIVERY CHARJDDEL 18-Nov-11 COMPULSORY DELIVERY CHLL334GTR 18-Nov-11 COMPULSORY DELIVERY DHANIYA 18-Nov-11 COMPULSORY DELIVERY GOLD100AHM 18-Nov-11 COMPULSORY DELIVERY JEERAUNJHA 18-Nov-11 COMPULSORY DELIVERY MAIZE 18-Nov-11 COMPULSORY DELIVERY RMSEED 18-Nov-11 COMPULSORY DELIVERY SUGARM Nov-11 COMPULSORY DELIVERY SUGARS Nov-11 COMPULSORY DELIVERY TMCFGRNZM 18-Nov-11 COMPULSORY DELIVERY WHTSMQDELI 18-Nov-11 COMPULSORY DELIVERY GARGUMJDR 18-Nov-11 EARLY DELIVERY GARSEDJDR 18-Nov-11 EARLY DELIVERY PPRMLGKOC 18-Nov-11 EARLY DELIVERY STEELLONG 18-Nov-11 EARLY DELIVERY SILVER5AHM 18-Nov-11 INTENTION MATCHING SYOREFIDR 18-Nov-11 INTENTION MATCHING GURCHMUZR 18-Nov-11 SELLERS RIGHT SYBEANIDR 18-Nov-11 SELLERS RIGHT NATURALGAS 25-Nov-11 INTENTION MATCHING GOLDINTL 29-Nov-11 INTENTION MATCHING SILVERINTL 29-Nov-11 INTENTION MATCHING CRDPOLKDL 30-Nov-11 INTENTION MATCHING NICKEL 30-Nov-11 INTENTION MATCHING ZINC 30-Nov-11 INTENTION MATCHING COPPER 30-Nov-11 SELLERS RIGHT BRENTCRUDE 15-Dec-11 INTENTION MATCHING CRUDEOIL 19-Dec-11 INTENTION MATCHING BADAM 20-Dec-11 COMPULSORY DELIVERY BARLEYJPR 20-Dec-11 COMPULSORY DELIVERY CASTORSEED 20-Dec-11 COMPULSORY DELIVERY CHARJDDEL 20-Dec-11 COMPULSORY DELIVERY CHLL334GTR 20-Dec-11 COMPULSORY DELIVERY COCUDAKL 20-Dec-11 COMPULSORY DELIVERY DHANIYA 20-Dec-11 COMPULSORY DELIVERY GARGUMJDR 20-Dec-11 EARLY DELIVERY GARSEDJDR 20-Dec-11 EARLY DELIVERY GOLD100AHM 20-Dec-11 COMPULSORY DELIVERY GURCHMUZR 20-Dec-11 SELLERS RIGHT JEERAUNJHA 20-Dec-11 COMPULSORY DELIVERY MAIZE 20-Dec-11 COMPULSORY DELIVERY PPRMLGKOC 20-Dec-11 EARLY DELIVERY RMSEED 20-Dec-11 COMPULSORY DELIVERY SILVER5AHM 20-Dec-11 INTENTION MATCHING STEELLONG 20-Dec-11 EARLY DELIVERY SUGARM Dec-11 COMPULSORY DELIVERY SUGARS Dec-11 COMPULSORY DELIVERY SYBEANIDR 20-Dec-11 SELLERS RIGHT SYOREFIDR 20-Dec-11 INTENTION MATCHING TMCFGRNZM 20-Dec-11 COMPULSORY DELIVERY th ANNUAL REPORT

30 Annexure I to Directors Report SYMBOL Expiry Date Delivery Options OI on Expiry Day OI Value on Expiry Day (Lakhs) Allocated Quantity Direct Delivery Quantity Total Quantity (Allocation + Direct Delivery) Value of Allocated Quantity (Lakhs) Quantity Cash Settled Value of Cash Settlement (lakhs) Final Settlement Price WHTSMQDELI 20-Dec-11 COMPULSORY DELIVERY NATURALGAS 27-Dec-11 INTENTION MATCHING CRDPOLKDL 30-Dec-11 INTENTION MATCHING NICKEL 30-Dec-11 INTENTION MATCHING SHANKRKPAS 30-Dec-11 INTENTION MATCHING ZINC 30-Dec-11 INTENTION MATCHING BRENTCRUDE 16-Jan-12 INTENTION MATCHING CRUDEOIL 19-Jan-12 INTENTION MATCHING BARLEYJPR 20-Jan-12 COMPULSORY DELIVERY CASTORSEED 20-Jan-12 COMPULSORY DELIVERY CHARJDDEL 20-Jan-12 COMPULSORY DELIVERY COCUDAKL 20-Jan-12 COMPULSORY DELIVERY DHANIYA 20-Jan-12 COMPULSORY DELIVERY GOLD100AHM 20-Jan-12 COMPULSORY DELIVERY JEERAUNJHA 20-Jan-12 COMPULSORY DELIVERY MAIZE 20-Jan-12 COMPULSORY DELIVERY PVC 20-Jan-12 COMPULSORY DELIVERY RMSEED 20-Jan-12 COMPULSORY DELIVERY SUGARM Jan-12 COMPULSORY DELIVERY WHTSMQDELI 20-Jan-12 COMPULSORY DELIVERY SILVER5AHM 20-Jan-12 INTENTION MATCHING SYOREFIDR 20-Jan-12 INTENTION MATCHING GURCHMUZR 20-Jan-12 SELLERS RIGHT SYBEANIDR 20-Jan-12 SELLERS RIGHT GOLDINTL 30-Jan-12 INTENTION MATCHING RBDPALMOLN 31-Jan-12 INTENTION MATCHING GARGUMJDR 20-Jan-12 EARLY DELIVERY GARSEDJDR 20-Jan-12 EARLY DELIVERY PPRMLGKOC 20-Jan-12 EARLY DELIVERY RBRRS4KOC 20-Jan-12 EARLY DELIVERY STEELLONG 20-Jan-12 EARLY DELIVERY GOLD 3-Feb-12 STAGGERED DELIVERY BRENTCRUDE 14-Feb-12 INTENTION MATCHING CRUDEOIL 17-Feb-12 INTENTION MATCHING PVC 17-Feb-12 COMPULSORY DELIVERY BARLEYJPR 17-Feb-12 COMPULSORY DELIVERY CASTORSEED 17-Feb-12 COMPULSORY DELIVERY CHARJDDEL 17-Feb-12 COMPULSORY DELIVERY CHLL334GTR 17-Feb-12 COMPULSORY DELIVERY COCUDAKL 17-Feb-12 COMPULSORY DELIVERY DHANIYA 17-Feb-12 COMPULSORY DELIVERY GOLD100AHM 17-Feb-12 COMPULSORY DELIVERY JEERAUNJHA 17-Feb-12 COMPULSORY DELIVERY MAIZE 17-Feb-12 COMPULSORY DELIVERY SILVER5AHM 17-Feb-12 INTENTION MATCHING SUGARM Feb-12 COMPULSORY DELIVERY SYBEANIDR 17-Feb-12 SELLERS RIGHT SYOREFIDR 17-Feb-12 INTENTION MATCHING WHTSMQDELI 17-Feb-12 COMPULSORY DELIVERY SILVERINTL 28-Feb-12 INTENTION MATCHING COPPER 29-Feb-12 SELLERS RIGHT KAPASSRNR 29-Feb-12 SELLERS RIGHT RBDPALMOLN 29-Feb-12 INTENTION MATCHING SHANKRKPAS 29-Feb-12 INTENTION MATCHING GARGUMJDR 17-Feb-12 EARLY DELIVERY GARSEDJDR 17-Feb-12 EARLY DELIVERY th ANNUAL REPORT

31 Annexure I to Directors Report SYMBOL Expiry Date Delivery Options OI on Expiry Day OI Value on Expiry Day (Lakhs) Allocated Quantity Direct Delivery Quantity Total Quantity (Allocation + Direct Delivery) Value of Allocated Quantity (Lakhs) Quantity Cash Settled Value of Cash Settlement (lakhs) Final Settlement Price PPRMLGKOC 17-Feb-12 EARLY DELIVERY RBRRS4KOC 17-Feb-12 EARLY DELIVERY STEELLONG 17-Feb-12 EARLY DELIVERY SILVER 5-Mar-12 STAGGERED DELIVERY BRENTCRUDE 15-Mar-12 INTENTION MATCHING CRUDEOIL 19-Mar-12 INTENTION MATCHING CASTORSEED 20-Mar-12 COMPULSORY DELIVERY CHARJDDEL 20-Mar-12 COMPULSORY DELIVERY CHLL334GTR 20-Mar-12 COMPULSORY DELIVERY COCUDAKL 20-Mar-12 COMPULSORY DELIVERY DHANIYA 20-Mar-12 COMPULSORY DELIVERY GOLD100AHM 20-Mar-12 COMPULSORY DELIVERY JEERAUNJHA 20-Mar-12 COMPULSORY DELIVERY MAIZE 20-Mar-12 COMPULSORY DELIVERY POTATO 20-Mar-12 COMPULSORY DELIVERY PVC 20-Mar-12 COMPULSORY DELIVERY SUGARM Mar-12 COMPULSORY DELIVERY WHTSMQDELI 20-Mar-12 COMPULSORY DELIVERY SILVER5AHM 20-Mar-12 INTENTION MATCHING SYOREFIDR 20-Mar-12 INTENTION MATCHING GURCHMUZR 20-Mar-12 SELLERS RIGHT SYBEANIDR 20-Mar-12 SELLERS RIGHT GOLDINTL 29-Mar-12 INTENTION MATCHING RBDPALMOLN 30-Mar-12 INTENTION MATCHING KAPASSRNR 30-Mar-12 SELLERS RIGHT GARGUMJDR 20-Mar-12 STAGGERED DELIVERY GARSEDJDR 20-Mar-12 STAGGERED DELIVERY PPRMLGKOC 20-Mar-12 EARLY DELIVERY RBRRS4KOC 20-Mar-12 EARLY DELIVERY STEELLONG 20-Mar-12 EARLY DELIVERY Note: 1. For Early delivery & Staggered delivery contracts only alloations for expiry date is given. 2. Staggered Delivery was started on 12 March 2012 in Guar Gum and Guar Seed Contracts. RULE 12 (l) Rates of margin and amount of margin deposited from time to time As on Total Effective Deposits Available (Rs. In Lacs) Total Margin Utilisation (Rs. In Lacs) 31/03/ th ANNUAL REPORT

32 Annexure I to Directors Report Daily Margins as on March 31, 2012 Contract Expiry Initial Margin Exposure Margin Add. Pre Expiry Margin Total Margin Add. Long Add. Short Special Cash. Long Special Cash. Short BARLEYJPR 20-Apr BARLEYJPR 18-May BARLEYJPR 20-Jun BARLEYJPR 20-Jul BRENTCRUDE 13-Apr BRENTCRUDE 16-May BRENTCRUDE 14-Jun CASTORSEED 20-Apr CASTORSEED 18-May CASTORSEED 20-Jun CASTORSEED 20-Jul CHARJDDEL 20-Apr CHARJDDEL 18-May CHARJDDEL 20-Jun CHARJDDEL 20-Jul CHARJDDEL 17-Aug CHLL334GTR 20-Apr CHLL334GTR 20-Jun CHLL334GTR 20-Jul COCUDAKL 20-Apr COCUDAKL 18-May COCUDAKL 20-Jun COCUDAKL 20-Jul COPPER 30-Apr COPPER 29-Jun COPPER 31-Aug CRUDEOIL 19-Apr CRUDEOIL 21-May CRUDEOIL 19-Jun DHANIYA 20-Apr DHANIYA 18-May DHANIYA 20-Jun GOLD 3-Apr GOLD 4-Jun GOLD 3-Aug GOLD100AHM 20-Apr GOLD100AHM 18-May GOLD100AHM 20-Jun GOLDINTL 30-May GOLDINTL 30-Jul GOLDINTL 27-Sep GURCHMUZR 20-Jul GURCHMUZR 20-Sep GURCHMUZR 20-Nov JEERAUNJHA 20-Apr JEERAUNJHA 18-May JEERAUNJHA 20-Jun KAPASSRNR 30-Apr MAIZE 20-Apr MAIZE 18-May MAIZE 20-Jun MAIZE 20-Jul POTATO 20-Apr POTATO 18-May POTATO 20-Jun POTATO 20-Jul th ANNUAL REPORT

33 Annexure I to Directors Report Contract Expiry Initial Margin Exposure Margin Add. Pre Expiry Margin Total Margin Add. Long Add. Short Special Cash. Long Special Cash. Short POTATO 17-Aug POTATO 20-Sep PPRMLGKOC 20-Apr PPRMLGKOC 18-May PPRMLGKOC 20-Jun PPRMLGKOC 20-Jul PPRMLGKOC 17-Aug PPRMLGKOC 20-Sep PVC 20-Apr PVC 18-May PVC 20-Jun RBDPALMOLN 30-Apr RBDPALMOLN 31-May RBDPALMOLN 29-Jun RBRRS4KOC 20-Apr RBRRS4KOC 18-May RBRRS4KOC 20-Jun RBRRS4KOC 20-Jul RMSEED 20-Apr RMSEED 18-May RMSEED 20-Jun RMSEED 20-Jul SHANKRKPAS 30-Apr SILVER 3-May SILVER 3-Jul SILVER 3-Sep SILVER 3-Dec SILVER5AHM 20-Apr SILVER5AHM 18-May SILVER5AHM 20-Jun SILVERINTL 27-Apr SILVERINTL 28-Jun SILVERINTL 30-Aug STEELLONG 20-Apr STEELLONG 18-May STEELLONG 20-Jun STEELLONG 20-Jul STEELLONG 17-Aug SUGARM Apr SUGARM May SUGARM Jun SUGARM Jul SUGARM Aug SUGARM Sep SYBEANIDR 20-Apr SYBEANIDR 18-May SYBEANIDR 20-Jun SYBEANIDR 20-Jul SYBEANIDR 17-Aug SYOREFIDR 20-Apr SYOREFIDR 18-May SYOREFIDR 20-Jun SYOREFIDR 20-Jul SYOREFIDR 17-Aug TMCFGRNZM 20-Apr TMCFGRNZM 18-May TMCFGRNZM 20-Jun WHTSMQDELI 20-Apr th ANNUAL REPORT

34 Annexure I to Directors Report Contract Expiry Initial Margin Exposure Margin Add. Pre Expiry Margin Total Margin Add. Long Add. Short Special Cash. Long Special Cash. Short WHTSMQDELI 18-May WHTSMQDELI 20-Jun WHTSMQDELI 20-Jul WHTSMQDELI 17-Aug WHTSMQDELI 20-Sep RULE 12 (m) Allowances payable by the seller in the event of mofussil delivery, fixed or altered during the year Such allowances, called location Premium / Discount for deliveries other than at basis centres are announced prior to launch of respective contracts and are disseminated by way of Exchange circulars from time to time. RULE 12 (n) Volume of transactions and quantity delivered against forward contracts Volume of Transactions/Traded Value Sl. No. COMMODITY TRADED VALUE in (Rs. Crs) % CONTRIBUTED 1 SYOREFIDR 415, % 2 GARSEDJDR 323, % 3 CHARJDDEL 274, % 4 RMSEED 165, % 5 SYBEANIDR 122, % 6 GARGUMJDR 98, % 7 CRUDEOIL 86, % 8 PPRMLGKOC 75, % 9 JEERAUNJHA 55, % 10 COCUDAKL 30, % 11 KAPASSRNR 19, % 12 COPPER 18, % 13 DHANIYA 17, % 14 GOLD 16, % 15 SUGARM200 15, % 16 TMCFGRNZM 15, % 17 SILVER 12, % 18 CHLL334GTR 11, % 19 STEELLONG 11, % 20 CASTORSEED 7, % 21 GURCHMUZR 5, % 22 POTATO 2, % 23 WHTSMQDELI 2, % 24 MAIZE 2, % 25 BARLEYJPR 1, % 26 GOLDINTL % 27 SILVERINTL % 28 BRENTCRUDE % 29 RBRRS4KOC % 30 GOLD100AHM % 31 NATURALGAS % 32 PVC % 33 NICKEL % 34 RBDPALMOLN % 35 SHANKRKPAS % 36 BADAM % 37 COALWANI % 38 CRDPOLKDL % 39 GASOLINE % 32 9th ANNUAL REPORT

35 Annexure I to Directors Report Sl. No. COMMODITY TRADED VALUE in (Rs. Crs) % CONTRIBUTED 40 HEATINGOIL % 41 KACHIGHANI % 42 LEAD % 43 MENTHAOIL % 44 PLATINUM % 45 SILVER5AHM % 46 SUGARS % 47 ZINC % Grand Total 1,810, % Delivery Details Expiry Date Commodity Allocation Shortages Delivery Unit April-11 GOLD KG April-11 BARLEYJPR MT April-11 CHARJDDEL MT April-11 CHLL334GTR MT April-11 COCUDAKL MT April-11 DHANIYA MT April-11 GARGUMJDR MT April-11 GARSEDJDR MT April-11 JEERAUNJHA MT April-11 MAIZE MT April-11 POTATO MT April-11 PPRMLGKOC MT April-11 RMSEED MT April-11 STEELLONG MT April-11 SUGARM MT April-11 SYBEANIDR MT April-11 TMCFGRNZM MT April-11 WHTSMQDELI MT May-11 SILVER KG May-11 BARLEYJPR MT May-11 CASTORSEED MT May-11 CHARJDDEL MT May-11 COCUDAKL MT May-11 DHANIYA MT May-11 GARGUMJDR MT May-11 GARSEDJDR MT May-11 JEERAUNJHA MT May-11 MAIZE MT May-11 POTATO MT May-11 PPRMLGKOC MT May-11 RMSEED MT May-11 STEELLONG MT May-11 SUGARM MT May-11 SYBEANIDR MT May-11 TMCFGRNZM MT May-11 WHTSMQDELI MT June-11 GOLD KG June-11 BARLEYJPR MT June-11 CASTORSEED MT June-11 CHARJDDEL MT June-11 CHLL334GTR MT June-11 COCUDAKL MT June-11 DHANIYA MT June-11 GARGUMJDR MT June-11 GARSEDJDR MT June-11 JEERAUNJHA MT June-11 MAIZE MT June-11 POTATO MT June-11 PPRMLGKOC MT June-11 RMSEED MT 9th ANNUAL REPORT

36 Annexure I to Directors Report Expiry Date Commodity Allocation Shortages Delivery Unit June-11 STEELLONG MT June-11 SUGARM MT June-11 SYBEANIDR MT June-11 TMCFGRNZM MT June-11 WHTSMQDELI MT July-11 SILVER KG July-11 BARLEYJPR MT July-11 CASTORSEED MT July-11 CHARJDDEL MT July-11 CHLL334GTR MT July-11 COCUDAKL MT July-11 DHANIYA MT July-11 GARGUMJDR MT July-11 GARSEDJDR MT July-11 JEERAUNJHA MT July-11 MAIZE MT July-11 POTATO MT July-11 PPRMLGKOC MT July-11 RMSEED MT July-11 STEELLONG MT July-11 SUGARM MT July-11 SYBEANIDR MT July-11 TMCFGRNZM MT July-11 WHTSMQDELI MT August-11 GOLD KG August-11 CASTORSEED MT August-11 BARLEYJPR MT August-11 CHARJDDEL MT August-11 CHLL334GTR MT August-11 COCUDAKL MT August-11 DHANIYA MT August-11 GARGUMJDR MT August-11 GARSEDJDR MT August-11 JEERAUNJHA MT August-11 MAIZE MT August-11 POTATO MT August-11 PPRMLGKOC MT August-11 RMSEED MT August-11 STEELLONG MT August-11 SUGARM MT August-11 SYBEANIDR MT August-11 TMCFGRNZM MT August-11 WHTSMQDELI MT September-11 SILVER KG September-11 BARLEYJPR MT September-11 CASTORSEED MT September-11 CHARJDDEL MT September-11 CHLL334GTR MT September-11 COCUDAKL MT September-11 DHANIYA MT September-11 GARGUMJDR MT September-11 GARSEDJDR MT September-11 JEERAUNJHA MT September-11 MAIZE MT September-11 POTATO MT September-11 PPRMLGKOC MT September-11 RMSEED MT September-11 STEELLONG MT September-11 SUGARM MT September-11 SYBEANIDR MT September-11 TMCFGRNZM MT September-11 WHTSMQDELI MT October-11 GOLD KG October-11 BARLEYJPR MT October-11 CASTORSEED MT 34 9th ANNUAL REPORT

