NATIONAL STOCK EXCHANGE OF INDIA LIMITED TWENTIETH ANNUAL REPORT

Transcription

1 NATIONAL STOCK EXCHANGE OF INDIA LIMITED TWENTIETH ANNUAL REPORT

2 Twentieth Annual Report FY CORPORATE INFORMATION Board of Directors* Dr. Vijay L. Kelkar : Chairman Mrs. Shyamala Gopinath : Mr. Abhay Havaldar : Mrs. Ranjana Kumar Mr. A.P. Kurian : Dr. Rajiv B. Lall : Mr. S. B. Mainak : Mr. Y.H. Malegam : Mr. S. B. Mathur : Dr. K.R.S. Murthy : Mr. Prakash Parthasarathy : Dr. V.A. Sastry : Mr. Deepak M. Satwalekar : Mr. M.V. Subbiah : Mrs.Pratima M. Umarji : Mr. Ravi Narain : Managing Director Ms. Chitra Ramkrishna : Joint Managing Director Management Team Mr. J. Ravichandran : Director (Finance & Legal) & Company Secretary Mr. R. Sundararaman : Senior Vice President Mr. Yatrik R. Vin : Senior Vice President Mr. R. Nanda Kumar : Senior Vice President Mr. Ravi Varanasi : Senior Vice President Ms. K. Kamala : Vice President Mr. Nirmal Mohanty : Vice President Mr. Hari K : Vice President Mr. T. Venkat Rao# : Vice President Mr. Chandrashekhar Mukherjee : Vice President Mr. Suprabhat Lala : Vice President Mr. Mahesh Haldipur : Asst. Vice President Mr. C.N. Upadhyay : Asst. Vice President Mr. Arup Mukherjee : Asst. Vice President Mr. R. Jayakumar # : Asst. Vice President Mr. Ravindra Mohan Bathula : Asst. Vice President Ms. Nisha Subhash : Asst. Vice President Mr. Nilesh Tinaikar : Asst. Vice President * As on June 13, 2012 # on deputation to NSCCL Page 1

3 National Stock Exchange of India Limited Twentieth Annual Report FY CORPORATE INFORMATION Continued... DIRECTORS REPORT Management Team Ms. Rana Usman : Asst. Vice President Mr. Mayur Sindhwad : Asst. Vice President Mr. Nagendra Kumar SRVS # : Asst. Vice President Mr. Vitthal More : Asst. Vice President Mr. Sandip Mehta : Asst. Vice President Mr. Sumit Tyagi : Asst. Vice President Mr. Amol Mahajan : Asst. Vice President Ms. Divya Malik Lahiri : Asst. Vice President Ms. Rehana D souza : Asst. Vice President Ms. Sunitha Anand : Asst. Vice President # on deputation to NSCCL Auditors : M/s. Khandelwal Jain & Co. Chartered Accountants 12-B, Baldota Bhavan, 5th Floor Maharshi Karve Road Churchgate, Mumbai Registered Office : Exchange Plaza Plot No. C-1, Block G Bandra Kurla Complex, Bandra (East) Mumbai Registrar & : Link Intime India Pvt, Ltd. Transfer Agents C-13, Pannalal Silk Mills Compound L B S Marg, Bhandup (West) Mumbai Your Directors have pleasure in presenting the Twentieth Annual Report and Audited Accounts of the Company for the year ended March 31, I. Operations and major developments during the year 1.1 Global rankings - Equity Derivatives Market Stock Futures During the year 2011, NSE was ranked as the 4th largest exchange in respect of contracts traded in stock futures. The details of top 5 exchanges trading stock futures are given in Table 1 below: Table 1 (in millions) Sr. Contracts traded No. Exchange during RTS Exchange NYSE Liffe (Europe) Eurex National Stock Exchange India Korea Exchange Source: WFE Index Options NSE continues to be ranked as the 2nd largest exchange in the world in index options. The details of top 5 exchanges in index options are given in Table 2 below: Table 2 (in millions) Sr. Contracts traded No. Exchange during Korea Exchange National Stock Exchange India Eurex Chicago Board Options Exchange TAIFEX Source: WFE Index Futures During the year 2011, NSE was ranked as the 4th largest exchange in the world in index futures. The details of top 5 exchanges in index futures are given in Table 3 as under: Table 3 (in millions) Sr. Contracts traded No. Exchange during CME Group Eurex RTS Exchange National Stock Exchange India Osaka SE Source: WFE Page 2 Page 3

4 National Stock Exchange of India Limited Twentieth Annual Report FY Nifty Index Global rankings Nifty Index options ranked 2nd across the top 20 Index options traded globally during the year Nifty Index futures ranked 4th across the top 20 Index futures traded globally during the year (Source: rankings based on number of contracts traded or cleared between Jan 11 - Dec 11) All products NSE continued to be ranked 5th across all the Derivatives exchanges in the world based on the volume of contracts traded during the year (Source: rankings based on number of contracts traded or cleared between Jan 11 - Dec 11) 1.2 Global rankings-capital Market In Capital Market segment, NSE improved its ranking to third largest exchange from being fourth largest last year in the world based on the number of transactions during the calendar year The details of top 10 Exchanges are given in the Table 4 below. Table 5 showing membership details for the Financial Year Particulars CM WDM F&O CD segment segment segment segment SEBI registered trading members 1, , Members registered in additional segments Registered Sub-brokers / Authorised persons 64,127 Nil 55,041 5,874 Surrender of membership Wholesale Debt Market (WDM) segment The WDM segment provides a trading platform for trading of a wide range of fixed income securities. Initially, government securities, treasury bills and bonds issued by public sector undertakings (PSUs) were made available for trading. This range has been widened to include non-traditional instruments like floating rate bonds, zero coupon bonds, index bonds, structured products, corporate debentures, state government loans, SLR and Turnover in WDM segment for FY is presented in Figure 2 as under: The transaction in dated government securities account for a substantial share of transaction on the WDM segment with 51.31% in Market capitalisation of the WDM segment has witnessed a constant increase indicating an increase in the number of securities available for trading on this segment. Total market capitalisaton of the securities available for trading on WDM segment stood at ` 42,72, crores as on March 31, Table 7 and Figure 3 represent security-wise distribution of turnover. Table 7: Security-wise Distribution of Turnover Securities Turnover % of Turnover % of (` in crores) Turnover (` in crores) Turnover Government Securities 3,24, ,04, T-Bills 1,39, , PSU Bonds 62, , Institutional Bonds 57, , Bank Bonds , Corporate Bonds 48, , Total 6,33, ,59, Figure 3: Security-wise Distribution of Turnover Table 4 (in Thousands) Sr No. of No Exchange transactions 1 NYSE Euronext (US) NASDAQ OMX National Stock Exchange India Shanghai SE Korea Exchange Shenzhen SE Bombay SE Tokyo SE Group non-slr bonds issued by financial institutions, units of mutual funds and Supra Institutions (Foreign institutions). There were 5,148 securities available for trading as on March 31, 2012 all belonging to listed category. The turnover on WDM segment increased in the financial year The turnover increased from ` 559, crores in to ` 6,33, crores in registering an increase of 13.18%. The average daily turnover increased to ` 2, crores in from ` 2, crores in The business growth on the WDM segment of the Exchange is presented in Figure 1. Table 6: Trades in WDM segment Particulars Number of Trades 23,447 20,383 Average monthly number of trades 1,954 1,699 Average daily number of trades Average Trade Value (` in crores) Average Daily Turnover (` in crores) 2, , Turnover (` in crores) 6,33, ,59, Number of Active Scrips 1,140 1,111 Number of Active members Issuance in WDM A total of 1,508 securities were listed during the financial year As at end of March 2012, 5,148 securities were available for trading on the WDM segment. Details of Issuance in WDM are provided in Table 8. Table 8: Issuance in WDM 9 London SE Group TMX Group Source: WFE. The sale and purchase of a share are counted as one transaction 1.3 Membership at NSE 46 new members (24 in CM, F&O and CD segments; 12 in CM and F&O segments; 3 in CM segment; 6 in CD segment; and 1 in CM and CD segments) were registered during the Financial Year The Exchange also granted additional segment membership to 44 members during the Financial Year Securities Profile The turnover of Government securities in WDM segment increased by 6.57 % during Its share in total turnover decreased from 54.49% in to 51.31% in The share of Treasury Bills increased from 17.64% in to 22.03% in The turnover of Non Government securities in WDM segment increased by 8.27% during During the share of Non Government Securities in total turnover decreased to 26.66% as compared to 27.87% in Financial No. of New Total No. of Market Year Securities Securities Capitalisation Listed (at year end) (at year end ` in Crores) , ,61, ,67, ,84, ,23, , ,48, ,65, , ,94, , ,72, Page 4 Page 5