37 Annexure I to Directors Report Expiry Date Commodity Allocation Shortages Delivery Unit October-11 CHARJDDEL MT October-11 CHLL334GTR MT October-11 DHANIYA MT October-11 GARGUMJDR MT October-11 GARSEDJDR MT October-11 JEERAUNJHA MT October-11 MAIZE MT October-11 PPRMLGKOC MT October-11 RMSEED MT October-11 STEELLONG MT October-11 SUGARM MT October-11 TMCFGRNZM MT October-11 WHTSMQDELI MT November-11 BARLEYJPR MT November-11 CASTORSEED MT November-11 CHARJDDEL MT November-11 CHLL334GTR MT November-11 DHANIYA MT November-11 GARGUMJDR MT November-11 GARSEDJDR MT November-11 JEERAUNJHA MT November-11 MAIZE MT November-11 PPRMLGKOC MT November-11 RMSEED MT November-11 STEELLONG MT November-11 SUGARM MT November-11 SYBEANIDR MT November-11 TMCFGRNZM MT November-11 WHTSMQDELI MT December-11 GOLD KG December-11 SILVER KG December-11 BARLEYJPR MT December-11 CASTORSEED MT December-11 CHARJDDEL MT December-11 CHLL334GTR MT December-11 COCUDAKL MT December-11 DHANIYA MT December-11 GARGUMJDR MT December-11 GARSEDJDR MT December-11 JEERAUNJHA MT December-11 MAIZE MT December-11 PPRMLGKOC MT December-11 RMSEED MT December-11 STEELLONG MT December-11 SUGARM MT December-11 SYBEANIDR MT December-11 TMCFGRNZM MT December-11 WHTSMQDELI MT January-12 BARLEYJPR MT January-12 CASTORSEED MT January-12 CHARJDDEL MT January-12 COCUDAKL MT January-12 DHANIYA MT January-12 GARGUMJDR MT January-12 GARSEDJDR MT January-12 JEERAUNJHA MT January-12 MAIZE MT January-12 PPRMLGKOC MT January-12 RBRRS4KOC MT January-12 RMSEED MT January-12 STEELLONG MT January-12 SUGARM MT January-12 SYBEANIDR MT January-12 WHTSMQDELI MT February-12 GOLD KG 9th ANNUAL REPORT

38 Annexure I to Directors Report Expiry Date Commodity Allocation Shortages Delivery Unit February-12 BARLEYJPR MT February-12 CASTORSEED MT February-12 CHARJDDEL MT February-12 CHLL334GTR MT February-12 COCUDAKL MT February-12 DHANIYA MT February-12 GARGUMJDR MT February-12 GARSEDJDR MT February-12 JEERAUNJHA MT February-12 MAIZE MT February-12 PPRMLGKOC MT February-12 PVC MT February-12 RBRRS4KOC MT February-12 STEELLONG MT February-12 SUGARM MT February-12 SYBEANIDR MT February-12 WHTSMQDELI MT March-12 CASTORSEED MT March-12 CHARJDDEL MT March-12 CHLL334GTR MT March-12 COCUDAKL MT March-12 DHANIYA MT March-12 JEERAUNJHA MT March-12 MAIZE MT March-12 PPRMLGKOC MT March-12 PVC MT March-12 RBRRS4KOC MT March-12 STEELLONG MT March-12 SUGARM MT March-12 SYBEANIDR MT March-12 WHTSMQDELI MT March-12 GARGUMJDR MT March-12 GARSEDJDR MT March-12 SILVER KG March-12 GARGUMJDR MT March-12 GARSEDJDR MT * Allocation happen during Early Delivery & Staggered Delivery period is also included in above data. 36 9th ANNUAL REPORT

39 Report On Corporate Governance 1. CORPORATE GOVERNANCE EXCHANGE S PHILOSOPHY Introduction The Exchange is owned by national level financial institutions, exchanges, banks, private sector companies and foreign institutional investors. Such a shareholding structure underscores the need for greater transparency and disclosure. Exchange philosophy on Corporate Governance Being a first level regulator, the business that the Exchange is in, makes it accountable to hedgers, value chain participants, investors and other participants. The Exchange s corporate governance philosophy is based on transparency & disclosures, integrity and accountability. The Corporate Governance structure of the Exchange is based on an effective independent board, constitution of Board committees to oversee certain critical aspects of the company and separation of the supervisory role of the Board from the executive management. The Exchange has constituted five separate committees, namely, the Audit Committee, the Board Governance & Compensation Committee, the Business Strategy Committee, the Risk Management Committee and the Nomination Committee. The Exchange voluntarily follows important provisions of Clause 49 of the Listing Agreement and is committed to adopting all best practices, both in letter and in spirit, in the interest of all its stakeholders. Towards this end, the information given in this section constitutes the report on Corporate Governance for the financial year BOARD OF DIRECTORS Details of composition of the Board and attendance of Directors/Members during meetings of the Board and its committees are as given below. Composition The Board comprises twelve directors, of whom shareholders have nominated six Directors, FMC has nominated four Directors, one Independent Director and the Managing Director & CEO, who is the only Executive Director. Board Meetings held during the financial year and attendance record During the financial year , six meetings of the Board were held on April 27, 2011, May 31, 2011, July 14, 2011, December 6, 2011, January 19, 2012 and March 7, Apart from these meetings, the Board of Directors also considered and approved certain matters by way of circular resolutions. 9th ANNUAL REPORT

40 Report On Corporate Governance The following table details Directors who held office and the meetings attended by them. Name of Director Number of Board Meetings Number of Board Meetings Attended Whether attended last AGM Number of Memberships in Board Committees of NCDEX Mr. Rakesh Kapur 6 6 No 3 Mr. Ravi Narain 6 6 No 3 Mr. R. Ramaseshan, Managing Director & CEO 6 6 Yes 2 Mr. Umesh Chandra Sarangi(Upto June 7, 2011) 2 0 No 0 Mr. Narendra Murkumbi 6 5 No 3 Mr. Sanjiv Batra 6 6 No 2 Mr. Gaurav Arora (w.e.f. April 27, 2011) 5 5 No 2 Mr. V. K. Kukreja (Upto August 8, 2011) 3 2 No 2 Mr. O. P. Gahrotra 6 6 Yes 3 Mr. V. K. Aggarwal 6 6 No 3 Mr. V. C. Chaturvedi 6 6 No 0 Mr. M. Raman (w.e.f. October 24, 2011) 3 3 No 2 Mr. Subir K. Mitra (w.e.f. January 6, 2012) 2 2 No 2 Mr. Samir K.Mitter (w.e.f. January 13, 2012) 2 2 No the number of meetings held during the year, after the date of appointment of Directors/ upto the date of retirement or resignation by a Director. 3. COMMITTEES OF THE BOARD The Board Committees focus on specific areas as per the functions delegated by the Board and take informed decisions. Each Committee functions within the given scope and powers as per the delegation of the Board and the applicable provisions of the Companies Act, The Exchange has the following five committees Audit Committee Nomination Committee Board Governance and Compensation Committee Business Strategy Committee Risk Management Committee I. AUDIT COMMITTEE The Audit Committee s main function is to oversee the audit function in the company and the quality of internal control and financial reporting. Composition, meetings and attendance The Audit Committee has been constituted as per Section 292A of the Companies Act, 1956 and consists of four non-executive Directors (of which two Directors retired on March 31, 2012). The Managing Director & CEO, Finance Head and Statutory Auditors are invited to 38 9th ANNUAL REPORT

41 Report On Corporate Governance attend the meetings of the committee from time to time. The Company Secretary acts as the Secretary to the Audit Committee. During the financial year , the Audit Committee met five times on May 31, 2011, August 25, 2011, September 30, 2011, December 6, 2011 and March 6, The attendance of the Members at the meetings of the Committee is given below Name of Member Number of meetings held during the relevant Number of meetings attended Mr. Rakesh Kapur 5 5 Mr. M. Raman 1 1 (w.e.f. January 19, 2012) Mr. O. P. Gahrotra 5 5 Mr. V. K. Aggarwal 5 the number of meetings held during the year, after the date of appointment of Committee Members/upto the date of retirement or resignation by Committee Members. II. NOMINATION COMMITTEE The Nomination Committee screens and recommends induction of persons to be appointed on the Board and their terms of office. Composition, meetings and attendance The Nomination Committee consist of six non-executive directors. No meeting of the committee was convened during the financial year The Committee consists of the following directors - 1. Mr. O. P. Gahrotra (Upto January 19, 2012) 2. Mr. Ravi Narain (Upto January 19, 2012) 3. Mr. V. K. Kukreja (Upto August 8, 2011) 4. Mr. R. Ramaseshan (Upto January 19, 2012) 5. Mr. V. K. Aggarwal (Upto March 31, 2012) 6. Mr. M. Raman (w.e.f. January 19, 2012) 7. Mr. Sanjiv Batra (w.e.f. January 19, 2012) 8. Mr. Narendra Murkumbi (w.e.f. January 19, 2012) 9. Mr. Subir K. Mitra (w.e.f. January 19, 2012) 10. Mr. Samir K. Mitter (w.e.f. January 19, 2012) III. BOARD GOVERNANCE AND COMPENSATION COMMITTEE The Board Governance and Compensation Committee oversees and approves the policy framework relating to good corporate governance, the best practices to be adopted by the Exchange and also prescribes management development measures. 9th ANNUAL REPORT

42 Report On Corporate Governance Composition, meetings and attendance The Board Governance and Compensation Committee consist of six non-executive Directors. During the financial year , three meetings of the Committee were held on June 27, 2011, August 25, 2011 and March 7, The details of composition of the Committee and attendance of the Members at the meetings of the Committee are given below Name of Member Number of meetings held during the relevant Number of meetings attended Mr. V. K. Kukreja (Upto August 8, 2011) 1 0 Mr. Rakesh Kapur 3 3 Mr. Ravi Narain 3 3 Mr. Narendra Murkumbi 3 3 Mr. Gaurav Arora (w.e.f. January 19, 2012) 1 1 Mr. V. K. Aggarwal 3 3 Mr. M. Raman (w.e.f. January 19, 2012) 1 the number of meetings held during the year, after the date of appointment of Committee Members/upto the date of retirement or resignation by Committee Members. IV. BUSINESS STRATEGY COMMITTEE Business Strategy Committee give direction and oversee medium and long range business strategies. Composition, meetings and attendance The Business Strategy Committee presently consist of five non-executive directors and Managing Director & CEO. The first meeting of the committee was convened on March 7, The Committee consists of the following directors 1. Mr. Ravi Narain 2. Mr. Narendra Murkumbi 3. Mr. Gaurav Arora 4. Mr. Rakesh Kapur 5. Mr. Sanjiv Batra 6. Mr. O. P. Gahrotra (Upto March 31, 2012) 7. Mr. R. Ramaseshan V. RISK MANAGEMENT COMMITTEE The Risk Management Committee overseas risk and control measures that are needed to be built into the system and at periodic intervals, monitoring their compliance and suggestions for improvement. The Committee will also oversee the policy and procedures for investments made by the Exchange. 40 9th ANNUAL REPORT

43 Report On Corporate Governance Composition, meetings and attendance The Risk Management Committee consists of five non-executive directors and Managing Director & CEO. No meeting of the committee was held during the financial year The Committee consists of the following directors 1. Mr. O. P. Gahrotra (Upto March 31, 2012) 2. Mr. V. K. Aggarwal (Upto March 31, 2012) 3. Mr. Ravi Narain 4. Mr. Samir K. Mitter 5. Mr. Subir K. Mitra 6. Mr. R. Ramaseshan 4. DETAILS OF ANNUAL GENERAL MEETINGS Particulars of last three annual general meetings of the Exchange are as follows Financial Year Date of AGMs Time Venue Special resolutions adopted August 10, :00 a.m. Board Room, First Floor, Gayathri Towers, Appasaheb Marathe Marg, Prabhadevi, No special resolution was adopted Mumbai July 15, a.m. Board Room, First No special resolution was Floor, Gayathri Towers, adopted Appasaheb Marathe Marg, Prabhadevi, Mumbai June 30, a.m. Board Room, First Re-appointment of Floor, Gayathri Towers, Mr. R. Ramaseshan as Appasaheb Marathe Managing Director & Marg, Prabhadevi, CEO Mumbai Alteration of Articles of Association 5. DISCLOSURES The Exchange has complied with the provisions of all applicable statutes and regulations and there has been no instance of non-compliance. No penalties have been imposed on the Exchange by any statutory authority on any matter related to commodities trading during the year. It may be noted that none of the senior management personnel have material, financial or commercial interest in the transactions that may have a potential conflict with that of the Exchange. There are no significant related party transactions of material nature, with its directors or their 9th ANNUAL REPORT

44 Report On Corporate Governance relatives, the management or any relative of senior managerial personnel that may have potential conflict with the interest of the Exchange. Management Discussion and Analysis Report The Management s Discussion and Analysis Report for the year under review is presented in a separate section forming part of the Annual Report. Whistle Blower Policy The Exchange promotes ethical behaviour in all its business activities and has put in place a mechanism of reporting illegal or unethical behaviour. The Exchange has a whistle blower policy wherein the employees are free to report violations of laws, rules, regulations or unethical conduct to the top management which in turn is notified to the workgroups. Such reports received are reviewed by the management from time to time. The identity of the persons reporting violations is protected. 6. GENERAL INFORMATION FOR SHAREHOLDERS (i) Annual General Meeting The Ninth Annual General Meeting is convened on Monday, September 3, 2012 at a.m., in the Board Room on first floor, at Gayatri Towers, Appasaheb Marathe Marg, Prabhadevi, Mumbai (ii) Financial Year : April 1, 2011 to March 31, 2012 (iii) Shareholding Pattern: As at March 31, 2012, the following were the shareholders. DETAILS OF EQUITY SHAREHOLDERS AS ON MARCH 31, 2012 Sr. No. Name of the shareholder Total no. of shares % of total capital 1. Jaypee Capital Services Limited 11,340, % 2. Shree Renuka Sugars Limited 6,336, % 3. Life Insurance Corporation of India (LIC) 5,625, % 4. National Bank for Agriculture and Rural Development 5,625, % (NABARD) 5. National Stock Exchange of India Limited (NSE) 5,067, % 6. Indian Farmers Fertiliser Cooperative Limited (IFFCO) 4,500, % 7. Punjab National Bank (PNB) 3,694, % 8. Canara Bank 3,055, % 9. CRISIL Limited 1,875, % 10. InterContinental Exchange (ICE) 1,500, % 11. Goldman Sachs Investments (Mauritius) I Limited 1,500, % 12. Build India Capital Advisors LLP 557, % 13. Individuals (2 numbers)* % * Insignificant holding in terms of percentage Total 50,676, % 42 9th ANNUAL REPORT

45 Report On Corporate Governance Equity Shareholding Pattern as on March 31, th ANNUAL REPORT

46 Management Discussion and Analysis INDIAN ECONOMY: KEY DEVELOPMENTS Concerns over slowing growth and high inflation were the key challenges that the economy faced during Against this backdrop, policy initiatives to contain inflation took priority over growth propelling policies. After raising policy rates by 375 basis points between March 2010 and October 2011 to contain inflation and anchor inflationary expectations, the Reserve Bank of India (RBI) maintained status quo vis-à-vis the key policy rates for the remaining part of the fiscal year. Inflation as measured by the wholesale price index remained close to 10 per cent until November 2011, which reduced thereafter due to the seasonal decline in the prices of food articles and a favourable base effect. Inflation in food articles dipped sharply from 10 per cent in April 2011 to 0.79 per cent in December 2011, moving briefly to the negative territory in January 2012 but increased to 9.94 per cent in March 2012 as prices of vegetables surged to 30 per cent and protein based food items - eggs, fish, meat, milk and pulses continued to witness double digit inflation due to structural demand supply imbalances. Unlike the broad based growth experienced in , fiscal year saw a sharp deceleration in the pace of growth in the industrial sector which is estimated to have slowed down to 3.9 per cent for want of favourable domestic policies, monetary tightening slackening of external demand and a host of other factors. The index of industrial production (IIP) slumped to 3.5 per cent during the period between April 2011 and February 2012 from 8.1 per cent during the corresponding period in the previous year. Agriculture and allied sector is estimated to have grown at 2.5 per cent in , as against 7 per cent growth recorded in the previous fiscal, notwithstanding an all time high food grain output of million tonnes in crop year as estimated by the Third Advance Estimate of the Ministry of Agriculture. While the production of cereals, cotton and sugarcane increased, the output of pulses and oilseeds declined, increasing the dependence over imports to cater to the increasing domestic demand. Services sector is estimated to have grown at 9.4 per cent in , marginally higher than 9.3 per cent in the previous fiscal. Overall, the growth in the GDP during April December 2011 slowed significantly to 6.9 per cent from 8.1 per cent recorded during the corresponding period in the previous year. Merchandise exports reached US$303.7 billion in , 21 per cent higher than US$251.1 billion in surpassing the target of US$300 billion set for the fiscal, but the surge in imports to US$488.6 billion from US$369.8 billion in widened the trade deficit to the highest ever level of US$184.9 billion. Consequently, the current account deficit is expected to widen to 4 per cent reflecting the high level of trade deficit during the year. The capital account was under strain, as portfolio inflows were lower, despite the high net FDI inflows during the first three quarters of the fiscal. Consequently, the Indian rupee remained under pressure since August 2011, reflecting the burgeoning imbalance in current and capital accounts, rising fiscal deficit and global uncertainty. The rupee touched an all time low of against the dollar on December 15, 2011 post which government and the RBI initiated steps to attract foreign flows and control speculation in the foreign exchange market. Fiscal deficit swelled to 5.9 per cent of the GDP significantly higher than the target of 4.6 per cent set for the year. With increasing commodity prices and limited flexibility in domestic price setting, the subsidy bill expanded while low non-tax revenue from divestment forced the government to expand market borrowing to Rs. 4.4 trillion which potentially crowded out private investment. GLOBAL ECONOMY: A PERSPECTIVE Political unrest in the Middle East and North Africa and a mired state of economy in Japan post tsunami that hit the island country in March 2011 intensified uncertainties in the global economy. This coupled 44 9th ANNUAL REPORT

47 Management Discussion and Analysis with mixed signals emerging from the Chinese economy and a stuttering Indian economy only added to global uncertainty. International crude oil prices surged above US$120 a barrel reflecting geo-political concerns and the abundant liquidity released through by the quantitative easing programmes of the central banks in the United States and Europe. The global economy grew at 4 per cent in US economy rebounded with 3 per cent growth in Q as consumer spending improved and unemployment dropped from 9.1 per cent in August 2011 to 8.2 per cent in March 2012 as hiring improved. Housing sector, the epicentre of the financial crisis showed signs of stabilisation. Debt crisis in the euro zone intensified but coordinated effort from the euro zone countries, the European Central Bank (ECB) and International Monetary Fund (IMF) in latter part of the year helped contain the crisis. A sustainable solution to the problem in the euro zone is yet to emerge, given the conflicting problems of high unemployment, recession, the large public debt and national priorities assuming precedence over the problems plaguing the continent. OUTLOOK The outlook for the coming year principally depends on the state of the global economy and the pace of reforms in India. DISCUSSION ON PERFORMANCE DURING THE YEAR During the financial year , the Exchange has earned a net profit of Rs crore. The year under review witnessed a healthy increase in turnover, as the total traded value on the Exchange grew by 28 per cent as compared to the previous financial year. The Exchange recorded a total turnover of Rs. 18,10,210 crore (one-way) during the current financial year as compared to the turnover in the previous year at Rs. 14,10,602 crore (one-way). The Daily Turnover touched a peak at Rs. 11,291 crore on January 3, The ADTV for the year was Rs. 6,034 crore, as compared to the ATDV of the previous year at Rs. 4,686 crore. As of 31st March 2012, the Exchange offered 32 contracts comprising 21 agricultural commodities, 6 in bullion, 2 in metals, 2 in energy and 1 polymer (PVC) contract. The top five commodities, in terms of traded turnover were soya oil, guar seed, chana, rape mustard seed and soybean and contributed to per cent of the total turnover of the Exchange. The financial year witnessed robust trading in oil and oilseeds complex with soybean, refined soy oil and rape mustard seed reporting a significant growth, essentially due to higher hedging interest and wider participation. Easing the hedge documentation process for large processors contributed to the increased open interest, which triggered and sustained the higher trading interest. Refined soya oil become the flagship product of the Exchange clocking a total volume of about 620 lakh tonnes valued at Rs. 4,15,762 crores. This contract also recorded the highest daily turnover of Rs. 4,201 crores on January 3, Trading interest in Soybean increased during the year and the contract recorded the highest trading volume of Rs. 1,390 crores on January 3, Revision in the specifications of this contract to encourage deliveries resulted in an impressive jump in the quantity delivered in the Exchange. As a component of the oil and oil seed complex, rape mustard seed also exhibited a remarkable increase in trading and clocked its highest volume of Rs. 2,831 crores on February 27, The Exchange witnessed a near total hold on the open interest and trading volume of castor seed and cottonseed oilcake. Liquidity and participation in these contracts increased substantially during the 9th ANNUAL REPORT