5 National Stock Exchange of India Limited Twentieth Annual Report FY Market Capitalisation Total Market capitalisation of the securities available for trading in WDM segment increased to ` 42,72, crores in from ` 35,94, crores in the previous year registering a growth of 18.86%. The Central Government securities accounted for the largest share of the market capitalisation with 57.86% while Non Government Securities accounted for18.35%. The composition of market capitalisation of various securities on WDM is presented in Table 9. Table 9: Market Capitalisation of WDM segment Securities As on March 2012 As on March 2011 Market % Market % Capitalisation of total Capitalisation of total (` in crores) (` in crores) Central Government Securities 24,72, ,85, PSU Bonds 2,44, ,90, State Loans 7,57, ,22, T-Bills 2,59, ,37, Others 5,39, ,58, Total 42,72, ,94, Figure 4: Market Capitalisation of WDM segment Turnover of Corporate Bond is presented in Table 10 and Figure 5 Table 10: Corporate Bond Turnover Corporate Bond Turnover % Change Total Turnover (` Crs) 1,93, ,55, Average Daily Turnover (` Crs) Total Number of Trades 11,977 8, Average Daily Trades Figure 5: Corporate Bond Turnover for FY Capital Market (CM) segment The total turnover of CM segment in the year is ` 28,10,893 crores as compared to ` 35,77,410 crores in the year , showing a decrease of 21%. The average daily traded value in is ` 11, crores as compared to ` 14, crores in As on March 31, 2012, the number of listed companies available for trading was 1,563 compared to 1,484 at the end of March 31, In current year, Exchange allowed trading facility in 73 securities in permitted to trade category. Figure 6: Month-wise Turnover and Average Daily Turnover in CM segment The changes in turnover statistics over the preceding year are presented in Table No. 11 Table No. 11: Turnover Statistics on CM segment Sr. No. Details % Rise / (Fall) in Total number of trades (In lakhs) 14,377 15,507 (7.28) 2 Total number of shares traded (in lakhs) 16,16,978 18,24,515 (11.37) 3 Total turnover (` Cr.) 28,10,893 35,77,410 (21.43) 4 Market Capitalisation at the end of year (` Cr.) 60,96,518 67,02,616 (9.04) 5 Turnover of S&P CNX Nifty Securities (` Cr.) 15,11, ,89, (10.57) 6 Total number of listed companies 1,646 1, Index Movement:- S & P CNX Nifty saw downward movement of 9.23% moving from 5, to 5, over the financial year decreased by 4.06% and S&P CNX Nifty Junior decreased by 1.48%. Figure 8 - Market Capitalisation during year During the year , the S&P CNX Nifty touched a high of 5, on April 06, 2011 and low of 4, on December 20, Movement of S&P CNX Nifty is shown in Figure 7: The turnover of S&P CNX Nifty securities was ` 15,11, crores in the year as compared to ` 16,89, crores. The contribution of S&P CNX Nifty securities turnover to total turnover during the year was 53.77% compared to 47.24% in the year Figure 7: S & P Nifty movement Distribution of Turnover Turnover-wise distribution of trading members About 74% of the trading members had an average daily turnover of ` 1 crore or more in and In , around 25% of the trading members have daily turnover more than ` 10 crores as against 28% in Figure No Corporate Bond Market Currently for reporting trades in corporate bonds, Exchanges provides two platforms namely NEAT WDM and Report CBT. The average daily traded value reported through corporate bond for was ` crores (NEAT WDM & Report CBT) as compared to ` crores for with an average of around 50 trades being reported on a daily basis as compared to 32 trades for Market Capitalisation The market capitalisation of securities available for trading on CM segment has decreased by 9.04% during from ` 67,02,616 crores as on March 31, 2011 to ` 60,96, crores as on March 31, Out of total market capitalisation of ` 60,96,518 crores as on March 30, 2012, ` 39,948 crores was contributed by newly listed securities. The market capitalisation growth is shown in Figure 8. During the year, the market capitalisation of S&P CNX Nifty Page 6 Page 7

6 National Stock Exchange of India Limited Twentieth Annual Report FY March 2012 Dissemination of Nifty Dividend Index on trading to a.m. out of which 45 minutes is for order entry, order Listing: Initiatives taken during the financial year (i) NEAPS (NSE Electronic Application Processing System) The Exchange had launched online application NEAPS to facilitate filing of listing applications by companies for various further issues like ADR, FCCB, GDR, etc. During the financial year, the said application was successfully extended to filing of quarterly Shareholding Pattern and Corporate Governance Report as required under the Listing Agreement. During the quarter ended December 31, 2011, around 80% and quarter ended March 31, 2012 around 85% of the active listed companies filed the Shareholding Pattern and Corporate Governance Reports through NEAPS. The Mutual Fund module (listing and compliance) in NEAPS was released in Live environment on March 25, 2012 granting access to AMCs with effect from April 1, In order to familiarise and popularise the interface, demos were conducted for AMCs. This initiative is facilitating Mutual Funds to submit applications and receive approvals online. This NEAPS initiative has further enhanced the quality and speed of processing the quarterly submission from listed corporates and will facilitate the companies, AMCs to move towards paperless processing. The Exchange had initiated the process of developing a system to provide online the Annual Listing Fees Bills and the collection of the same from listed corporates seamlessly. This project has been made Live in NEAPS on March 31, The companies can download their respective Annual Listing fees bills from NEAPS and also make payment by way of e-payment, RTGS/NEFT, cheque payment mode through the same system. This project is expected to eliminate manual billing system, manual collection system and manual reconciliation for annual listing fees. (ii) Tie up with Madhya Pradesh Stock Exchange (MPSE): The Exchange has made a tie up with MPSE in the FY Pursuant to the MoU signed up with MPSE, the Exchange has permitted trading in 7 companies listed on MPSE. (iii) Know Your NSE' Program Know your NSE' is an initiative aimed at building relationship with corporates and to provide an insight into functioning of the Exchange. An overview about live trading, capital market, futures and options, clearing, settlement, risk management, listing and surveillance was imparted during the session. During the year , the said program was organised at Mumbai, Kolkatta and New Delhi. The program was attended by the Chief Financial Officers and Company Secretaries from various listed / unlisted corporates. (iv) Relationship Manager for NIFTY / JUNIOR NIFTY companies Relationship Manager is an initiative aimed at improving the quality of services rendered to listed corporates. To start with, companies forming part of NIFTY and Junior NIFTY have been assigned Relationship Manager who will serve as first point of contact for all correspondence with the Exchange. This initiative is expected to immensely improve the service experience of listed companies. (v) Corporate Visits Corporate Visits is an initiative aimed at seeking feedback from the listed companies with regard to service efficiency of the Exchange. This initiative has provided an impetus to further improve the quality of service being provided to listed companies. (vi) Webcast of Listing Ceremony Webcast of Listing Ceremony is an initiative aimed at providing live experience of listing ceremonies vide Internet. The listing ceremony of L&T Finance Holdings Limited was webcasted by the Exchange New Developments during the year In year various new developments have been taken by the Exchange. The details of the same are given below:- September 2011 Web platform for Mutual Fund Service System (MFSS) The Exchange has launched a web interface to place bids through the MFSS platform. Its architecture provides scalable operation and flexible deployment options while ensuring data integrity for improved performance. The platform is feature-rich and highly flexible. It has facility for one-time registration of client, detailed easy-to-use information on various schemes being offered through the platform and report management