48 Management Discussion and Analysis year, primarily due to emphasis on the quality of the stocks deposited in accredited warehouses and a smooth delivery process. In the spices complex, liquidity in the coriander contract improved and the ADTV increased at an astounding 214 per cent to Rs crores. In the grains complex, Chana emerged as the major commodity traded on the Exchange platform, with a significant increase in both open interest and turnover. The guar complex, namely guar seed and guar gum, attracted attention in the latter half of the year. A strong demand due to a spurt in drilling for oil and gas, resulted in increased exports of guar gum, causing a significant increase in the price of both guar and guar gum in the physical market. These contracts attracted a lot of trading interest and due to inadequate availability of goods in the physical market, the Exchange closed trading in these contracts in March, 2012, as advised by the Forward Markets Commission. Crude oil continued as major non agricultural commodity traded on the Exchange. On metals front, steel was the main contributory. Other liquid non agricultural commodities include copper, gold and silver. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY Apart from a structured framework, the Exchange has well documented policies, procedures, authorisation guidelines, and process manuals, commensurate with the complexities of individual business segments. The Exchange has engaged the services of a reputed audit firm M/s. Mahajan & Aibara to conduct an internal audit of its operations. Further, business and other processes are also reviewed by professional consultants on a regular basis. These consultants oversee Internal Controls and advise on the adequacy of the process and compliance with the laid down processes. Shortcomings are identified and rectified. Significant observations made by these consultants and the status of implementation of recommended remedial measures are regularly presented to and reviewed by the Audit Committee of the Board. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES INCLUDING NUMBER OF PEOPLE EMPLOYED Details of Human Resource activities during the financial year are as per the following - RECRUITMENT The company recruits employees keeping in mind skill requirements of the organisation, its high technology orientation, the diverse product domain expertise needed, the strong process and operational control requirements. Equally important is the need to have a mix of experience and youth, with particular emphasis on the ability of an individual to absorb knowledge quickly, be self motivated and display the required initiative. To achieve this mix, apart from recruitment consultants and website announcements, word of mouth referrals were relied upon. Employees recruited came from other segments of the financial sector, with requisite or analogous work background. The Exchange has outsourced all routine jobs, retaining all strategic and critical jobs. To the extent feasible, routine tasks are being continuously automated. Technology is one area where there is a mix of insourcing and outsourcing. The challenge has been in arriving at an optimal insource/outsource balance; the Exchange constantly fine tunes this mix to improve organisational efficiency. 46 9th ANNUAL REPORT

49 Management Discussion and Analysis The number of employees (including all categories, namely, regular, contractual and outsourced) has increased from 232 as on March 31, 2011 to 239 as on March 31, There was increase in the number of male employees (from 138 to 143) and slight decrease in the number of female employees (from 37 to 34). The breakup of the employees in the company is as under. Function Regular Employees (Numbers) As on March 31, 2011 As on March 31, 2012 Outsourced Employees (Numbers) As on March As on March 31, , 2012 Business Technology & Operations Compliance Corporate Services Others Total The above does not include 162 persons deployed in the technology department by TCS, NSE (IT) and other technology service providers, who work full time in the Exchange. EMPLOYEE ATTRITION LEVELS A big challenge for the company has been managing attrition levels. During the period under review, 55 persons (44 regular employees, and 11 outsourced persons) left the organisation. The overall attrition rate inclusive of outsourced personnel works out to 23 per cent, while in respect of regular employees of the company the rate is at a 24.8 per cent. The attrition rates were 26 per cent and 20.2 per cent respectively in the previous year; while the attrition rate remained unchanged in respect of regular employees, it was higher case of the outsourced category. CHALLENGES AHEAD The Exchange has carved a niche for itself in the trading of agricultural commodities. Overseeing warehouse service providers who manage deposit of commodities in warehouses spread across the country, managing delivery of commodities after every settlement, a rigourous process for country wide price polling, etc., have led to the Exchange earning the confidence of all market participants. The Exchange performs a useful economic function, as farmers, producers and other market participants look to the prices discovered in the Exchange. However, the constant policy glare that the Exchange faces in wake of inflationary concerns, notwithstanding various studies and research reports that have underlined that futures trading does not contribute to increases in prices of commodities, is an immediate challenge. Given the above environment, the Exchange has the twin responsibility of creating awareness and making its price discovery function relevant to the real economy. While the Exchange would continue its education programmes as in previous years, distinct efforts are required to integrate the physical market with the derivatives market. Towards that end, the subsidiary of the Exchange NSPOT has taken up Mandi Modernisation Programmes in various states. The Exchange would supplement this effort by increasing its presence amongst the value chain in various commodities. It is a small step towards a long journey. But this first step has brought the destination closer and the Exchange would continue steadily in this path and be an important contributor to the growth of the country. 9th ANNUAL REPORT

50 Auditors Report To The Members of National Commodity & Derivatives Exchange Limited 1. We have audited the attached Balance Sheet of National Commodity & Derivatives Exchange Limited ( the Company ) as at March 31, 2012and also the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. Without qualifying our opinion, we draw attention to Note 11 to the financial statements in respect of investments of Rs.1,500 lacs (March 31, 2011: Rs.1,500 lacs) in NCDEX Spot Exchange Limited, a subsidiary company and in respect of investments of Rs. 1,300 lacs (March 31, 2011: Rs. 1,300 lacs) in Power Exchange India Limited, an associate company. Having regards to the factors considered by the Management, discussed in the aforesaid note, the Management is of the view that there is no permanent diminution to the carrying value of these investments and hence no adjustments has been made in this regard in the accompanying financial statements. 4. As required by the Companies (Auditor s Report) Order, 2003 (as amended) ( the Order ) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 ( the Act ), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 5. Further to our comments in the Annexure referred to above, we report that: i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; ii. iii. iv. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account; In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act; v. On the basis of the written representations received from the directors, as on March 31, 2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; 48 9th ANNUAL REPORT

51 Auditors Report vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India; a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012; b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date. For S.R.BATLIBOI & Co. Firm registration number: E Chartered Accountants per Shrawan Jalan Partner Membership No.: Place : Mumbai Date : June 22, th ANNUAL REPORT

52 Auditors Report Annexure referred to in paragraph 4 of our report of even date Re: National Commodity & Derivatives Exchange Limited (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) Fixed assets have been physically verified by the management during the year and material discrepancies were identified on such verification. These have been properly dealt with in the books of accounts. (c) There was no disposal of a substantial part of fixed assets during the year. (ii) The Company is a commodity exchange and does not maintain any inventory. Therefore, the provisions of clause 4(ii) of the Order are not applicable to the Company and hence not commented upon. (iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4(iii) (a) to (d) of the Order are not applicable to the Company and hence not commented upon. (b) According to information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4(iii) (e) to (g) of the Order are not applicable to the Company and hence not commented upon. (iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for rendering of services. The activities of the Company do not involve purchase of inventory and the sale of goods. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas. (v) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, Accordingly, the provisions of clause 4(v)(b) of the Order is not applicable to the Company and hence not commented upon. (vi) The Company has not accepted any deposits from the public. (vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. (viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Act for the products of the Company. (ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, incometax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it. The provisions of Employees State Insurance Act, 1948 are not applicable to the Company. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.the provisions of Employees State Insurance Act, 1948 are not applicable to the Company. 50 9th ANNUAL REPORT

53 Auditors Report (c) According to the information and explanations given to us, there are no dues of income tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute. (x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year. (xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company did not have any dues to a financial institution, bank or debenture holders. (xii) According to the information and explanations given to us and based on the documents and records produced before us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor s Report) Order, 2003 (as amended) are not applicable to the Company. (xiv) In respect of dealing/trading in shares, securities, debentures and other investments, in our opinion and according to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The shares, securities, debentures and other investments have been held by the Company, in its own name. (xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. (xvi) The Company did not have any term loans outstanding during the year. (xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment. (xviii)the Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act. (xix) The Company did not have any outstanding debentures during the year. (xx) The Company has not raised any money by public issues. (xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year. For S.R.BATLIBOI & Co. Firm registration number: E Chartered Accountants per Shrawan Jalan Partner Membership No.: Place : Mumbai Date : June 22, th ANNUAL REPORT

54 Balance Sheet as at March 31, 2012 Notes As at March 31, 2012 (Rupees in lacs) As at March 31, 2011 Equity and liabilities Shareholders' funds Share capital 3 5,068 5,068 Reserves and surplus 4 25,072 22,186 30,140 27,254 Non - current liabilities 5 1,335 1,230 1,335 1,230 Current liabilities and provisions Trade payables 6 1,584 1,470 Other current liabilities 7 54,634 40,306 Short - term provisions ,088 42,612 Total 88,563 71,096 Assets Non - current assets Fixed assets Tangible assets 9 1,971 2,006 Intangible assets 10 1,342 1,063 Intangible assets under development Non - current investments 11 5,571 3,371 Deferred tax assets (net) Long - term loans and advances 13 1,877 1,779 Other non - current assets 14 2,589-14,150 8,979 Current assets Current investments 15 19,548 9,207 Trade receivables 16 1, Cash and bank balances 17 51,366 50,172 Short - term loans and advances Other current assets 14 1,291 1,184 74,413 62,117 Total 88,563 71,096 Summary of significant accounting policies 2.1 The accompanying notes are an integral part of the financial statements. As per our report of even date For S.R.BATLIBOI & Co. For and on behalf of the Board of Directors Firm Registration No : E National Commodity & Derivatives Exchange Limited Chartered Accountants R. Ramaseshan Rakesh Kapur per Shrawan Jalan Managing Director & CEO Director Partner Membership No M. K. Ananda Kumar Place : Mumbai Company Secretary Date : June 22, th ANNUAL REPORT

55 Statement of Profit and Loss for the year ended March 31, 2012 Notes For the year ended March 31, 2012 (Rupees in lacs) For the year ended March 31, 2011 Income Revenue from operations 19 7,180 8,137 Other income 20 6,679 3,783 Total revenue (I) 13,859 11,920 Expenditure Employee benefits expense 21 2,207 2,004 Other expenses 22 6,152 5,054 Depreciation and Amortization expenses 23 1,225 1,329 Total expenses (II) 9,584 8,387 Profit / (Loss) before tax III ( I-II ) 4,275 3,533 Tax expense Current tax (623) (737) Deferred tax 63 (10) MAT Credit (179) 334 Total tax income/(expense) (739) (413) Profit after tax (III - IV) 3,536 3,120 Earnings per share Basic & Diluted computed on the basis of profit after tax for the year Weighted average number of equity share used in calculating the above (Equity shares of Rs.10 each fully paid up) ,676,000 41,125,364 Summary of significant accounting policies 2.1 The accompanying notes are an integral part of the financial statements. As per our report of even date For S.R.BATLIBOI & Co. For and on behalf of the Board of Directors Firm Registration No : E National Commodity & Derivatives Exchange Limited Chartered Accountants R. Ramaseshan Rakesh Kapur per Shrawan Jalan Managing Director & CEO Director Partner Membership No M. K. Ananda Kumar Place : Mumbai Company Secretary Date : June 22, th ANNUAL REPORT

56 ( ((A) ((B) Cash Flow Statement for the year ended March 31, 2012 For the year ended March 31, 2012 (Rupees in lacs) For the year ended March 31, 2011 A. Cash flow from operating activities Profit before tax 4,275 3,533 Adjustments for: - Depreciation & amortisation 1,225 1,329 Dividend income (1,727) (817) Provision for leave encashment (18) 40 Provision for gratuity (6) 1 Bad debt write off - 3 Provision for doubtful debts and advances Loss on sale of fixed asset 48 0 Profit on sale of investments (712) (7) Interest income (3,904) (2,729) Income transferred to Settlement Guarantee fund (((((((A) Operating profit before working capital changes (355) 2,168 Movements in working capital: Decrease / (Increase) in trade receivables (848) (189) Decrease / (Increase) Current loans and advances 12 (526) Decrease / (Increase) non - current loans and advances (473) - Decrease / (Increase) other non current assets (149) - Increase / (Decrease) in non - current liabilities 105 (145) Increase / (Decrease) in trade payables Increase / (Decrease) in current liabilities 14,328 10,027 Cash generated/(used) from operations 12,734 11,335 Direct taxes paid (net of refunds) Net cash generated/(used) in operating activities 12,082 10,609 B. Cash flows from investing activities Purchase of fixed assets, including intangible assets and CWIP (1,498) (918) Proceeds from sale / disposal of fixed assets 4 6 Purchase of current investments (1,004,327) (522,895) Proceeds from sale of current investments 994, ,086 Dividend Income 1, Interest received 3,796 3,494 Purchase of non - current investments (2,200) (466) Investment in fixed deposits (original maturity of more than three months) (64,706) (42,827) Redemption/Maturity of fixed deposits (original maturity of more than three months) 65,327 27,744 Net cash generated/(used) in investing activities (7,180) (12,959) 54 9th ANNUAL REPORT

57 ((C) Cash Flow Statement for the year ended March 31, 2012 For the year ended March 31, 2012 (Rupees in lacs) For the year ended March 31, 2011 C. Cash Flows from financing activities Proceeds from issuance of equity share capital - 8,599 Redemption of preference share capital - (1,000) Repayment of bank overdraft - (43) Preference dividend paid - (115) Dividend paid (557) (179) Dividend tax paid (90) (49) Net cash generated/(used) from financing activities (647) 7,213 Net increase / (decrease) in cash and cash equivalents (A + B + C) 4,255 4,863 Cash and cash equivalents at the beginning of the year 7,345 2,482 Cash and cash equivalents at the end of the year 11,600 7,345 Components of cash and cash equivalents Cash and cheques on hand 0 0 With Banks - on current accounts * 2,600 1,245 - on fixed deposits (Original maturity being three months or less) 9,000 6,100 Total 11,600 7,345 * Includes - NCDEX Joint Price Dissemination fund of Rs 59 lacs (March 31,2011 : Rs lacs) which can be utilized only for Joint Price Dissemination project along with FMC - Settlement Guarantee Fund of Rs 0.01 lacs (March 31,2011 : Rs.0.01 lacs) which can be utilized for completion of settlement, in case of member default - Investor Protection Fund of Rs lacs (March 31,2011 : Rs.0.01 lacs) which can be utilized only as per FMC guidelines As per our report of even date For S.R.BATLIBOI & Co. Firm Registration No : E Chartered Accountants per Shrawan Jalan Partner Membership No Place : Mumbai Date : June 22, 2012 For and on behalf of the Board of Directors National Commodity & Derivatives Exchange Limited R. Ramaseshan Rakesh Kapur Managing Director & CEO Director M. K. Ananda Kumar Company Secretary 9th ANNUAL REPORT

58 INDIA 2012 ENSURING THE HANDS THAT WORK THE HARDEST ARE ALWAYS FULL.

59 Notes to the financial statements for the year ended March 31, Nature of Operations Amount in Rupees Lacs unless otherwise stated National Commodity & Derivatives Exchange Limited ( the Company ) is a demutualised national level commodity exchange focusing on capitalizing the opportunities of the offering commodity exchange through a robust technology platform. The Company was incorporated on April 23, 2003, under the provisions of the Companies Act, Basis of preparation The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statement to comply in all material respects with Accounting Standards notified by Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies adopted in preparation of financial statements have been consistently applied by the Company and are consistent with those used in the previous year, except for the change in accounting policy as explained below. 2.1 Summary of significant accounting policies a Change in accounting policy Presentation and disclosure of financial statements During the year ended 31 March 2012, the revised schedule VI notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of its financial statements. The adoption of revised schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirements applicable in the current year. b Use of estimates The preparation of financial statements in conformity with Indian GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosures of contingent liabilities at the end of the reporting period. Although these estimates are based on management best knowledge of current event and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustments to the carrying amounts of assets or liabilities in future periods. c Tangible fixed assets Fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price and any other cost attributable to bringing the asset to its working condition for its intended use. 9th ANNUAL REPORT

60 Notes to the financial statements for the year ended March 31, 2012 Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-today repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred. Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized. d Depreciation and amortisation Depreciation is provided on Straight Line Method ( SLM ) at the rates mentioned below, which reflect the management s estimate of the useful lives of the respective fixed assets and are greater than or equal to the corresponding rates prescribed in Schedule XIV of the Act. Particulars Rates (SLM) Schedule XIV rates (SLM) Computer hardware and software 20.00% 16.21% Telecommunication Equipments 20.00% 16.21% Office Equipments 4.75% 4.75% Furniture & Fixtures 6.33% 6.33% Electrical Installation 4.75% 4.75% Motor Vehicles 9.50% 9.50% Leasehold improvement is amortized over the renewable period of lease subject to a maximum of 60 months. Fixed assets having an original cost less than or equal to Rs. 5,000 individually and Electrical Tickers are fully depreciated in the year of purchase or installation. e Intangible assets Costs relating to acquisition and development of computer software are capitalized in accordance with AS 26 Intangible Assets issued by The Institute of Chartered Accountants of India and are amortized on a straight-line basis for a period of five years, which is management s estimate of its useful life. The carrying value of computer software costs is reviewed for impairment annually when the asset is not yet in use, and otherwise when events or changes in circumstances indicate that the carrying value may not be recoverable. f Impairments The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of the asset s net selling price and value in use. In 58 9th ANNUAL REPORT

61 Notes to the financial statements for the year ended March 31, 2012 assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. g Operating Leases Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term are classified as operating leases. Operating lease payments are recognized as an expense in the profit and loss account on a straight-line basis over the lease term. h Investments Investments that are readily realizable and intended to be held for not more than a year from the date on which such investments are made are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the long term investments. i Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Transaction charges Transaction charges are recognized as income on trade date basis. Annual subscription charges Annual subscription charges are recognized as income on a time proportion basis beginning from the month it is received. Admission fees Admission fees are recognized as income at the time an applicant is converted as member and provisional member. Interest Income Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividends Dividend income is recognized when the company s right to receive payment is established by the reporting date. 9th ANNUAL REPORT

62 Notes to the financial statements for the year ended March 31, 2012 j Foreign currency transactions Initial Recognition Transactions in foreign currency entered during the year are recorded at the exchange rates prevailing on the date of the transaction. Conversion Monetary assets and liabilities denominated in foreign currency are translated in to rupees at exchange rate prevailing on the date of reporting. Exchange Differences Exchange differences arising on the settlement of monetary items or on reporting such monetary items at rates different from those at which they were initially recorded during the year or reported in previous financial statements are recognized as income or as expense in the year in which they arise. k Income taxes Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 enacted in India. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. At each reporting date the Company reassesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets are reviewed at each reporting date. The company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. Deferred tax assets and deferred tax liabilities are off set, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority. 60 9th ANNUAL REPORT