features. October 2011 Revision in Market Timings of closing session The Exchange has revised the market timings of Closing Session w.e.f. October 03, The closing session now open at 3:40 p.m. in place of earlier open time of 3:50 p.m. February 2012 Back office Application for MFSS The Exchange has provided Back Office application to the participants of MFSS. The back-office application is integrated with the Exchange MFSS platform. It provides an end to end solution to the participants for their MFSS transactions. It captures details starting from client registration, client accounting, client billing, client holding, transaction history, etc. system in capital market segment The Exchange incorporated Nifty Dividend Index in trading system for its on-line dissemination. The S&P CNX Nifty Dividend Index is designed to track the total dividend points of the S&P CNX Nifty Index constituents. The value of S&P CNX Nifty Dividend index does not change throughout the day. The S&P CNX Nifty Dividend Index segregates the dividend cash flow of the S&P CNX Nifty Index and provides investors with the ability to hedge against the dividend risk that it is implicit in the value of exchange traded derivative products linked to S&P CNX Nifty Index. The Index resets to zero every year after the close of the settlement of exchange traded derivative contracts linked to S&P CNX Nifty Index in the month of March every year (normally the last Thursday in March). March 2012 Investment by Qualified Foreign Investors (QFI) in Indian Equity Shares SEBI issued circular in Jan 2012 regarding investment by Qualified Institutional Investors (QFIs) in India and their eligibility criteria. SEBI also advised the Exchange to provide facility for QFIs to trade in companies where the caution limit of QFI investment has been reached and QFI wish to buy without the prior approval of the depositories. As per the SEBI circular, when the aggregate shareholding of all the QFIs in a company reaches 8% of the equity paid up capital, the company s name along with ISIN shall be published in caution list by the depositories and no fresh purchases shall be allowed without prior approval of the depositories. On March 20, 2012, the Exchange introduced new segment viz: QFI segment (series IQ) to facilitate intra QFI transactions in companies where the caution limit of QFI investment has been reached and QFI wish to buy without the prior approval of the depositories. March 2012 Introduction of Call Auction in Pre-open session for Initial Public Offering (IPO) and other category of scrips The Exchange has extended the call auction in pre-open session for securities listed on Exchange due to Initial Public Offering (IPO) and Re-listing (as defined under para 1( c ) of SEBI circular no. SEBI/CIR/ISD/1/2010 dated September 02, 2010). This pre-open session is addition to the existing call auction in pre-open session available for securities forming part of Nifty indices. The salient features of above call-auction in pre-open session are given below:- The pre-open session is introduced for IPO and Re-listed securities. The duration of pre-open session is of 60 minutes i.e a.m. modification and order cancellation which closes randomly during last one minute, 10 minutes for order matching and trade confirmation and remaining 5 minutes is buffer period to facilitate transition from pre-open to normal trading session. Market orders are not accepted in pre-open session. The equilibrium price is a price at which maximum value is executable. The equilibrium price of pre-open is an opening price of a security. Risk management at order level in pre-open session. Trading in security moves in the normal market only after the prescribed time subject to certain conditions. All unmatched orders within applicable price range are moved to the normal market at their limit price on the basis of the price time priority subject to certain condition. March 2012 Offer for Sale through Exchange Platform The Exchange has introduced Offer for Sale (OFS) facility to promoters to dilute/offload their holding in listed companies in a transparent manner with wider participation. The salient features of the same are given below:- Salient features: All eligible trading members of the capital market segment and their clients are eligible to bid in OFS. Separate window is provided in the IPO bidding platform to facilitate bidding in OFS. The duration of the offer for sale is for a maximum of one trading day i.e. 9:15 a.m. to 3:30 p.m. subject to minimum period of one hour. Dissemination of information on Indicative Price and Cumulative orders / bid quantity on the website at specific time intervals. Only limit orders / bids are allowed. In case floor price is not disclosed, then no price band is applicable for the orders/ bids placed in the OFS. However, where floor price is disclosed, orders/ bids below floor price are not accepted. 100% of the order value is collected at the order level for every buy order including institutional orders. A facility for confirmation of orders bearing Custodian Participant (CP) codes are provided to the Custodians. Custodian confirmations are subject to sufficiency of funds. The allocation is done by the designated stock exchange. The Page 8 Page 9

7 National Stock Exchange of India Limited Twentieth Annual Report FY method of allocation is either a single price or multiple prices based on the specifications received from the promoter in this regard. Funds and Securities pay-out on T+2 as per existing secondary market procedure. Member issues contract notes for transactions executed in OFS. March 2012 Facility for Institutional Placement Programme The Exchange has introduced Institutional Placement Programme (IPP) facility to the issuers for issuance of fresh shares and/ or offer for sale of shares in a listed issuer for the purpose of achieving minimum public shareholding in terms of Rule 19(2)(b) and 19A of the Securities Contracts (Regulation) Rules, The salient features of the same are given below:- Exchange provides a separate bidding system in existing IPO bidding platform. Bids accepted only through ASBA mechanism. Only qualified institutional investors allowed to bid in IPP. Withdrawal of a bid or downward revision of a bid is not allowed. The issue is kept open for a day and a maximum of two days. The eligible seller announces a floor price or price band at least one day prior to the opening of institutional placement programme. Dissemination of aggregate demand schedule on the Exchange s web site without disclosing the price. Allocation/allotment is overseen by the stock exchange before final allotment. 1.6 Futures and Options segment The financial year witnessed an increase of 7.19% in volumes and 16.52% in number of contracts vis-à-vis in the F&O segment of the Exchange. The daily average open interest was reduced by 15.32% over previous year. The average contribution of proprietary category increased to 43.31% in from 38.14% in Comparison of the close prices of the NIFTY Near Month Futures Contract (F&O segment) with the underlying movement of the NIFTY Index (Cash segment) along with the Daily Traded value of the F&O segment (Figure 10): Note: Special trading sessions on October 26, 2011 (Muhurat trading), January 7, 2012 and March 3, Records achieved in the F&O segment during (Table 12): Category Traded Date of Value Record (` crores) Stock Options 9, Feb-12 Number of trades 33,26, Nov-11 Number of contracts traded 1,11,36, Nov-11 It may be observed that during , new records were set in stock options traded value, number of trades and number of contracts traded (b) A graphical presentation of monthly product-wise contribution is given below (Figure 11): Among all products, Index Options continue to dominate the total turnover with their contribution observed at 72.47% in Institutional Retail & Proprietary Investors Turnover Analysis (Table 14): Institutional Retail Proprietary Average Percentage Average Percentage Average Percentage Gross Traded Contribution Gross Traded Contribution Gross Traded Contribution Sr. No. Month Value (` Crs.) Value (` Crs.) Value (` Crs.) , ,396, ,859, , ,114, ,262, It may be observed that average contribution of institutional as well as proprietary categories have increased in as compared to Comparative analysis of the Traded Value in the F&O segment with the Cash segment (Figure 12): 1.6.3(a) Basic Statistics of the F&O Segment (Table 13): Particulars Apr 11 July 11 Oct 11 Jan 12 to Jun 11 to Sep 11 to Dec 11 to Mar % Change Traded Value (` in crores) Daily Average 1,19,268 1,32,762 1,28,644 1,23,008 1,25,903 1,15, Number of Contracts Daily Average 4,327,842 5,120,145 5,270,854 4,654,670 4,839,540 4,071, Open Interest (` in crores) End of day averages 136, , , , , , % of Open interest to Daily Average Traded value Page 10 Page 11