63 Notes to the financial statements for the year ended March 31, 2012 Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternate Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as MAT Credit Entitlement. The company reviews the MAT credit entitlement asset at each reporting date and writes down the asset to the extent the company does not have convincing evidence that it will pay normal tax during the specified period. l Retirement and other employee benefits Retirement benefits in the form of Provident Fund are a defined contribution scheme and the contributions are charged to the Statement of Profit and Loss of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the provident fund. Gratuity liability under the Payment of Gratuity Act, 1972 is a defined benefit obligation and is provided for on the basis of the actuarial valuation on projected unit credit method made at the end of each financial year. Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method. Actuarial gains/losses are immediately taken to profit and loss account and are not deferred. m Earnings per share Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividend and attributable taxes) by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. n Provisions A provision is recognized when the Company has present obligation as a result of past event. It is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. 9th ANNUAL REPORT

64 Notes to the financial statements for the year ended March 31, 2012 o Cash and cash equivalents Cash and cash equivalents for the purpose of cash flow statement comprises cash in hand and cash at bank and short term investments with an original maturity of three months or less. p Employee stock compensation cost 3 Share Capital Measurement and disclosure of the employee share based payment plans is done in accordance with the Guidance Note on Accounting for Employee Share based Payments, issued by the ICAI. The Company measures compensation cost relating to employee stock options using the intrinsic value method. Compensation expense is amortized over the vesting period of the option on a straight line basis. Share Capital As at March 31, 2012 As at March 31, 2011 Authorised 60,000,000 (March 31, 2011:60,000,000) Equity shares of Rs. 10/- each 6,000 6,000 10,000,000 (March 31, 2011:10,000,000) 5% Cumulative Redeemable Preference Shares of Rs. 10/- each 1,000 1,000 7,000 7,000 Issued, subscribed and fully paid up shares 50,676,000 (March 31, 2011:50,676,000) Equity shares of Rs. 10/- each fully paid up 5,068 5,068 Total 5,068 5,068 a. Reconciliation of the equity shares outstanding at the beginning and at the end of the reporting year Equity Shares of Rs. 10 each fully paid March 31, 2012 March 31, 2011 No. of Rs. No. of Rs. Shares In lacs Shares In lacs At the beginning of the year 50,676,000 5,068 35,750,000 3,575 Issued during the year ,926,000 1,493 Outstanding at the end of the year 50,676,000 5,068 50,676,000 5,068 Preference Shares of Rs. 10 each fully paid March 31, 2012 March 31, 2011 No. of Rs. No. of Rs. Shares In lacs Shares In lacs At the beginning of the year ,000,000 1,000 Redemption during the year ,000,000 1,000 Outstanding at the end of the year th ANNUAL REPORT

65 Notes to the financial statements for the year ended March 31, 2012 b. Terms/Rights attached to equity share The Company has only one class of equity share having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share except for the shares held by National Stock Exchange Limited in excess of 5% of the Company s equity share capital, which carries no voting rights in terms of Forward Market Commission letter dated March 21, The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. During the year ended March 31, 2012, the amount of per share dividend recognized as distributions to equity shareholders was Rs ( March 31, 2011 : Rs.1.10 ) In the event of liquidation of the Company, the holder of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all the preferential amounts. The distribution will be in the proportion to the number of equity shares held by the shareholder. c. Details of shareholders holding more than 5% share in the Company Equity Shares of Rs. 10 each fully paid As at March 31, 2012 No. of % Shares holding As at March 31, 2011 No. of % Shares holding Jaypee Capital Services Limited 11,340, % 11,340, % Shree Renuka Sugars Limited 6,336, % 6,336, % Life Insurance Corporation of India 5,625, % 5,625, % National Bank for Agriculture and Rural Development 5,625, % 5,625, % National Stock Exchange of India Limited 5,067, % 5,625, % Indian Farmers Fertiliser Cooperative Limited 4,500, % 4,500, % Punjab National Bank 3,694, % 3,694, % Canara Bank 3,055, % 3,055, % As per records of the company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares. d. Shares reserved for issue under options For details of shares issued under the employee stock option (ESOP) plan of the company, please refer note 32 9th ANNUAL REPORT

66 Notes to the financial statements for the year ended March 31, Reserves and Surplus As at March 31, 2012 As at March 31, 2011 General Reserve Balance as per last financial statements Add : Transferred from Profit & Loss Account Closing balance Settlement Guarantee Fund Balance as per last financial statements Add : Net Additions during the year Closing balance (Refer note 36) Securities Premium Account Balance as per last financial statements 13,956 5,750 Add : Amount received during the year - 8,206 Closing balance 13,956 13,956 Surplus in Statement of Profit and Loss Balance as per last financial statements 7,546 5,170 Profit for the year 3,536 3,120 Less : Appropriations Dividend on Preference Shares - 15 Proposed Dividend Corporate dividend tax Transfer to General Reserve Total appropriations Net surplus in the statement of profit and loss 10,285 7,546 Total reserves and surplus 25,072 22,186 5 Non current liabilities As at March 31, 2012 As at March 31, 2011 Deposits from members 1,335 1,230 Total 1,335 1, th ANNUAL REPORT

67 Notes to the financial statements for the year ended March 31, Trade payable As at March 31, 2012 As at March 31, 2011 a) Total outstanding due of Micro and Small Enterprises (Refer note 25) 0 2 b) Total outstanding dues of creditors other than Micro and Small Enterprises 1,584 1,468 Total 1,584 1,470 7 Other current liabilities As at March 31, 2012 As at March 31, 2011 Deposits from members and applicants 45,486 32,485 Deposits from clearing banks 4,500 4,500 Deposits from depository participants Income received in advance Dues to members Investor Protection Fund * 3,011 2,157 Payable towards purchase of fixed assets / intangibles Other Liabilities Total 54,634 40,306 * As per the guidelines received from the FMC, the specified penalties (after deducting 10% towards administrative expenditure) such as those for default of delivery obligations, non-delivery, position limit violation, etc. are transferred to Investor Protection Fund (IPF) maintained by the Company. FMC issued guidelines for formation of IPF Trust vide its letter dated September 28, 2011 stating that the IPF Trust has to be operationalised by March 31, The draft IPF Trust deed and bye-laws were finalized among the national level commodity exchanges under the guidance of FMC in the month of March However, since the IPF Committee members of the Company suggested certain changes in the said documents, the Company took up the changes with FMC for approval. The FMC during the meeting of chief executive officers of all Exchanges expressed that the trust deed be executed without making any changes. Accordingly, the registration of IPF Trust is in process as on date. Till the IPF Trust is operationalised, the IPF funds are separately earmarked and invested by the Company. The income earned on such investments is also credited to IPF. As per FMC guidelines the income earned on IPF investments is utilized only for investor education and awareness programs. The income utilized during the current year is Rs.84 lacs (March 31, 2011 Rs.76 lacs). 9th ANNUAL REPORT

68 Notes to the financial statements for the year ended March 31, Short term provisions As at March 31, 2012 As at March 31, 2011 Provision for encashment of leave salary Provision for gratuity Proposed dividend on equity shares Corporate dividend tax Total Fixed Assets Opening as on April 1, 2010 Additions during the year Gross Block Depreciation Net Block Deletions during the year As at Mar 31, 2011 Adjustments Opening as on April 1, 2010 During the year Deletions during the year As at Mar 31, 2011 As at Mar 31, 2011 As at Mar 31, 2010 Computer Hardware 2, ,505 1, , Improvement to 1, , , Lease hold Property Telecommunication Equipments Office Equipments (Refer Note below) Electrical Installations Furniture & Fixtures Motor Car Total 5, ,099 3, ,093 2,006 2,627 Adjustments Opening as on April 1, 2011 Additions during the year Gross Block Depreciation Net Block Deletions during the year As at March 31, 2012 Adjustments Opening as on April 1, 2011 During the year Deletions during the year Adjustments As at March 31, 2012 As at March 31, 2012 As at March 31, 2011 Computer Hardware 2, ,861 1, , Improvement to 1, ,568 1, , Lease hold Property Telecommunication (136) (136) Equipments Office Equipments (8) (1) (Refer Note below) Electrical Installations Furniture & Fixtures Motor Car Total 6, (139) 6,220 4, (135) 4,249 1,971 2,004 Note : Gross Block of Office Equipment includes assets carried net of grants received from FMC, aggregating to Rs. 142 lacs (March 31, 2011 : 109 lacs) 66 9th ANNUAL REPORT

69 Notes to the financial statements for the year ended March 31, Intangible Assets Opening as on April 1, 2010 Additions during the year Gross Block Depreciation Net Block Deletions during the year As at Mar 31, 2011 Adjustments Opening as on April 1, 2010 During the year Deletions during the year As at Mar 31, 2011 As at Mar 31, 2011 As at Mar 31, 2010 Computer Software 3, ,076 2, ,013 1,063 1,146 Total 3, ,076 2, ,013 1,063 1,146 Adjustments Opening as on April 1, 2011 Additions during the year Gross Block Depreciation Net Block Deletions during the year As at March 31, 2012 Adjustments Opening as on April 1, 2011 During the year Deletions during the year Adjustments As at March 31, 2012 As at March 31, 2012 As at March 31, 2011 Computer Software 4, ,008 3, ,666 1,342 1,064 Total 4, ,008 3, ,666 1,342 1, Non current investments Trade (Valued at cost unless stated otherwise) Unquoted Shares As at March 31, 2012 As at March 31, 2011 Quantity Amount Quantity Amount In Subsidiary Companies 2,999,400 ( March 31, 2011 : 2,999400) Equity shares of Rs.10/- each fully paid up in NCDEX Spot Exchange Limited * 2,999, ,999, ,000,000 (March 31,2011 : Nil) 5% Cumulative Redeemable Preference Shares of Rs.10/- each fully paid up in NCDEX Spot Exchange Limited * 12,000,000 1,200 12,000,000 1,200 50,000 (March 31, 2011 : 50,000) Equity Shares of Rs.10/- each fully paid up in NCDEX Institute of Commodity Markets & Research 50, ,000 5 In Associates 1,662,500 (March 31,2011 : 1,662,500) Equity shares of Rs.10/- each fully paid up in National Commodity Clearing Limited 1,662, ,662, th ANNUAL REPORT

70 Notes to the financial statements for the year ended March 31, 2012 As at March 31, 2012 As at March 31, 2011 Quantity Amount Quantity Amount 13,000,000 (March 31, 2011 : 13,000,000 Equity Shares of Rs.10/- each fully paid up in Power Exchange India Limited ** 13,000,000 1,300 13,000,000 1,300 In Others 5,052,631 (March 31,2011 : 4,000,000) Equity shares of Rs.10/- each fully paid up in National Collateral Management Services Limited 5,052, ,000, ,571 3,371 Non Trade (At lower of cost and market value) Mutual Funds (Unquoted) Birla Sunlife Fixed Term Plan Series ES - Growth 5,000, Religare FMP Series XIII Plan D Days - Growth Plan 5,000, SDFS-13 Months - 12-Growth 5,000, Tata Fixed Maturity Plan Series -39 Scheme G Growth 5,000, ,000 - Total 5,571 3,371 Aggregate amount of unquoted investments 5,571 3,371 Aggregate provision for diminution in value of unquoted investments - - * The Company has investments of Rs.149,994 thousands (March 31, 2011: Rs.149,994 thousands) comprising 2,999,400 equity shares of Rs.10 each and 12,000,000 5% cumulative convertible preference shares of Rs.10 each, in NCDEX Spot Exchange Ltd (NSPOT), a wholly owned subsidiary company. The Company believes that SPOT Exchange is a new concept across the globe and the market is still in a nascent stage. The management considers these investments as strategic in nature and considering the nature of the industry it will have longer gestation period. In view of the foregoing and based on the improvements in the business in terms of growth in revenue, profitability and future projections of the subsidiary s business, the Management is of the opinion that the decline in value is not other than temporary and hence no provision is considered necessary for such diminution. ** The Company has also invested Rs. 1,300 lacs (March 31, 2011: Rs.1,300 lacs ) in a joint venture viz. Power Exchange India Limited (PXIL). The investment in PXIL is strategic in nature. The niche business segment in which PXIL operates has a long gestation period and has high potential in the years to come. It is expected that PXIL s market share will increase considerably due to several new initiatives. In view of the foregoing, the Management is of the opinion that the decline in value is not other than temporary and hence no provision is considered necessary for such diminution. 68 9th ANNUAL REPORT

71 Notes to the financial statements for the year ended March 31, Deferred tax As at March 31, 2012 As at March 31, 2011 Deferred tax assets components Employee benefits Unabsorbed loss including unabsorbed depreciation 47 5 Other items Gross deferred tax asset Deferred tax liabilities components Depreciation and amortisation 7 37 Gross deferred tax liabilities 7 37 Net deferred tax asset/(liability) Long term loans and advances As at March 31, 2012 As at March 31, 2011 Receivables from subsidiaries Unsecured, considered good - - Unsecured, considered doubtful 1, Less: Provision for doubtful advances (1,290) (885) - - Unsecured, Considered Good Advance income tax paid including tax deducted at source receivable (net of provision for taxation) 1,503 1,483 Advance fringe benefit tax paid (net of provision for fringe benefit tax) Advance lease rent Security deposits Total 1,877 1,779 9th ANNUAL REPORT

72 Notes to the financial statements for the year ended March 31, Other assets As at March 31, 2012 Non Current As at March 31, 2011 As at March 31, 2012 Current As at March 31, 2011 Deposits with original maturity more than 12 months 2, Interest accrued on fixed deposits - - 1,291 1,184 Others Total 2,589-1,291 1, Current Investments Current Investment (At lower of cost and market value) Mutual Funds (Unquoted) As at March 31, 2012 As at March 31, 2011 Units Rs. In lacs Units Rs. In lacs Birla Sun Life Fixed Term Plan - Series CW (368 Days) Growth Option - - 5,000, Fidelity FMP Series IV Plan E (370 -days) -Growth Option - - 5,000, IDFC FMP - Yearly Series 42-Growth - - 5,000, Kotak Floater ST daily Div ,303,450 1,750 KOTAK FMP 370 Days Series 10 Growth - - 5,000, KOTAK FMP 370 Days Series 8 Growth - - 5,000, KOTAK FMP Series 29 Growth - - 4,000, Reliance Fixed Horizon Fund -XIX- Series 11-Growth Plan - - 5,000, Religare FMP- Series VI - Plan B (370 Days) - Growth - - 5,000, SDFS 370 DAYS - 10 SERIES - GROWTH OPTION ,000,000 1,000 Sundaram Mutual Fixed Term Plan AX- Growth Option - - 5,000, TATA FIXED MATURITY PLAN - Series 31 Scheme - B - - 5,000, TATA FIXED MATURITY PLAN - Series 31 Scheme - C - - 5,000, Tata Fixed Maturity Plan Series 29-B - - 5,000, TATA FMP Series 29 Scheme A Growth - - 5,000, KOTAK FLOTER ST -DAILY DIV * , th ANNUAL REPORT

73 Notes to the financial statements for the year ended March 31, 2012 As at March 31, 2012 As at March 31, 2011 Units Rs. In lacs Units Rs. In lacs KOTAK FLOTER ST -DAILY DIV ** ,113 8 Birla Sunlife Floating Rate Fund- STP-IP-Daily Div -Reinvestment 1,000,048 1, BIRLASunlife Fixed Term Plan Series DL - Growth 5,000, BIRLASunlife Fixed Term Plan Series DT - Growth 5,000, BIRLASunlife Fixed Term Plan Series EA - Growth 5,000, BIRLASunlife Fixed Term Plan Series EQ - Growth 5,000, BIRLASunlife Fixed Term Plan Series EU - Growth 5,000, DSP Blackrock FMP series m -GROWTH 5,000, DSP Blackrock FMP series m -GROWTH 5,000, DWS FIXED MATURITY PLAN- SERIES 5- GROWTH PLAN 5,000, DWS FIXED MATURITY PLAN- SERIES 3- GROWTH PLAN 5,000, DWS FIXED TERM FUND - SERIES 90- GROWTH PLAN 5,000, HDFC FMP 370D MAY2011(1) GROWTH- SERIES XVIII 5,000, HDFC FMP 375D July 2011(2) Growth Series XVIII 5,000, ICICI Prudential FMP Series 62 1 year plan B - Cumulative 5,000, IDFC FMP - YS 49-Growth 5,000, IDFC FMP - YS 51-Growth 5,000, IDFC FMP - YS 52-Growth 5,000, IDFC FMP - YS 61-Growth 5,000, IDFC FMP - YS 62-Growth 5,000, KOTAK FMP Series 72 Growth 10,000,000 1, KOTAK FMP Series 79 Growth 5,000, L&T FMP - V(February 368D A) - Growth 5,000, Reliance Fixed Horizon Fund -XXI- Series 9-Growth Plan 5,000, FMP Series XIII Plan A Days - Growth 5,000, SBI PLF - SI - Daily Dividend 99,721 1, SDFS-367 DAYS - 13-Growth 5,000, SDFS-367 DAYS - 17-Growth 5,000, SDFS-367 DAYS - 6-Growth 5,000, th ANNUAL REPORT

74 Notes to the financial statements for the year ended March 31, 2012 As at March 31, 2012 As at March 31, 2011 Units Rs. In lacs Units Rs. In lacs Sundaram Fixed Term Plan BE 366 days Growth 5,000, TATA FIXED MATURITY PLAN - Series 34 Scheme -B - Growth 5,000, TATA FIXED MATURITY PLAN SERIES -39 SCHEME A GROWTH 5,000, TATA FIXED MATURITY PLAN SERIES 36 Scheme C - GROWTH 5,000, UTI Fixed Term Income Fund - Series X -VII (368 DAYS) - GROWTH Plan 5,000, UTI Fixed Term Income Fund - Series XI -III (368 DAYS) - GROWTH Plan 10,000,000 1, UTI Fixed Term Income Fund - Series XI -IV (367 DAYS) - GROWTH Plan 5,000, TATA FIXED MATURITY PLAN SERIES 36 Scheme A - GROWTH** 476, Total - Current Investments 19,548 9,207 Aggregate amount of unquoted investments 19,548 9,207 Aggregate provision for diminution in value of unquoted investments - - * Represents investment earmarked for Investor Protection fund ** Represents investment earmarked for Settlement Guarantee Fund 16 Trade Receivables Trade Receivables As at March 31, 2012 As at March 31, 2011 Receivables outstanding for a period exceeding six months Secured, considered good Unsecured, considered good 20 0 Unsecured, considered doubtful 2 - Less: Provision for doubtful debts (2) Other Receivables Secured, considered good 1, Unsecured, considered good Unsecured, considered doubtful 1 - Less: Provision for doubtful debts (1) - 1, Total 1, th ANNUAL REPORT

75 Notes to the financial statements for the year ended March 31, Cash and Bank Balances As at March 31, 2012 Non Current As at March 31, 2011 As at March 31, 2012 Current As at March 31, 2011 Cash and cash equivalents Cash in hand Balances with bank On current accounts * - - 2,600 1,245 Deposits with original maturity three months or less - - 9,000 6, ,600 7,345 Other bank balances Deposits with original maturity more than 12 months ** 2,440 10,377 4,591 Deposits with original maturity for more than 3 months but less than 12 months ** ,389 38,236 2,440-39,766 42,827 Amounts disclosed under Non - Current assets (Note 14) (2,440) - Total ,366 50,172 * Includes Rs 59 lacs (March 31,2011 : Rs lacs) in Escrow account NCDEX Joint Price Dissemination Account and Settlement Guarantee Fund of Rs 0.01 lacs (March 31, 2011 : Rs.0.01 lacs) and Investor Protection Fund of Rs lacs (March 31, 2011 : Rs.0.01 lacs) ** Includes Fixed Deposits of Rs 16,638 lacs (March 31,2011 : Rs 11,695 lacs) pledged with Banks for Overdraft facilities and includes Fixed Deposit earmarked for Settlement Guarantee Fund of Rs 106 lacs (March 31,2011 : Rs.85 lacs) and Investor Protection fund of Rs 2,804 lacs (March 31,2011 : Rs.2,067 lacs) 18 Short term loans and advances As at March 31, 2012 As at March 31, 2011 Unsecured, Considered Good Advances recoverable in cash or in kind or for value to be received MAT Credit Entitlement Total th ANNUAL REPORT

76 Notes to the financial statements for the year ended March 31, Revenue from operations Amount in Rupees Lacs unless otherwise stated For the year ended March 31, 2012 For the year ended March 31, 2011 Sale of services Transaction charges 5,753 7,133 Annual subscription fees Admission fees ,328 7,697 Other operating revenue Computer to computer link charges Internet trading fees Depository participants charges Warehouse charges Exchange charges Other income Total 7,180 8, Other income For the year ended March 31, 2012 For the year ended March 31, 2011 Investment income 6,343 3,553 Data info feed charges Miscellaneous income Total 6,679 3, Employee benefits expense For the year ended March 31, 2012 For the year ended March 31, 2011 Salaries, allowances and bonus 1,965 1,760 Contribution to Provident and other funds Staff welfare expenses Total 2,207 2, th ANNUAL REPORT

77 Notes to the financial statements for the year ended March 31, Other Expenses For the year ended March 31, 2012 For the year ended March 31, 2011 Rent Rates and taxes Technology expenses 1,709 1,437 Clearing and settlement charges Repair and maintenance: - Building Plant and Machinery Others Insurance Communication expenses Advertisement and publicity Printing and stationery Legal and professional fees Travelling and conveyance expenses Auditors' remuneration - Audit fees Electricity charges Directors' sitting fees and expenses 24 9 Committee member sitting fees and expenses 21 8 Warehousing charges 4 12 Polling expenses Loss on sale/scrap of fixed assets (net) 48 0 Provision for doubtful debts and advances Bad debts written off - 3 Loss on exchange fluctuations 8 - Contribution to IPF Claims & Settlements Books Periodicals & Subscription Other expenses Total 6,152 5, Depreciation and Amortisation For the year ended March 31, 2012 For the year ended March 31, 2011 Depreciation of tangible assets Amortisation of intangible assets Total 1,225 1,329 9th ANNUAL REPORT

78 Notes to the financial statements for the year ended March 31, The total margin money as on March 31, 2012 for the Company is Rs.217,139 lacs (March 31, 2011: Rs.149,652 lacs) which consists of cash, bank guarantees, securities and fixed deposit receipts. 25 The Company has initiated the process of identification of suppliers registered under the Micro, Small and Medium Enterprises Development ( MSMED ) Act, 2006, by obtaining confirmations from all suppliers. Based on the information received by the company the amounts payable to Micro, Small and Medium Enterprises as per the MSMED 2006 as at March are as follows: March 31, 2012 March 31, 2011 The principal amount and the interest due thereon remaining unpaid to any supplier as at the end of each accounting year 0 2 The amount of interest paid by the buyer in terms of section 16, of the Micro Small and Medium Enterprise Development Act, 2006 along with the amounts of the payment made to the supplier beyond the appointed day during each accounting year NIL NIL The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under Micro Small and Medium Enterprise Development Act, NIL NIL The amount of interest accrued and remaining unpaid at the end of each accounting year; and NIL NIL The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure under section 23 of the Micro Small and Medium Enterprise Development Act, 2006 NIL NIL 26 Operating lease The Company has taken premises, office equipments, computers, servers and furniture on lease. Certain lease arrangements provide for cancellation by either party and contains clauses for escalation of lease rentals and for renewal of lease agreements. Lease payments on cancelable and non-cancelable operating lease arrangements are charged to the Profit and Loss Account and the future minimum lease payments in respect of non-cancelable operating lease as at the Balance Sheet date are summarized below: Lease obligations March 31, 2012 March 31, 2011 Minimum Lease Payments : Not later than one year Later than one year but not later than five years 1,800 2,012 Later than five years th ANNUAL REPORT

79 Notes to the financial statements for the year ended March 31, 2012 Included in Rent, rates and taxes and technology expenses (refer Note 22) are lease payments as given below: Particulars March 31, 2012 March 31, 2011 Rent Contingent Liabilities Particulars March 31, 2012 March 31, 2011 On account of Income taxes (Refer Note 1 below) On account of Legal claim (Refer Note 2 below) On account of Bank Guarantee (Refer Note 3 below) The Company had received an assessment order in respect of A.Y making disallowance under section 14A of Income Tax Act, The Company had filed an appeal against the order with Commissioner of Income Tax (Appeals) on January 23, The CIT(appeals) had upheld the decision of Assessing Officer against which appeal had been filed with Income Tax Appellate Tribunal (ITAT) on April 13, The ITAT has decided in favour of the Company on August 26, However the Income Tax Department has filed an appeal against the ITAT order with High Court on March 15, The Company had received an assessment order in respect of A.Y making disallowance under section 14A of Income Tax Act, The Company has filed an appeal against the order with Commissioner of Income Tax (Appeals) on February 2, The Company received CIT(Appeals) order, in which the partial relief of Rs 79 lacs has been granted by CIT(appeals) and the amount of disallowance has been reduced from Rs 159 lacs to Rs 79 lacs. The Company has filed appeal against this order with Income Tax Appellate Tribunal (ITAT) on March 21, 2011.There has been no outcome of the appeal till date. The above contingent liability represents the additional tax liability for Sec 14A disallowance for A.Y A legal suit was been filed jointly against the Company and National Collateral Management Services Limited by a party claiming a sum of Rs. 185 lacs for loss on sale of goods, loss of profit, interest etc. The Company is of the view that since the matter is sub-judice, a reliable estimate of the amount of liability cannot be made. 3 The Company has given bank guarantee to the Director of Agricultural Marketing of Maharashtra for Rs. 20 lacs and to the Director of Agricultural Marketing of Karnataka for Rs.25 lacs on behalf of NCDEX Spot Exchange Limited. 28 Capital Commitments Estimated amount of contracts remaining to be executed on capital accounts and not provided for Rs. 256 lacs (March 31, 2011: Rs.238 lacs). 29 The Company operates in a single business and geographical segment, hence no disclosure is required as per AS 17 on Segmental Reporting issued by The Institute of Chartered Accountants of India. 9th ANNUAL REPORT

80 Notes to the financial statements for the year ended March 31, Related Party Disclosures Subsidiaries Associates Key Managerial Personnel NCDEX Spot Exchange Limited (NSEL) NCDEX Institute of Commodity Markets and Research (NICR) National Commodity Clearing Limited (NCCL) Power Exchange India Limited (PEIL) R.Ramaseshan Managing Director & Chief Executive Officer Particulars March 31,2012 Subsidiaries Associates NSEL NICR NCCL Power Exchange Key Managerial Total March 31,2011 March 31,2012 March 31,2011 March 31,2012 March 31,2011 March 31,2012 March 31,2011 March 31,2012 March 31,2011 March 31,2012 March 31,2011 Remuneration Fees Paid Investment in Equity capital Conversion of Loan to 2,950,000 Equity shares of Rs. 10 each Conversion of Loan to 12,000,000 5% Cumulative Convertible Preference Shares of Rs.10 each - 1, ,200 Expenses paid on behalf of Subsidiaries/ Associates Amount received for Expenses incurred Provision for Advances Advance/Loan given Advance/Loan repaid Balance outstanding at the year end March 31,2012 March 31,2011 March 31,2012 March 31,2011 March 31,2012 March 31,2011 March 31,2012 March 31,2011 March 31,2012 March 31,2011 March 31,2012 March 31,2011 Investments in Equity Shares ,300 1, ,771 1,771 Investments in Preference Shares 1,200 1, ,200 1,200 Loans and Advances 1, , Provision for Advances 1, , Sundry Creditors Earnings per share (EPS) Particulars March 31, 2012 March 31, 2011 Net Profit/(Loss) after tax as per profit and loss account 3,536 3,120 Less: Preference dividend and tax thereon - 16 Net Profit for calculation of EPS (A) 3,536 3,104 Weighted average no. of equity shares for calculating EPS (B) 50,676,000 41,125,364 Basic/Diluted earnings per equity share(in Rupees) (Face value of Rs. 10/- per share) (A) /(B) th ANNUAL REPORT

81 Notes to the financial statements for the year ended March 31, 2012 Particulars March 31, 2012 March 31, 2011 Weighted average number of equity shares for calculating EPS 50,676,000 41,125,364 Add: Equity shares for no consideration arising on grant of stock options under ESOP Nil Nil Weighted average number of equity shares in calculation of diluted EPS 50,676,000 41,125, Employee Stock Option Plans ( ESOP ) Particulars Series I Series II Date of grant July 1, 2006 July 1, 2007 Date of Board /Compensation Committee approval May 6, 2006 June 15, 2007 Date of Shareholder s approval May 26, 2006 May 26, 2006 Number of options granted 225, ,500 Method of Settlement Equity Equity Graded Vesting Period After 1 year of grant date 20 % of the options granted After 2 years of grant date 30 % of the options granted After 3 years of grant date 50 % of the options granted Exercisable period 5 years from the date of vesting of options Vesting Conditions None The details of Series I have been summarized below: Particulars March 31, 2012 March 31, 2011 Number of shares Outstanding at the beginning of the year 49,000 66,000 Add: Granted during the year Nil Nil Less: Forfeited during the year Nil 17,000 Less: Exercised/lapsed during the year Nil Nil Less: Expired during the year Nil Nil Outstanding at the end of the year 49,000 49,000 Exercisable at the end of the year 49,000 49,000 Weighted average remaining contractual life (in years) 1.55 Yrs 2.55 Yrs Weighted average exercise price (Rs. per share) Rs. 192 Rs. 192 Weighted average fair value of options granted The details of Series II have been summarized below Particulars March 31, 2012 March 31, 2011 Number of shares Outstanding at the beginning of the year 78, ,500 Add: Granted during the year Nil Nil Less: Forfeited during the year 6,000 28,500 Less: Exercised during the year Nil Nil Less: Expired during the year Nil Nil Outstanding at the end of the year 72,000 78,000 Exercisable at the end of the year 72,000 78,000 Weighted average remaining contractual life (in years) 2.55 Yrs 3.55 Yrs Weighted average exercise price Rs 203 Rs 203 Weighted average fair value of options granted Rs Rs th ANNUAL REPORT

82 Notes to the financial statements for the year ended March 31, 2012 There were no stock options exercised during the period ended March 31, 2012 (March 31, 2011: Nil) The details of exercise price for stock options outstanding at the end of the year are March 31, 2012 Series Range of exercise prices Number of options outstanding Weighted average remaining contractual life of options (in years) Weighted average exercise price Series I Rs , years Rs.192 Series II Rs , years Rs.203 March 31, 2011 Series Range of exercise prices Number of options outstanding Weighted average remaining contractual life of options (in years) Weighted average exercise price Series I Rs , years Rs.192 Series II Rs , years Rs.203 Stock Options granted Series I The weighted average fair value of stock options granted was Rs The binomial valuation model has been used for computing the weighted average fair value of options considering the following inputs Particulars Yr 1 Yr 2 Yr 3 Exercise Price (Rs.) Expected Volatility (%) 30% 30% 30% Historical Volatility NA NA NA Life of the options granted (Vesting and exercise period) in years 6 years 7 years 8 years Expected dividends per annum (Rs.) Nil Nil Nil Average risk free interest rate (%) 7.89% 8.05% 8.15% Expected dividend rate (%) Nil Nil Nil 80 9th ANNUAL REPORT

83 Notes to the financial statements for the year ended March 31, 2012 Series II: The weighted average fair value of stock options granted was Rs The binomial valuation model has been used for computing the weighted average fair value of options considering the following inputs: Particulars Yr 1 Yr 2 Yr 3 Exercise Price (Rs.) Expected Volatility (%) 30% 30% 30% Historical Volatility NA NA NA Life of the options granted (Vesting and exercise period) in years 6 years 7 years 8 years Expected dividends per annum (Rs.) Nil Nil Nil Average risk free interest rate (%) 8.08% 8.16% 8.19% Expected dividend rate (%) Nil Nil Nil Since the company used the intrinsic value method and the exercise price being the same as fair value of the shares of the Company, there is no compensation cost recognized in the profit and loss account during the year ended March 31, (March 31, 2011: Rs. Nil) In March 2005, The Institute of Chartered Accountants of India has issued a guidance note on Accounting for Employees Share Based Payments applicable to employee based share plan the grant date in respect of which falls on or after April 1, The said guidance note requires that the proforma disclosures of the impact of the fair value method of accounting of employee stock compensation accounting in the financial statements. Applying the fair value based method defined in the said guidance note, the impact on the reported net profit and earnings per share would be as follows: Particulars March 31, 2012 March 31, 2011 Profit/(Loss)as reported (net of preference dividend and tax thereon) 3,537 3,104 Add: Employee stock compensation under intrinsic value method Nil Nil Less: Employee stock compensation under fair value method Nil 2.27 Pro forma profit (net of preference dividend and tax thereon) 3,537 3,102 Earnings per share Basic - As reported Pro forma Diluted - As reported Proforma th ANNUAL REPORT

84 Notes to the financial statements for the year ended March 31, Gratuity and other post - employment benefit plans The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The following tables summarize the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans. Profit and Loss Account Net employee benefit expense (recognized in Employee Cost) Particulars Gratuity March 31, 2012 March 31, 2011 Current service cost Interest cost on benefit obligation 7 8 Expected return on plan assets (5) (6) Net actuarial (gain) / loss recognized in the year (9) (3) Past service cost Nil Nil Net benefit expense Actual return on plan assets Nil Nil Balance Sheet Details of Provision for Gratuity Particulars Gratuity March 31, 2012 March 31, 2011 Defined benefit obligation Fair value of plan assets (11) (17) Less: Unrecognized past service cost Nil Nil Plan asset / (liability) (11) (17) Changes in the present value of the defined benefit obligation are as follows Particulars Gratuity March 31, 2012 March 31, 2011 Opening defined benefit obligation Interest cost 7 8 Current service cost Benefits paid (3) (11) Actuarial (gains) / losses on obligation (9) (5) Closing defined benefit obligation th ANNUAL REPORT

85 Notes to the financial statements for the year ended March 31, 2012 Changes in the fair value of plan assets are as follows Particulars Gratuity March 31, 2012 March 31, 2011 Opening Fair Value of Plan Assets Expected return 5 5 Contributions by employer Benefits paid (3) (11) Actuarial gains / (losses) 1 (2) Closing fair value of plan assets The Company expects to contribute Rs.28 lacs to gratuity in (Previous Year: 22 lacs) The major categories of plan assets as a percentage of the fair value of total plan assets are as follows: Particulars March 31, 2012 % Gratuity March 31, 2011 % Investments with insurer The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. Particulars Gratuity March 31, 2012 March 31, 2011 Discount Rate 8.25% 8.70% Expected rate of return on assets 8.60% 8.00% Increase in compensation cost 10% for first 5 10% for first 5 years, 7% for next years, 7% for next 5 years and 5% thereafter 5 years and 5% thereafter Employee Turnover 20.00% 20.00% The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Amounts for the current period are as follows Particulars March 31, 2012 March 31, 2011 Defined benefit obligation Plan assets Surplus /(deficit) (11) 17 Experience adjustments on plan liabilities (6) (13) Experience adjustments on plan assets 1 (2) 9th ANNUAL REPORT

86 Notes to the financial statements for the year ended March 31, Expenditure in foreign currency (on cash basis) Particulars March 31, 2012 March 31, 2011 Travelling Professional & consultation fees Others Total Basis Net Dividend remitted in foreign exchange Particulars March 31, 2012 March 31, 2011 Period for which it relates Number of non-resident shareholders 1 1 Number of equity shares held on which dividend was due 1,500,000 1,500,000 Amount remitted - US Dollars Settlement Guarantee Fund (SGF) as constituted by the Company is the amount earmarked for completion of the settlement, in case of a default by a member. Guidelines for constitution of SGF are awaited from the Forward Market Commission ( FMC ). Pending issuance of such guidelines, the Company, on its own, out of the funds belonging to the Company, has started contributing to the fund and accordingly informed the FMC, vide its letter dated October 24, Till the year ended 31 March 2011, the company was using pre - revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company. The company has reclassified previous year figures to confirm to this year s classification. For S.R.BATLIBOI & Co. Firm Registration No : E Chartered Accountants Shrawan Jalan Partner Membership No Place : Mumbai Date : June 22, 2012 For and on behalf of the Board of Directors National Commodity & Derivatives Exchange Limited R. Ramaseshan Rakesh Kapur Managing Director & CEO Director M. K. Ananda Kumar Company Secretary 84 9th ANNUAL REPORT

87 Statement pursuant to Sec 212(1) (e) of Companies Act, 1956 NCDEX Spot Exchange Limited NCDEX Institute of Commodity Markets & Research 1. The extent of holding company s interest in the subsidiary at the end of the financial year : No. of Shares (Equity Shares) 2,999,400 50,000 Paid up value of Shares(Rs.in lacs) Percentage of Holding Company s interest in the 99.98% 100% total share capital of the subsidiary. No. of Shares (Preference Shares) 12,000,000 Nil Paid up value of Shares(Rs. in lacs) 1,200 Nil Percentage of Holding Company s interest in the total share capital of the subsidiary. 100% Nil 2. The net aggregate amount of the profit/(loss), so far as it concerns members of the holding company and is not dealt with in the company s accounts (Rs. in lacs) For the financial year ended (259) (7) For all the previous financial years of the subsidiary. (1,935) (102) 3. The net aggregate amount of the profits/(loss), of the subsidiary and is dealt with in the company s accounts (Rs. in lacs) Nil Nil For the financial year ended Nil Nil For all the previous financial years of the subsidiary. Nil Nil R.Ramaseshan Managing Director & CEO Rakesh Kapur Director M. K. Ananda Kumar Company Secretary Place : Mumbai, Date : June 22, th ANNUAL REPORT

88 INDIA 2012 HELPING THE CREATOR BE THE BIGGEST BENEFICIARY

89 NCDEX Spot Exchange Limited DIRECTORS Mr. Arun Balakrishnan Mr. R. Bhaskaran Mr. R. Ramaseshan Mr. Sanjeev Asthana REGISTERED OFFICE First Floor Akruti Corporate Park L. B. S. Road Kanjurmarg West Mumbai CORPORATE OFFICE Unit No. 9 to 13, Kailash Commercial Complex, 1st Floor, L. B. S. Marg, Vikhroli (West), Mumbai AUDITORS M/s. Shah Gupta & Co. Chartered Accountants 2nd Floor, Bombay Mutual Building 38, Dr. D. N. Road, Fort Mumbai BANKERS Karur Vysya Bank Limited Bank of India Axis Bank Limited Indusind Bank Limited HDFC Bank Limited Development Credit Bank Limited State Bank of India Punjab National Bank MANAGER Mr. Rajesh Kumar Sinha COMPANY SECRETARY Ms. Bhanupriya Rao 9th ANNUAL REPORT

90 Directors Report Dear Shareholders, Your Directors have pleasure in presenting the Fifth Annual Report of the Exchange together with the audited accounts for the financial year ended March 31, FINANCIAL RESULTS The financial highlights of the Exchange for the year ended March 31, 2012 are summarised below: (Rupees in thousands) For the year ended March 31, 2012 For the year ended March 31, 2011 Total income 28,376 16,058 Expenditure 46,399 40,266 Profit before interest, finance charges (18,023) (24,208) and depreciation Interest and finance charges Depreciation 7,913 6,025 Loss before tax (25,936) (30,233) Loss after taxation (25,936) (30,233) Balance brought forward from previous year (193,466) (163,233) Loss after taxation carried forward to Balance Sheet (219,402) (193,466) 2. OVERVIEW OF OPERATIONS: The year witnessed increased trading in the Exchange. The Mandi modernization programme, initially started in Gulbarga district of Karnataka gained momentum. Over 5.50 lakh MT of Tur and 1.20 lakh MT of Chana valued at over Rs. 250 crores brought to the market by farmers have been auctioned through the Exchange platform, giving an average of 500 MT of Tur and 100 MT of Chana every day. The system is very closely aligned to the physical auction that was in vogue, due to which all participants in the market have easily adapted to the process. The Exchange submitted a more ambitious plan to the government to expand this across the state and the budget for the year has made specific references to the plan of the Exchange. Encouraged by the acceptance, the Exchange has initiated preliminary discussions with Rajasthan and Maharashtra, which in course of time would cover other states as well. Procurement for public agencies was another new initiative in the year. Tur dal (and later palm oil) for the midday meal scheme, hitherto being procured through the traditional tender process was brought in under the reverse auction platform, resulting in substantial savings to the government. For the first time, quality sampling was introduced. A similar process for Gujarat is expected to commence shortly. The Exchange intends to expand this across the country gradually. Pledge finance for farmers and traders, contracts aligned to NCDEX quality specifications and direct buying from farmers, to name a few were some new concepts introduced on an experimental 88 9th ANNUAL REPORT

91 Directors Report basis during the year. Coming years would witness business expand on these fronts. Traded value of agri commodities on the Exchange were Rs. 52,231 Lakhs for the F.Y as compared to Rs. 31,922 Lakhs for the F.Y During the year the Exchange has launched 62 New Agri contracts and the transaction charges have risen from Rs Lakhs in the F.Y to Rs Lakhs in the F.Y A preliminary effort to increase the paid up capital commenced during the year. This is necessary to garner resources for the expansion plans of the Exchange and to have a more diversified shareholder base. M/s. Frontier Growth Advisors Private Limited have been retained for this purpose and the exercise would be completed in the ensuing year. 3. SHARE CAPITAL: As on March 31, 2012, the total paid-up share capital of the Exchange stood at Rs.15,00,00,000/-. Details of the share capital are furnished as under: Authorised Rs.15,00,00,000/-,comprising : Capital 1,20,00,000 preference shares of Rs. 10/- each, aggregating Rs. 12,00,00,000/- 30,00,000 equity shares of Rs. 10/- each, aggregating Rs. 3,00,00,000/- Paid-up Capital 1,20,00,000 preference shares of Rs. 10/- each, aggregating Rs. 12,00,00,000 /- 30,00,000 equity shares of Rs. 10/- each, aggregating Rs. 3,00,00,000/- 4. DIVIDEND : Since the Exchange has posted a net loss for the financial year , no dividend has been recommended for the financial year ended March 31st, DETAILS OF MEETINGS OF SHAREHOLDERS: The Fourth Annual General Meeting of the Exchange was held on June It is proposed to hold the Fifth Annual General Meeting of the Exchange on Saturday, June 30, 2012 at 11:00 a.m., in Mumbai. 6. COMMITTEES OF THE EXCHANGE: Audit Committee Pursuant to section 292A of Companies Act, 1956, the Exchange has set up Audit Committee for overseeing audit functions and quality of financial reporting. The Audit Committee comprises of experts in finance, Investments and related fields. The Composition of Audit Committee is as follows:- 1. Mr. R. Bhaskaran (Chairman) 2. Mr. Sanjeev Asthana 3. Mr. R. Ramaseshan Board Governance and Compensation Committee 9th ANNUAL REPORT

92 Directors Report Pursuant to Schedule XIII of Companies Act, 1956, the Exchange has set up Board Governance and Compensation Committee which deliberates on the matters like compensation policies for Board and employees of the Exchange, performance evaluation of Managing Director/ Manager and key matters pertaining to human resources and management development measures. The Committee comprises of the following professionals who are experts in the related areas: 1. Mr. Sanjeev Asthana (Chairman) 2. Mr. R. Bhaskaran 3. Mr. Arun Balakrishnan 4. Mr. R. Ramaseshan 7. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: Since the Exchange does not have any manufacturing activities, the disclosure of information in accordance with the provisions of Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 regarding conservation of energy and technology absorption is not applicable. Nevertheless it may be noted that being the provider of on-line spot markets, the Exchange has fully made use of the latest available technology in its trading and operation platform. During the year under review, your Exchange did not have any foreign exchange inflow and outgo. 8. PARTICULARS OF EMPLOYEES: As per the provisions of Section 217(2A) of the Companies Act, 1956 read with the circular issued by Ministry of Company Affairs, there are no employees drawing salary in excess of the limits prescribed under the Act. 9. DIRECTORS: The Board of Directors of the Exchange consists of Mr. Arun Balakrishnan, Mr. R. Bhaskaran, Mr. Sanjeev Asthana, and Mr. R. Ramaseshan. Pursuant to the provisions of Section 255 and 256 of Companies Act, 1956, and Article 127 (2) of the Articles of Association of the Exchange, Mr. R. Ramaseshan and Mr. Sanjeev Asthana would be retiring at the ensuing Annual General Meeting (AGM) and being eligible, has offered themselves for re-appointment at that meeting. 10. AUDITORS: M/s. Shah Gupta & Co., Chartered Accountants, who are the Statutory Auditors of the Exchange, hold office until the conclusion of the ensuing Fifth Annual General Meeting and are eligible for reappointment. 90 9th ANNUAL REPORT

93 Directors Report The Exchange has received Certificate from the Auditors to the effect that their appointment/ reappointment, if made, would be within the prescribed limit under Section 224 (1B) of the Companies Act, 1956 and that they are not disqualified for such appointment/reappointment within the meaning of Section 226 of the said Act. 11. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors Responsibility Statement, it is hereby confirmed: i. that in the preparation of accounts for the financial year ended March 31, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii. iii. that the directors have selected such accounting policies and applied them consistently and made judgement and estimates that were responsible and prudent so as to give a true and fair view of the state of affairs of the Exchange at the end of the financial year and of the loss of the Exchange for the year under review; that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Exchange and for preventing and detecting fraud and other irregularities; iv. that the Directors have prepared the accounts for the financial year ended March 31, 2012 on a going concern basis. 12. ACKNOWLEDGEMENTS: Your Directors express their gratitude for the valued support, co-operation, encouragement, guidance and advice received from various State Governments, other government organizations and public sector undertaking associated with the Exchange. The Board also places on record its appreciation for the co-operation extended by the banks. The Directors sincerely thank the trading and clearing members and their clients for their backing. The Directors gratefully acknowledge the support and guidance received from National Commodity & Derivatives Exchange Limited, the holding Company and its employees. The Board also acknowledges the relentless efforts and contribution made by the Exchange s employees. By order of the Board of Directors R. Ramaseshan Director R.Bhaskaran Director Place : Mumbai Date : June 2, th ANNUAL REPORT

94 Auditors Report To, The Members NCDEX SPOT EXCHANGE LIMITED, Mumbai 1. We have audited the attached Balance Sheet of NCDEX SPOT EXCHANGE LIMITED, as at March 31, 2012, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor s Report) Order, 2003 (as amended) (the Order ), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (the Act ), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:- a. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; b. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; c. The Balance Sheet, Statement of Profit and Loss and Cash flow statement dealt with by this report are in agreement with the books of account; d. In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow statement dealt with by this report comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Act. e. On the basis of the written representations received from directors, as on March 31, 2012, and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act. f. Without qualifying our opinion, we draw attention to Note-21(B)(1) to the financial statements in respect managements expectation of future business potentials to overcome the accumulated losses and hence, there are no negative indication as regards the company not being a going concern. 92 9th ANNUAL REPORT

95 Auditors Report g. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: i. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012; ii. iii. in the case of the Profit and Loss Account, of the loss for the year ended on that date; and in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. For SHAH GUPTA & CO Chartered Accountants Firm Registration No W Vipul K. Choksi Partner M. No Place: Mumbai Date : June 2, th ANNUAL REPORT

96 Annexure to the Auditors Report (Referred to in paragraph 3 of our Report of even date) (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) (c) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification. There was no substantial disposal of fixed assets during the year. (ii) As the Company does not have inventory, the Clauses (ii)(a) to (ii)(c) of paragraph 4 of the Order are not applicable to the Company. (iii) (a) (b) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, sub-clause (b), (c) and (d) are not applicable. As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, sub-clause (f) and (g) are not applicable. (iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase fixed assets and with regard to rendering of services. The activities of the Company do not involve purchase of inventory and the sale of goods. We have not observed any continuing major weakness in such internal control system during the course of the audit. (v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301 have been so entered. (b) In our opinion and according to the information and explanations given to us, transactions made in pursuance of such contract or arrangement exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time. (vi) The Company has not accepted any deposits under the provisions of Section 58A and 58 AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 1957 framed there under. (vii) The Company is in the process of setting up an internal audit system commensurate with its size and nature of its business. (viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Act for the products of the Company. (ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to it. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, wealth-tax, service tax, sales-tax, 94 9th ANNUAL REPORT

97 Annexure to the Auditors Report (Referred to in paragraph 3 of our Report of even date) customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable. (c) According to the records of the Company, there are no dues of Income Tax, Sales Tax, Service Tax, Excise Duty, Wealth Tax, Customs Duty and Cess which have not been deposited on account of any dispute. (x) The Company has been registered for a period of less than five years and hence we are not required to comment on whether or not the accumulated losses at the end of the financial year is fifty per cent or more of its net worth and whether it has incurred cash losses in such financial year and in the immediately preceding financial year. (xi) According to the books of account and records of the Company, no amount is due to financial institution or bank or debenture holders. (xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor s Report) Order, 2003 (as amended) are not applicable to the Company. (xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor s Report) Order, 2003 (as amended) are not applicable to the Company. (xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. (xvi) The Company did not have any term loans outstanding during the year. (xvii) According to the information and explanations given to us and on overall examination of the cash flow statements and balance sheet of the Company, in our opinion, the funds raised on short-term basis have, prima facie not been used for long term investment. (xviii)during the year, the Company has not made preferential allotment of equity shares to parties covered in the register maintained under section 301 of the Act. (xix) The Company did not have any outstanding debentures during the year. (xx) The Company has not raised any money by public issue during the year (xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the Company was noticed or reported during the year. For SHAH GUPTA & CO Chartered Accountants Firm Registration No W Vipul K. Choksi Partner M. No Place: Mumbai Date: June 02, th ANNUAL REPORT

98 Balance Sheet as at 31st March 2012 Particulars Notes As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 EQUITY AND LIABILITIES Shareholders funds Share capital 1 150,000, ,000,000 Reserves and surplus 2 (218,900,738) (192,965,159) (68,900,738) (42,965,159) Non-current liabilities Long-term borrowings 3 117,921,633 77,508,994 Other Long term liabilities 4 127,900, ,900,000 Long term provisions 5 918,840 60, ,740, ,469,358 Current liabilities Trade payables 6 2,421,532 4,123,192 Other current liabilities 7 68,180,630 42,272,248 Short-term provisions 8 2,488,244 2,926,065 73,090,406 49,321,505 TOTAL 250,930, ,825,704 ASSETS Non-current assets Fixed assets Tangible assets 9 6,624,005 3,429,191 Intangible assets 9 21,679,848 21,859,143 Intangible assets under development 9 19,277,708 - Non-current investments ,000 1,039,000 Other non-current assets ,000 48,580,561 26,727,334 Current assets Trade receivables 12 94, ,922 Cash and Bank Balances ,360, ,277,954 Short-term loans and advances 14 7,899,726 5,653,508 Other current assets 15 6,995,013 3,390, ,349, ,098,370 TOTAL 250,930, ,825,704 Significant Accounting Policies and Other Notes 21 Notes referred to above form an integral part of the financial statements As per our report of even date attached For SHAH GUPTA & CO. FOR NCDEX SPOT EXCHANGE LIMITED Chartered Accountants Firm Registration No W Vipul K. Choksi R. Ramaseshan R. Bhaskaran Partner Director Director Place: Mumbai Bhanupriya Rao Date : June 2, 2012 Company Secretary 96 9th ANNUAL REPORT

99 Statement of Profit and loss for the year ended 31st March 2012 Particulars Notes Year ended March 31,2012 (Amt in Rupees) Year ended March 31,2011 Income: Revenue from operations 16 14,203,292 7,769,165 Other income 17 14,173,288 8,288,589 Total Revenue 28,376,580 16,057,754 Expenses: Employee Benefits Expense 18 19,687,923 10,761,523 Operating Expenses 19 5,192,290 3,115,525 Administrative Expenses 20 21,519,098 26,389,009 Depreciation and amortization expense 7,912,848 6,024,792 Total Expenses 54,312,159 46,290,849 Loss before tax (25,935,579) (30,233,095) Tax expenses: [Refer note 10 of Part B of note 21] Current tax - - Deferred tax - - Loss for the year (25,935,579) (30,233,095) Earnings per share: [Nominal value Rs.10 per share (Previous year Rs 10)] Basic & Diluted [Refer note 9 of Part B of note 21] (8.65) (19.16) Significant Accounting Policies and Other Notes 21 Notes referred to above form an integral part of the financial statements As per our report of even date attached For SHAH GUPTA & CO. Chartered Accountants Firm Registration No W FOR NCDEX SPOT EXCHANGE LIMITED Vipul K. Choksi R. Ramaseshan R. Bhaskaran Partner Director Director Place: Mumbai Date : June 2, 2012 Bhanupriya Rao Company Secretary 9th ANNUAL REPORT

100 Cash Flow Statement For The Year Ended March 31, 2012 Particulars Year ended March 31, 2012 (Amt in Rupees) Year ended March 31, 2011 A. Cash flow from operating activities Loss Before Tax (25,935,579) (30,233,095) Adjustments for: Depreciation 7,912,848 6,024,792 Interest income (14,103,303) (8,288,589) Interest on income tax refund (69,985) - Operating loss before working capital changes (32,196,019) (32,496,892) Movements in working capital: Decrease / (Increase) in Trade receivables 681,243 (608,579) Decrease / (Increase) short term loans and advances (1,521,653) 771,966 Increase / (Decrease) in Deposits 19,000,000 6,000,000 Increase / (Decrease) in Other liabilities and provisions 9,505,099 28,290,318 Cash Outflow from operations (4,531,330) 1,956,813 Direct taxes paid (724,565) 980,394 Net Cash Generated from Operating Activities (A) (5,255,895) 976,419 B. Cash Flows From Investing Activities Purchase of fixed assets (3,802,553) (14,278,609) Payment for intangible asset under development (11,281,245) 3,929,532 Interest received 10,499,277 7,209,425 Interest on Income tax refund 69,985 - Investment in fixed deposits (35,258,430) (10,545,442) Sale of Investements in NCDEX Bullion Pvt Ltd 40,000 Net Cash Flow from Investing Activities (B) (39,732,964) (13,685,094) C. Cash Flows From Financing Activities Loan from NCDEX 40,412,639 40,003,584 Net cash from financing activities (C) 40,412,639 40,003,584 Net increase / (decrease) in cash and cash equivalents (A + B + C) (4,576,220) 27,294,909 Cash and cash equivalents at the beginning of the year 40,936,383 13,641,474 Cash and cash equivalents at the end of the year 36,360,163 40,936,383 Net increase / (decrease) in cash and cash equivalents (4,576,220) 27,294, th ANNUAL REPORT

101 Cash Flow Statement For The Year Ended March 31, 2012 Particulars Year ended March 31, 2012 (Amt in Rupees) Year ended March 31, 2011 Components of cash and cash equivalents Cash and cheques on hand 7,947 4,605 With Banks - on current accounts 21,352,216 40,931,778 - on fixed deposits (Original maturity being three months or less) 15,000,000-36,360,163 40,936,383 Notes: 1. The above cash flow statement has been prepared by using the indirect method set out in Accounting Standard 3 - Cash Flow Statement notified in the Companies ( Accounting Standard) Rules, As per our report of even date attached For SHAH GUPTA & CO. Chartered Accountants Firm Registration No W For and behalf of the Board of Directors NCDEX SPOT EXCHANGE LIMITED Vipul K. Choksi R. Ramaseshan R. Bhaskaran Partner Director Director Place: Mumbai Date : June 2, 2012 Bhanupriya Rao Company Secretary 9th ANNUAL REPORT

102 Notes to Financial statements for the year ended 31 March 2012 NOTE 1 SHARE CAPITAL (Amt in Rupees) Share Capital As at March 31, 2012 As at March 31, 2011 Number Amount Number Amount Authorised Equity Shares of Rs.10 each 3,000,000 30,000,000 3,000,000 30,000,000 5% Cumulative redemeable preference shares of Rs.10 each 12,000, ,000,000 12,000, ,000,000 Issued, Subscribed & Paid up Equity Shares of Rs. 10 each 3,000,000 30,000,000 3,000,000 30,000,000 5% Cumulative redemeable preference shares of Rs.10 each 12,000, ,000,000 12,000, ,000,000 Total 15,000, ,000,000 15,000, ,000,000 NOTE 1(a) Reconciliation of Number of Shares (Amt in Rupees) Equity Shares As at March 31, 2012 As at March 31, 2011 Number Amount Number Amount Shares outstanding at the beginning of the year 3,000,000 30,000,000 3,000,000 30,000,000 Shares Issued during the year Shares bought back during the year Shares outstanding at the end of the year 3,000,000 30,000,000 3,000,000 30,000,000 (Amt in Rupees) Preference Shares As at March 31, 2012 As at March 31, 2011 Number Amount Number Amount Shares outstanding at the beginning of the year 12,000, ,000,000 12,000, ,000,000 Shares Issued during the year Shares bought back during the year Shares outstanding at the end of the year 12,000, ,000,000 12,000, ,000, th ANNUAL REPORT

103 Notes to Financial statements for the year ended 31 March 2012 NOTE 1(b) The Company has only one class of Equity Shares having Par Value of Rs 10 per share. Each holder of Equity shares is entitled to one vote per share. In the event of Liquidation of the Company; the holders of Equity shares will be entitled to receive remaining assets of the company after distribution of all preferential amounts. The distribution will be in proportion to the number of Equity shares held by each shareholder. 5% Cumulative redeemable preference shares( CRP ) 12,000,000 of Rs 10 each convertible at par at the option of National Commodities and Derivatives Exchange Ltd(Holding company), at the expiry of 5th year but before expiry of 7th year.in case of non-exercise of aforesaid conversion option, redemption in 4 equal tranches at the expiry of 7th year, 8th year, 9th year and 10th year. Hence, the shares will be completely redeemed at the expiry of 10th year from the date of issue. In the event of liquidation of the company before redemption of CRP, the holder of CRP s will have priority over equity shares in the repayment of capital. NOTE 1(c) Out of shares issued by the company, Shares held by its Holding company are as follows: (Amt in Rupees) Equity Shares As at March 31, 2012 As at March 31, 2011 Number % of holding Number % of holding National Commodity & Derivatives Exchange Limited (Holding Company) along with its Nominees 3,000, ,000, (Amt in Rupees) Preference shares As at March 31, 2012 As at March 31, 2011 Number % of holding Number % of holding National Commodity & Derivatives Exchange Limited (Holding Company) along with its Nominees 12,000, ,000, NOTE 1(d) Details of Shareholders holding more than 5% shares in the company Name of Shareholders As at March 31, 2012 As at March 31, 2011 Number of Shares % of holding Number of Shares % of holding Equity Shares held by National Commodity & Derivatives Exchange Limited 3,000, ,000, th ANNUAL REPORT

104 Notes to Financial statements for the year ended 31 March 2012 Name of Shareholders As at March 31, 2012 As at March 31, 2011 Number of Shares % of holding Number of Shares % of holding Preference Shares held by National Commodity & Derivatives Exchange Limited 12,000, ,000, NOTE 2 RESERVES AND SURPLUS Resereves and surplus As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 Settlement Guarantee Fund (Created for Meeting Members Obligations in case of Defaults) [Refer note 6 of Part B of note 21] 500, , , ,220 Balance in the Statement of Profit and loss Opening Balance (193,465,379) (163,232,284) Loss For the current year (25,935,579) (30,233,095) Closing Balance (219,400,958) (193,465,379) Total (218,900,738) (192,965,159) NOTE 3 Long Term Borrowings As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 Unsecured Loans and advances from related parties 117,921,633 77,508,994 Interest Free Loan from National Commodity and Derivatives Exchange Limited (Holding Company) Total 117,921,633 77,508, th ANNUAL REPORT

105 Notes to Financial statements for the year ended 31 March 2012 NOTE 4 Other Long Term Liabilities As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 Others Interest free Deposits form Clearing Banks 60,000,000 50,000,000 Trade Deposits from members [Refer note 3 of Part B of note 21] 67,900,000 58,900,000 Total 127,900, ,900,000 NOTE 5 Long Term Provisions As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 Provision for employee benefits Leave Encashment 918,840 60,364 Total 918,840 60,364 NOTE 6 Trade Payables As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 Micro, Small and Medium Enterprises - - Others 2,421,532 4,123,192 Total 2,421,532 4,123,192 9th ANNUAL REPORT

106 Notes to Financial statements for the year ended 31 March 2012 NOTE 7 Other Current Liabilities As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 Pledge money received in advance 56,256 - Other Payables Margin monies from Members 51,356,847 41,463,159 Statutory Dues Payable 1,552, ,653 Creditors for Capital Expenses 15,214,714 92,436 Total 68,180,630 42,272,248 NOTE 8 Short Term Provisions As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 Provision for employee benefits - Leave Encashment 244, ,362 Other Provisions 2,243,534 2,186,703 Total 2,488,244 2,926, th ANNUAL REPORT

107 Notes to Financial statements for the year ended 31 March 2012 NOTE 9 FIXED ASSETS (Amt in Rupees) Fixed Assets Gross Block (At cost) Depreciation Net Block As at April 1, 2011 Additions (Disposals) As at March 31, 2012 As at April 1, 2011 For the year As at March 31, 2012 As at March 31, 2012 As at March 31, 2011 Tangible Assets Computer Hardware 6,513,045 4,700,545 11,213,590 3,083,855 1,505,730 4,589,585 6,624,005 3,429,191 Total 6,513,045 4,700,545-11,213,590 3,083,855 1,505,730 4,589,585 6,624,005 3,429,191 Previous Year 5,311,384 2,386,161 1,184,500 6,513,045 2,020,699 1,063,156 3,083,855 3,429,190 3,290,684 Intangible Assets Computer Software 29,521,821 6,227,822 35,749,643 7,662,677 6,407,118 14,069,795 21,679,848 21,859,143 Total 29,521,821 6,227,822-35,749,643 7,662,677 6,407,118 14,069,795 21,679,848 21,859,143 Previous Year 16,444,873 13,229, ,300 29,521,821 2,701,041 4,961,636 7,662,677 21,859,144 13,743,832 Intangible assets under development - 19,277,708 19,277, ,277,708 - Total 19,277,708 19,277, ,277,708 - Previous Year Grand Total 36,034,866 30,206,075-66,240,941 10,746,532 7,912,848 18,659,380 47,581,561 25,288,334 Previous Year 21,756,257 15,615,409 1,336,800 36,034,866 4,721,740 6,024,792 10,746,532 25,288,334 NOTE 10 (Amt in Rupees) Non-current investments Face Value Quantity As at March 31, 2012 Face Value Quantity As at March 31, 2011 Other Non Trade Investments Long term Equity Shares - Unquoted, Fully paid up National Warehousing Pvt. Ltd , , , ,000 NCDEX Bullion Pvt.Ltd. 10 1,000 10, ,000 50,000 Total 999,000 1,039,000 Aggregate value of unquoted investments Cost 999,000 1,039, All Investments are stated at cost. 9th ANNUAL REPORT

108 Notes to Financial statements for the year ended 31 March 2012 NOTE 11 Other non-current assets As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 Others Long term deposit with banks with maturity period more than 12 months - 400,000 Total - 400,000 NOTE 12 Trade Receivables As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 (Unsecured, Considered good) Outstanding for period exceeding six months - - Others 94, ,922 Total 94, ,922 NOTE 13 Cash and Bank Balances As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 Cash and Cash Equivalents Balances with banks in Current Accounts 21,352,216 40,931,778 Cash on hand 7,947 4,605 Fixed deposit with banks having maturity within 3 months 15,000,000 - Other Bank Balances Fixed deposits with banks 151,000, ,341,571 Total 187,360, ,277,954 NOTE 14 Short Term Loans and Advances As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 (Unsecured, considered Good) Loans and Advances to Employees 899, Advances to Ncdex Bullion Private Limited 7, ,143 Rental Deposit 30,000 - Prepaid Expenses 1,979,011 1,272,348 Advance Tax & Tax Deducted at Source (Net) 4,983,752 4,259,187 Total 7,899,726 5,653, th ANNUAL REPORT

109 Notes to Financial statements for the year ended 31 March 2012 NOTE 15 Other Current Assets As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 Interest Accrued on Fixed Deposits 6,995,013 3,390,986 Total 6,995,013 3,390,986 NOTE 16 REVENUE FROM OPERATIONS Revenue from operations Year ended March 31,2012 (Amt in Rupees) Year ended March 31,2011 Transaction Charges 10,215,582 4,988,083 Annual Membership Fees 1,116,100 1,153,530 Admission/Registration Fees 2,385,000 1,599,005 Other Operating Income 486,610 28,547 Total 14,203,292 7,769,165 NOTE 17 Other Income Year ended March 31,2012 (Amt in Rupees) Year ended March 31,2011 Interest on bank Deposits 14,103,303 8,071,847 Dividend Income on investments - 216,742 Interest on Income tax refund 69,985 - Total 14,173,288 8,288,589 NOTE 18 Employee Benefits Expense Year ended March 31,2012 (Amt in Rupees) Year ended March 31,2011 Salaries and incentives 17,761,210 9,972,074 Contributions to - Provident & other funds 1,362, ,248 Provision for Leave encashment 424,188 - Staff welfare expenses 139,543 59,201 Total 19,687,923 10,761,523 9th ANNUAL REPORT

110 Notes to Financial statements for the year ended 31 March 2012 NOTE 19 Operating expenses Year ended March 31,2012 (Amt in Rupees) Year ended March 31,2011 Advertisement & Business Promotion Expenses 818, ,718 Legal & professional fees 2,495, ,669 Manpower Hire Charges 1,731,504 1,336,489 Bank charges 147,265 10,649 Total 5,192,290 3,115,525 NOTE 20 Administrative Expenses Year ended March 31,2012 (Amt in Rupees) Year ended March 31,2011 Software Maintainence Charges 12,230,321 19,942,280 Travelling & conveyance expenses 4,054,926 2,306,427 Communication expenses 940,434 1,061,777 Printing & stationery 140,312 66,670 Sitting fees to directors 130, ,000 Auditor's Remuneration - Statuory Audit Fees 224, ,600 *Tax Audit Fees 66,798 - **Re-imbursement of Expenses 26,127 10,000 (*Includes for F.Y Rs 33,090 ) (**Includes for F.Y Rs 14,881 ) Licence Fees 3,546,371 2,586,901 Other expenses 159,089 94,354 Total 21,519,098 26,389,009 Note 21: Significant Accounting Policies and Notes to Accounts A. SIGNIFICANT ACCOUNTING POLICIES 1) Nature of Operations NCDEX SPOT EXCHANGE LIMITED ( the Company ) is a demutualised national level commodity exchange focusing on capitalizing the opportunities of the offering commodity exchange through a robust technology platform. The Company was incorporated on October 18, ) Statement of Significant Accounting Policies a. Basis of preparation The financial statements have been prepared and presented under the historical cost 108 9th ANNUAL REPORT

111 Notes to Financial statements for the year ended 31 March 2012 convention on the accrual basis of accounting and comply with the accounting standard prescribed in the Companies (Accounting Standards) Rules,2006 and the relevant provisions of the Companies Act b. Use of Estimates The Preparation of Financial Statements requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (Including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. All the assets and liabilities have been classified as current or non-current as per the Company s normal operating cycle and other criteria set out in the Schedule VI to the Companies Act Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of Current-Non Current classification of assets and liabilities. c. Fixed Assets Fixed assets are stated at cost less accumulated depreciation. Cost comprises the purchase price and any other cost attributable to bringing the asset to its working condition for its intended use. d. Depreciation/Amortisation Depreciation/Amortisation is provided on Straight Line Method ( SLM ) at the rates mentioned below, which reflect the management s estimate of the useful lives of the respective fixed assets and are greater than or equal to the corresponding rates prescribed in Schedule XIV of the Act. Particulars Rates (SLM) Schedule XIV rates (SLM) Computer hardware and software 20.00% 16.21% Computer Software Amortised Over a period of Five years Fixed assets having an original cost less than or equal to Rs. 5,000 individually are fully depreciated in the year of purchase or installation. e. Impairments The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of the asset s net selling price and value in use. In 9th ANNUAL REPORT

112 Notes to Financial statements for the year ended 31 March 2012 assessing value in use, the estimated future cash flows are discounted to their present value. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment. f. Intangible assets Costs relating to acquisition and development of computer software are capitalized in accordance with AS 26 Intangible Assets and are amortized on a straight-line basis for a period of five years, which is management s estimate of its useful life. The carrying value of computer software costs is reviewed for impairment annually when the asset is not yet in use, and otherwise when events or changes in circumstances indicate that the carrying value may not be recoverable. g. Investments Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long term investments are carried at weighted average cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the long term investments. h. Revenue Recognition Revenue is recognized to the extent that it is probable that economic benefits will flow to the Company and the revenue can be reliably measured. Annual Membership Fees/Lot creation charges/penalty /Other charges Annual subscription charges are recognized as income when there is reasonable certainty of ultimate realization. Admission Fees Admission fee is recognized as one time income for the financial year. Interest Income Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Registration Fees Registration fee is recognized as one time income for the financial year th ANNUAL REPORT

113 Notes to Financial statements for the year ended 31 March 2012 i. Foreign currency policy Foreign currency transactions are recorded at the rates of exchange prevailing on the date of the transaction. At the year end, monetary items denominated in foreign currency are reported using the closing rate of exchange. Exchange difference arising thereon and on realization / payments of foreign exchange are accounted as income or expense in the relevant year. j. Income taxes Tax expense comprises current and deferred taxes. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. However, Deferred tax assets are recognized on carry forward of unabsorbed depreciation and tax losses only if there is a virtual certainty that such deferred tax assets can be realized against future taxable profits. Unrecognized deferred tax assets of earlier years are reassessed and recognized to the extent that it has become reasonably/virtually certain, as a case may be, that future taxable income will be available against which such deferred tax assets can be realized. k. Retirement and other employee benefits Provident Fund Retirement benefits in the form of Provident Fund are a defined contribution scheme and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective trusts. Gratuity Gratuity liability is defined benefit obligation for employees. The Company has taken Group Gratuity-cum-Life Insurance Policy from Life Insurance Corporation of India (LIC). Accordingly, the Company accounts for liability for future gratuity benefits based on actuarial valuation carried out at the end of each financial year and the Contribution by way of premium paid to LIC of India is charged to Profit/Loss Account. Actuarial gain or losses are immediately recognized in the Profit and Loss Account. Leave Benefits Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation. 9th ANNUAL REPORT

114 Notes to Financial statements for the year ended 31 March 2012 l. Earnings per share Basic earnings/(loss) per share are calculated by dividing the net profit or loss attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings/(loss) per share, the net profit or loss attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. m. Cash Flow Statement The cash flow statement is prepared by indirect method set out in accounting standard 3 on cash flow statements and presents the cash flows by operating, investing & financing activities of the company. Cash & cash equivalents presented in the cash flow statement consist of cash-on-hand and demand deposits with banks. n. Provision A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent Assets are not recognized. B. Notes to Accounts 1. Contingent Liability: Contingent liability in respect of unpaid dividend on 5% Cumulative preference shares: (Amt in Rupees) Particulars March 31, 2012 March 31, 2011 Dividend Payable 60,00,000 31,23, The Company has witnessed a sustained growth in its total income over the years. The Members base has also gone up substantially and additional revenue streams have also opened up. Based on the above and the future Business potential the Company does not see negative indication as regards the company not being a going concern. 3. Members holding membership of the Exchange for more than three years can terminate their membership and withdraw deposit. The Company does not foresee possibility of termination of such membership and therefore membership deposit of such members is classified as non-current liability th ANNUAL REPORT

115 Notes to Financial statements for the year ended 31 March Gratuity and other post-employment benefit plans: a) Defined Contribution Plan: Company s contribution to Provident Fund Rs. 5,55,635 (Previous year Rs. 3,01,919). b) Defined Benefit Plans: The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rs. 10,00,000. The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet. Statement of Profit and Loss: Net employee benefits expense (recognised in Employee Cost): (Amt in Rupees) Particulars March 31, 2012 Current service cost 82,949 Interest cost on benefit obligation 10,546 (Expected return on plan assets) (19,685) Net actuarial (gain) / loss recognised in the year 26,237 Net benefit expense 1,00,047 Actual return on plan assets 22,686 Balance sheet: Details of Provision for gratuity: (Amt in Rupees) Particulars March 31, 2012 Defined benefit obligation 2,50,569 Fair value of plan assets 5,83,188 Difference 3,32,619 Less: Unrecognised past service cost - Plan asset / (liability) 3,32,619 Changes in the present value of the defined benefit obligation are as follows: (Amt in Rupees) Particulars March 31, 2012 Opening defined benefit obligation 1,27,836 Interest cost 10,546 Current service cost 82,949 Actuarial (gains) / losses on obligation 29,238 Closing defined benefit obligation 2,50,569 9th ANNUAL REPORT

116 Notes to Financial statements for the year ended 31 March 2012 Changes in the fair value of plan assets are as follows: (Amt in Rupees) Particulars March 31, 2012 Opening fair value of plan assets 2,46,057 Expected return 19,685 Contributions by employer 3,14,445 Actuarial gains / (losses) 3,001 Closing fair value of plan assets 5,83,188 The major categories of plan assets as a percentage of the fair value of total plan assets are as follows: Particulars March 31, 2012 Investments with insurer 100 % The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. The principal assumptions used in determining gratuity obligations for the Company s plans are shown below: Particulars March 31, 2012 March 31, 2011 % % Discount rate Expected rate of return on Plan assets Salary Escalation Rate Attrition Rate In the absence of detailed information regarding Plan Assets which is funded with Life Insurance Corporation of India, the composition of each major category of plan assets, the percentage or amount for each category to the total fair value of plan assets has not been disclosed. The details of experience adjustments arising on account of plan assets and plan liabilities as required by paragraph 120(n)(ii) of AS 15 (Revised) on Employee Benefits are not readily available in the valuation statement received from LIC and hence, are not furnished. In the absence of disclosure tables in actuarial valuation report of Gratuity liability for the F.Y , the same has not been disclosed in the notes to accounts. 5. The company operates in a single business and geographical segment; hence no disclosure is required as per AS 17 on Segmental Reporting notified in the Companies (Accounting Standard) Rules, th ANNUAL REPORT

117 Notes to Financial statements for the year ended 31 March Settlement Guarantee Fund (SGF) as constituted by the Company is the amount earmarked for completion of the settlement, in case of a default by a member. 7. Related Party Disclosures a) List of Related Parties i. Holding Company National Commodity & Derivatives Exchange Limited (NCDEX) ii. iii. Fellow Subsidiary NCDEX Institute of Commodity Markets & Research (NICR) Associate NCDEX Bullion Private Limited (NBL) (Upto 12/02/2012) b) Transactions with Related Parties: (Amt in Rupees) Particulars March 31, 2012 March 31, 2011 Reimbursement of payments on Behalf of Company by- NCDEX 1,17,820 11,213 Conversion of unsecured loan given by NCDEX into share capital of company - 14,95,00,000 Advance / Loan Received from- NCDEX 4,04,00,000 4,00,00,000 Advance / Loan Given to- NCDEX Bullion Private Limited NIL NIL c) Closing Balance of Related Parties: (Amt in Rupees) Particulars March 31, 2012 March 31, 2011 Share Capital-NCDEX-Holding Company, Equity Share Capital 3,00,00,000 3,00,00,000 Preference Share Capital 12,00,00,000 12,00,00,000 Advance / Loan Received from, NCDEX 11,79,21,633 7,75,08,994 Investments in Equity Shares NCDEX Bullion Private Limited 10,000 50,000 Reimbursement of payments by Company on Behalf of- NCDEX Bullion Private Limited NIL 1,21,143 9th ANNUAL REPORT

118 Notes to Financial statements for the year ended 31 March Operating Leases Office premises are taken on operating lease. There are no restrictions imposed by lease agreements and all lease agreements are cancellable in nature on short term notice. (Amt in Rupees) Particulars March 31, 2012 March 31, 2011 Lease payments for the year Contingent rent recognized in Statement of Profit and Loss 23,219 NIL Minimum Lease Payments: Not later than one year 23,219 NIL Later than one year and not later than five years NIL NIL Later than five years NIL NIL 9. Earnings per share (EPS) (Amt in Rupees) Particulars March 31, 2012 March 31, 2011 Loss after tax as per Statement of Profit and Loss attributable to the Equity Shareholders (2,59,35,579) (3,02,33,095) Loss for calculation of EPS (A) (2,59,35,579) (3,02,33,095) Weighted average number of equity shares for calculating outstanding during the year (B) 30,00,000 15,77,534 Basic Loss per equity share (Rupees) (Face value of Rs.10 per share) (A) /(B) (8.65) (19.16) 10. Taxation The Company has incurred a loss in the current year and accordingly, no provision for current tax has been made. Further, the Company has carried forward tax losses. Deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. The deferred tax asset has been created on carry-forward tax losses to the extent of deferred tax liability. The components of deferred tax are given hereunder: (Amt in Rupees) Particulars March 31, 2012 March 31, 2011 Deferred Tax Asset Components Unabsorbed depreciation 3,65,90,610 2,90,49,582 Unpaid Liability under 43 B 1,12,422 81,650 Gross deferred Tax Assets 3,67,03,031 2,91,31,232 Deferred Tax Liabilities Components Depreciation (48,98,536) (35,75,186) Deferred Tax Liability (48,98,536) (35,75,186) Net Deferred tax Assets/(Liabilities) *NIL *NIL 116 9th ANNUAL REPORT

119 Notes to Financial statements for the year ended 31 March 2012 *Since the Company has made taxable Loss in the current year and there is no virtual certainty that it will make taxable profits in the future, deferred tax asset to the extent of deferred tax liability has been recognized and no net deferred tax asset has been created. 11. a) In the opinion of the Management, the Current Assets, Loans and Advances have a value on realization in the ordinary course of business, at least equal to the amount at which they are stated in the Balance Sheet. The provision for all known liabilities is adequate and not in excess of what is required. b) The account of Trade receivables, Trade payables, Loans and Advances are subject to confirmation /reconciliation and adjustments, if any. The management does not expect any material differences affecting the current year financial statements. 12. The Company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year end together with interest paid/ payable as required under the said act have not been given. 13. Additional information pursuant to Part II of Schedule VI to the Companies Act, 1956 is either Nil or Not Applicable. 14. The Financial statements for the year ended 31st March, 2011 were prepared as per the then applicable, pre-revised Schedule VI to the companies Act, Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended 31st March 2012, are prepared in compliance with the Revised Schedule VI. Accordingly, the previous year figures have also been reclassified/ regrouped to confirm to current year s classification. The adoption of Revised schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of the financial statements. For and on behalf of the Board of Directors NCDEX Spot Exchange Limited R. Ramaseshan R. Bhaskaran Director Director 9th ANNUAL REPORT

120 INDIA 2012 FACILITATING PROSPERITY WITH TECHNOLOGICAL INNOVATIONS.

121 NCDEX Institute of Commodity Markets & Research A wholly owned subsidiary of National Commodity & Derivatives Exchange Limited ( NCDEX ) DIRECTORS Mr. R. Ramaseshan Mr. Sanjay Kaul Mr. M. K. Ananda Kumar REGISTERED OFFICE 1st Floor, Ackruti Corporate Park Near G. E. Garden, L. B. S. Road Kanjurmarg West Mumbai CORPORATE OFFICE 1st Floor, Gayathri Towers, 954, Appasaheb Marathe Marg, Prabhadevi, Mumbai AUDITORS M/s. Lodha & Co. Chartered Accountants 6, Karim Chambers 40, A. Doshi Marg (Hamam Street) Mumbai BANKERS ICICI Bank Limited Axis Bank Limited 9th ANNUAL REPORT

122 Director s Report Dear Shareholders, Your Directors hereby present the Fifth Annual Report on the operations of the Institute together with the Audited Statement of Accounts for the period ended March 31, FINANCIAL AND OPERATIONAL PERFORMANCE: (Amt in Rupees) For the year ended March 31, 2012 For the year ended March 31, 2011 Authorised capital 5,00, ,00, Issued and subscribed capital 5,00, ,00, Total Income 2,49, ,16, Total expenditure (including Depreciation) 9,25, ,75, Deficit for the year (6,75,923.00) (6,59,621.00) Fixed assets 7,05, ,28, Though there has been no significant improvement in the financial performance of the Institute, some improvements were seen in the financial year with new business opportunities for the Institute. During the year, the Institute has entered into two tie-up arrangements, one being with Factiva, a Dow Jones Company ( Factiva ) and the other with Indian Institute of Financial Markets ( IIFM ). The details of the arrangements are as set forth hereunder: Tie-up with Factiva During the year, the Institute has entered into a Memorandum of Understanding with Factiva, wherein Factiva has agreed to distribute daily, weekly, monthly and occasional research reports of the Institute to all the subscribers of Factiva positioned world-wide with effect from September 8, Although such arrangement may not generate considerable revenue for the Institute, the main essence of the arrangement is creating awareness of the Institute as well as of NCDEX. Through Factiva, the research reports are being accessed and read by more than 1 million subscribers of Factiva which will assist in brand building of the Institute. Tie-up with IIFM Under this arrangement with IIFM, the Institute and IIFM have jointly developed the financial market course with built in NCDEX Commodity Certification course, which is targeted at students who wish to pursue career in commodity markets. As regards the curriculum, the course contains 2 modules containing extensive study of subjects like macroeconomics, basics of markets, fundamental and technical analysis, futures and options, market psychology, strategies and the like. The course has been named as Gold at 18 and a dedicated website has been developed for the purpose. At present, the course is made available in Mumbai and Delhi and IIFM is actively involved in the marketing of the course. Till the date, the response in Delhi for the course has been satisfactory. 2. DIVIDEND: Being an association not for profit, your Institute is dedicated to promoting research and awareness in commodity markets and the objective behind this is to widen and improve the understanding on commodity markets. Therefore, no dividend is declared th ANNUAL REPORT

123 Director s Report 3. DIRECTORS: The Directors of the Institute includes Mr. R. Ramaseshan, Managing Director & CEO of NCDEX; Mr. M. K. Ananda Kumar, Chief Corporate Services of NCDEX and Mr. Sanjay Kaul, MD & CEO, National Collateral Management Services Limited. Pursuant to the provisions of Section 255 and 256 of the Companies Act, 1956, Mr. Sanjay Kaul will be retiring by rotation at the ensuing AGM and has offered himself for re-appointment as Director at that meeting. The Directors recommend Mr. Sanjay Kaul to be re-appointed as Director of the Institute. 4. AUDITORS: M/s. Lodha & Co., Chartered Accountants, who are the Statutory Auditors of the Institute, hold office until the conclusion of the ensuing Fifth Annual General Meeting and are eligible for reappointment. The Institute has received Certificate from the Auditors to the effect that their appointment/ reappointment, if made, would be within the prescribed limit under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for such appointment/reappointment within the meaning of Section 226 of the said Act. 5. DIRECTORS RESPONSIBILITY STATEMENT: In terms of Section 217(2AA) of the Companies Act, 1956, your Directors in respect of the financial year , state that: i. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; ii. The Directors have selected accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Institute at the end of the financial year i.e. March 31, 2012, and of the loss of the Institute for that period; iii. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Institute and for preventing and detecting fraud and other irregularities; iv. The Directors have prepared the annual accounts on a going concern basis. 6. ACKNOWLEDGEMENTS: The Directors are grateful to NCDEX for its cooperation, support, encouragement and guidance. The Directors also express their sincere thanks to trade bodies, academic institutions, and knowledge partners for their support. The Directors further express their appreciation for the outstanding professionalism and commitment exhibited by its small band of employees and consultants. By order of the Board of Directors Place : Mumbai Date : May 31, 2012 R. Ramaseshan Director M. K. Ananda Kumar Director 9th ANNUAL REPORT

124 Auditors Report To The Members, NCDEX Institute of Commodity Market and Research 1. We have audited the attached Balance Sheet of NCDEX Institute of Commodity Markets and Research (hereinafter referred as the Institute ), as at 31st March, 2012 and also the Statement of Income and Expenditure and Cash Flow Statement of the Institute for the year ended on that date. These financial statements are the responsibility of the Management of the Institute. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As the Institute is registered under Section 25 of the Act, the clauses under the Companies (Auditor s Report) Order, 2003 are not applicable. 4. We report that :- (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) (c) in our opinion, proper books of account as required by law have been kept by the Institute so far as it appears from our examination of those books; the Balance Sheet, Statement of Income and Expenditure and Cash Flow Statement dealt with by this report are in agreement with the books of account of the Institute; (d) in our opinion, the Balance Sheet, Statement of Income and Expenditure and Cash Flow Statement dealt with by this report have been prepared in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 (hereinafter called as the Act ) to the extent applicable; (e) on the basis of the written representations received from the directors as on 31 st March, 2012 and taken on record by the Board of Directors, wherever applicable, we report that none of the director is disqualified as on 31 st March, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act ; (f) in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with Note 11 regarding assumption of going concern 122 9th ANNUAL REPORT

125 Auditors Report used in the preparation of financial statements and other notes appearing elsewhere in the accounts, give a true and fair view in conformity with the accounting principles generally accepted in India; (i) (ii) in the case of the Balance Sheet, of the state of affairs of the Institute as at 31st March, 2012; in the case of the Statement of Income and Expenditure, of the deficit of the Institute for the year ended on that date; (iii) in the case of the Cash Flow Statement, cash flows of the Institute for the year ended on that date. For Lodha & Co. Chartered Accountants (Firm Registration No E) Place : Mumbai Date : May 31, 2012 A.M. Hariharan Partner (Membership No.38323) 9th ANNUAL REPORT

126 Balance Sheet as at 31st March 2012 Particulars Notes As at (Amt in Rupees) As at I. EQUITY & LIABILITIES (1) Shareholders' funds (a) Share Capital 3 500, ,000 (b) Reserves and surplus 4 (10,888,063) (10,212,140) (2) Current Liabilities (a) Short Term Borrowings 5 11,051,421 11,035,726 (b) Trade Payables 278, ,870 (c) Other Current Liabilities 24,708 19,846 TOTAL 966,215 1,446,302 II. ASSETS (1) Non-Current Assets (a) Fixed Assets 6 Tangible assets 162, ,959 Intangible assets 542,452 1,034,220 (b) Other Non Current assets 53,013 53,013 (2) Current Assets (a) Cash and cash equivalents 7 207,835 65,110 TOTAL 966,215 1,446,302 Statement of significant accounting policies 2 The accompanying notes are an integral part of the financial statements As per our attached report of even date For LODHA & CO. Chartered Accountants For and on behalf of NCDEX INSTITUTE OF COMMODITY MARKETS AND RESEARCH A. M. Hariharan R. Ramaseshan M. K. Ananda Kumar Partner Director Director Place : Mumbai Date : May 31, th ANNUAL REPORT

127 Statement of Income And Expenditure For The Year Ended March 31, 2012 Particulars Notes For the year ended March 31, 2012 (Amt in Rupees) For the year ended March 31, 2011 INCOME Revenue from operations 8 227, ,150 Other Income 9 21,259 4,956 TOTAL (I) 249, ,106 EXPENSES Operating and other expenses , ,915 Depreciation & amortisation 6 622, ,812 TOTAL (II) 925, ,727 Deficit for the year (I) - (II) (675,923) (659,621) Basic and Diluted earnings per equity share of Rs. 10 each (13.52) (13.19) Statement of significant accounting policies 2 The accompanying notes are an integral part of the financial statements As per our attached report of even date For LODHA & CO. Chartered Accountants For and on behalf of NCDEX INSTITUTE OF COMMODITY MARKETS AND RESEARCH A. M. Hariharan R. Ramaseshan M. K. Ananda Kumar Partner Director Director Place : Mumbai Date : May 31, th ANNUAL REPORT

128 Cash Flow Statement For The Year Ended 31St March 2012 Particulars For the year ended March 31, 2012 (Amt in Rupees) For the year ended March 31, 2011 A. Cash flow from operating activities Deficit for the year (675,923) (659,620) Adjustments for: Depreciation and amortization 622, ,812 Operating profit/(loss) before working capital changes (53,111) (36,808) Movements in working capital: Decrease / (Increase) in Other Current Assets - 6,176 Increase / (Decrease) in Trade payables and Other Current Liabilities 180,141 (181,899) Net cash used in operating activities (A) 127,030 (212,531) B. Cash flows from investing activities (B) - - C. Cash Flows from financing activities Loan from Holding Company 15, ,726 Net cash from financing activities (C) 15, ,726 Net increase / (decrease) in cash and cash equivalents (A + B + C) 142,725 23,195 Cash and cash equivalents at the beginning of the year 65,110 41,915 Cash and cash equivalents at the end of the year 207,835 65,110 The above Cash Flow Statement has been prepared by using the indirect method as per Accounting Standard 3. As per our attached report of even date For LODHA & CO. Chartered Accountants For and on behalf of NCDEX INSTITUTE OF COMMODITY MARKETS AND RESEARCH A. M. Hariharan R. Ramaseshan M.K.Ananda Kumar Partner Director Director Place : Mumbai Date : May 31, th ANNUAL REPORT

129 Notes to financial statements for the year ended 31 March Nature of Operations NCDEX Institute of Commodity Markets and Research is an institute promoted by National Commodity & Derivates Exchange Limited (NCDEX) and incorporated under section 25 of the Companies Act, 1956 on September 18, The main object of the Institute is to operate as a charitable statistical research institute to promote knowledge and research relating to commodity markets, associated derivatives and disseminate information for the benefit of the participants in markets for products, goods, commodities, currency bonds, fixed income, intangibles, indices etc. The Institute has been registered as a Company under the provisions of the Companies Act, 1956 and by virtue of the license granted to the institute by the Central Government under Section 25 of the Act, the word LIMITED is not required to be suffixed in its name. 2 Statement of Significant Accounting Policies a b c d Basis of preparation The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting and comply with in all material aspects with the accounting standard prescribed in the Companies ( Accounting Standards) Rules,2006 and the relevant provision of the Companies Act All assets and liabilities have been classified as current or non-current as per the Company s normal operating cycle and other criteria set out in the Schedule VI to the Companies Act, Use of Estimates The preparation of financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent liability and the results of operations. Although these estimates are based on management best knowledge of current event and actions, actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively. Fixed Assets Fixed assets are stated at cost less accumulated depreciation. Cost comprises the purchase price and any other cost attributable to bringing the asset to its working condition for its intended use. Depreciation and Amortisation Depreciation is provided on Straight Line Method ( SLM ) at the rates mentioned below, which reflect the management s estimate of the useful lives of the respective fixed assets and are greater than or equal to the corresponding rates prescribed in Schedule XIV of the Act. Particulars Rates Used (SLM) Schedule XIV rates (SLM) Computer hardware and software 20.00% 16.21% Furniture & Fixtures 6.33% 6.33% 9th ANNUAL REPORT

130 Notes to financial statements for the year ended 31 March 2012 Fixed assets having an original cost less than or equal to Rs. 5,000 individually are fully depreciated in the year of purchase or installation. e Impairments The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of the asset s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment. f Retirement and other employee benefits Retirement benefits in the form of Provident Fund are a defined contribution scheme and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective trusts. Gratuity liability under the Payment of Gratuity Act, 1972 is a defined benefit obligation and is provided for. Compensated absences are provided for based on estimates. g Provisions A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. h Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Course fees Course fees are accrued and recognized as revenue in the year of enrollment. Interest Income Interest income is recognized on a time proportion basis taking into account the amount 128 9th ANNUAL REPORT

131 Notes to financial statements for the year ended 31 March 2012 outstanding and the rate applicable. Interest income is included under the head other income in the statement of income and expenditure. i Foreign currency transactions Transactions in foreign currency entered during the year are recorded at the exchange rates prevailing on the date of the transaction. 3 Share Capital Share Capital As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 Authorised Share Capital 50,000 Equity Shares of Rs 10 Each 500, ,000 Issued Subscribed & Paid up 50,000 Equity shares of Rs. 10/- each fully paid up. 500, ,000 Total 500, ,000 a Reconciliation of the equity shares oustanding at the beginning and at the end of the reporting period Equity Shares of Rs. 10 each fully paid March 31, 2012 March 31, 2011 No. of Shares Amount in Rs. No. of Shares Amount in Rs. At the beginning of the year 50, ,000 50, ,000 Outstanding at the end of the year 50, ,000 50, ,000 b Terms/Rights attached to equity share The company has only one class of equity share having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the company, the holder of the equity shares will be entitled to receive remaining assets of the company, after distribution of all the prefrential amounts. The distribution will be in the proportion to the number of equity shares held by the shareholder. c Shares held by holding/ultimate holding company and/or their subsidiaries/associates (Amt in Rupees) Share Capital March 31, 2012 March 31, 2011 National Commodity & Derivatives Exchange Limited the Holding Company 49,400 (31 March 2011 : 49,400) Equity Shares of Rs. 10 each fully paid 494, ,000 9th ANNUAL REPORT

132 Notes to financial statements for the year ended 31 March 2012 d Details of shareholders holding more than 5% share in the company Equity Shares of Rs. 10 each fully paid As at March 31, 2012 As at March 31, 2011 No. of % holding No. of % holding Shares Shares National Commodity & derivatives Exchange Ltd, Holding Company % % 4 Reserves & Surplus As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 Balance as per last financial statements (10,212,140) (9,552,519) Add : Deficit for the year (675,923) (659,621) Total (10,888,063) (10,212,140) 5 Short Term Borrowings As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 Unsecured Loan from Holding company Ncdex Ltd 11,051,421 11,035,726 (Interest free) Total 11,051,421 11,035,726 6 Fixed Assets (a) Tangible assets (Amt in Rupees) Gross Block Depreciation Net Block As at April 1, 2011 As at Mar 31, 2012 Upto April 1, 2011 During the year Upto Mar 31, 2012 As at March 31, 2012 As at March 31, 2011 Furniture & Fixtures 142, ,875 28,080 9,044 37, , ,795 Hardware 610, , , , ,836 57, ,164 Total 752, , , , , , ,959 Previous year 752, , , , , , , th ANNUAL REPORT

133 Notes to financial statements for the year ended 31 March 2012 (b) Intangible assets (Amt in Rupees) Gross Block Depreciation Net Block As at April 1, 2011 As at Mar 31, 2012 Upto April 1, 2011 During the year Upto Mar 31, 2012 As at March 31, 2012 As at March 31, 2011 Software 2,458,837 2,458,837 1,424, ,768 1,916, ,452 1,034,220 Total 2,458,837 2,458,837 1,424, ,768 1,916, ,452 1,034,220 Previous year 2,458,837 2,458, , ,768 1,424,617 1,034,220 1,525,988 Grand total 3,211,712 3,211,712 1,883, ,812 2,506, ,367 1,328,179 Previous year 3,211,712 3,211,712 1,260, ,812 1,883,533 1,328,179 1,950,991 7 Cash and cash equivalent As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 Balances with bank 207,835 65,110 Total 207,835 65,110 8 Revenue from operations For the year ended March 31, 2012 (Amt in Rupees) For the year ended March 31, 2011 Course fees 227, ,150 Total 227, ,150 9th ANNUAL REPORT

134 Notes to financial statements for the year ended 31 March Other Income For the year ended March 31, 2012 (Amt in Rupees) For the year ended March 31, 2011 Interest On Income Tax Refund - 3,007 Bank Interest 3,837 1,949 Miscellaneous Income 17,422 - Total 21,259 4, Operating and Other expenses For the year ended March 31, 2012 (Amt in Rupees) For the year ended March 31, 2011 Professional Fees 38,790 58,191 Travelling & Conveyance ,962 Business Meeting and Conferences - 14,000 Research Expenses 210,949 - Books and Periodicals Printing and Stationery 6,562 - Telephone Expenses 1,868 14,693 Auditors' Remuneration (Includes Service Tax) Audit Fees 33,708 33,090 Tax Audit fees 8,272 5,515 Out of Pocket Expenses - 9,309 Miscellaneous Expenses 1,126 2,532 Fringe benefit tax - (22,477) Total 302, , The financial statements have been prepared on the assumption of a going concern in view of the Institute s ability to continue in its operation for a foreseeable future with the continued support from NCDEX, the Holding Company. 12 Contingent Liabilities and commitments (to the extent not provided for) The Company was granted registration under section 12AA of the Income Tax Act, 1961 (Act) with effect from for income tax exemption. The Director of Income Tax (Exemption) vide its Order dated cancelled the said registration on the ground that the activities of the Company were in relation to trade or business and not for charitable purpose since the 132 9th ANNUAL REPORT

135 Notes to financial statements for the year ended 31 March 2012 gross receipts had exceeded the prescribed limit of Rs. 10 lakhs during the financial year Accordingly, the assessment for the financial year was completed disallowing the Company s claim of deduction under section 11 and 12 of the Act. The Company had preferred an appeal against the cancellation of registration and the subsequent assessment proceedings for the year As per the assessment order, there was no demand of income tax in view of business loss and unabsorbed depreciation. However, the Department has issued a notice initiating the penalty proceedings. Pending the final outcome of the dispute, the liability if any, that may be imposed on the Company for financial years commencing from , on account of income tax, interest and penalty is presently not ascertainable. 13 Capital Commitments : NIL 14 Related Party Disclosures Holding Company National Commodity & Derivatives Exchange Limited (NCDEX) The related parties relation has been identified as per AS 18 -Related Party disclosure and the same has been relied upon by the Auditors. (Amt in Rupees) (i) Transaction during the year with related parties: Loan from NCDEX towards reimbursement of expenses, purchases of assets, etc. 15, ,726 (ii) Balance at the year end : As at March 31, 2012 (Amt in Rupees) As at March 31, 2011 Unsecured Loan from NCDEX 11,051,421 11,035,726 No amounts pertaining to related parties have been provided for, written off or written back during the year. 15 Exposure / Expenditure in foreign currency : NIL 16 As Research & Development is the only operating segment, there are no reportable segments as per AS 17 Segment Reporting issued by Companies (Accounting Standards) Rules, In the opinion of the Management, assets other than fixed assets have a value on realization in the ordinary course of business, at least equal to the amount at which they are stated in the Balance Sheet. For and on behalf of NCDEX Institute of Commodity Markets and Research Place : Mumbai Date : May 31, 2012 R. Ramaseshan Director M. K. Ananda Kumar Director 9th ANNUAL REPORT

136 Additional Information Pursuant to Part Iv of Schedule Vi to the Companies Act, BALANCE SHEET ABSTRACT AND GENERAL BUSINESS PROFILE. I. Registration Details : Registration no. : State Code : 11 Balance sheet date : II. Capital raised during the year (Amount in Rs. Thousands): Public Issue Right Issue Nil Nil Bonus Issue Private Placement Nil Nil III. Position of Mobilisation and Deployment of Funds (Amount in Rs.) : Total Liabilities Total Assets 9,66,215 9,66,215 Sources of Funds: Paid-up Capital Reserves & Surplus 5,00,000 (1,08,88,063) Non Current Liabilties Current Liabilities Nil 1,13,54,278 Application of Funds: Non Current Assets Current Assets 7,58,380 2,07,835 IV Performance of Company (Amount in Rs.): Turnover (Total Income) Total Expenditure 2,49,109 9,25,032 Net Surplus Nil Earning Per Share in Rs. Dividend Rate % Not Applicable Not Applicable. V. Generic Names of Three Principal Services of the Company Item Code No. : Not Applicable Description of Activity : Research & Development. For and on behalf of the Board of Directors NCDEX Institute of Commodity Markets and Research R. Ramaseshan M. K. Ananda Kumar Director Director Place : Mumbai Date : May 31, th ANNUAL REPORT

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