8 National Stock Exchange of India Limited Twentieth Annual Report FY Cash segment turnover as a percentage of F&O segment turnover was 11.15% for the year as compared to 8.18% for Product-wise Basic Statistics (Table 15): Apr 11 July 11 Oct 11 Jan 12 Category Product to Jun 11 to Sep 11 to Dec 11 to Mar % Change Daily Average Stock Futures 16,331 16,031 14,422 18,544 16,364 21, Traded Value (` Crs) Index Futures 13,762 15,232 14,755 13,748 14,369 17, Stock Options 3,315 3,673 3,516 5,144 3,924 4, Index Options 85,860 97,825 95,952 85,572 91,245 72, Daily Average Stock Futures 634, , , , , , No. of Contracts Index Futures 523, , , , , , Stock Options 122, , , , , , Index Options 3,046,762 3,738,608 3,856,223 3,253,325 3,469,951 2,561, Average Stock Futures 36,925 33,471 31,325 34, ,123 42, OI Value (` Crs) Index Futures 21,319 18,295 19,260 22,921 81,795 23, Stock Options 8,107 7,779 7,285 9,942 33,113 9, Index Options 92,761 89,472 86,949 91, ,214 1,00, Average Stock Futures 1,448,510 1,346,613 1,372,071 1,228,371 1,348,891 15,52, Number of OI contracts Index Futures 799, , , , ,258 8,96, Stock Options 317, , , , ,679 3,24, Index Options 3,307,793 3,512,326 3,582,853 3,456,499 3,464,868 35,81, Number of trading Days TOP 5 TRADED SYMBOLS (Figure 13) Options: Futures: Futures Traded Value (` Crs) Options Traded Value (` Crs) New Developments during the year for the year Introduction of derivative contracts on Global Indices The Exchange has introduced futures contracts on S&P 500 index and Dow Jones Industrial Average index and options contracts on S&P 500 index in the F&O segment with effect from August 29, It was the first time in India that derivative contracts on a foreign index was made available for trading by an Exchange. The turnover on the first trading day was ` crores. Liquidity Enhancement Scheme on Global Indices Based on the guidelines issued by SEBI, the Exchange introduced a Liquidity Enhancement Scheme (LES) on the derivative contracts of Global Indices in September 2011 for a period of 6 months. The scheme provided for incentives on order, trade and open interest level to encourage market participants. The daily average turnover observed till March 2012 in the above mentioned contracts was ` 187 crores. Introduction of new trading application - Advanced NEAT F&O (NEATPro) The Exchange has launched a new Trading Work Station NEATPro in the Futures & Options segment. The NEATPro application supports advanced version of already popular NEAT-F&O which is based on improved system architecture. 1.7 Currency Derivatives segment The financial year witnessed a considerable growth in currency derivatives (Currency Futures and Options) volumes. The average daily turnover in currency derivatives has grown by 41% and stood at `19,479 crores in compared to ` 13,855 crores in The daily average number of contracts also increased by 34.72% in and stood at 40,55,601 contracts as compared to 30,10,450 contracts traded in The daily average open interest also increased substantially by 114% in as compared to what was observed last year during November March 2011 after launch of currency options. The number of members registered in currency derivative segment has risen to 797, of which 32 are banks and 1 Primary dealer. Currency Futures: Turnover in Currency futures for the financial year was ` 33,78,489 crores as compared to ` 32,79,002 crores during The average daily turnover was ` 14,077 crores contributing to 72% of the total turnover. Futures on USD-INR currency pair were the most traded contracts. Currency Options: Turnover in currency options for the financial year was ` 12,96,501 crores with average daily turnover at ` 5,402 crores compared to ` 1,627 crores observed during November 2010 March The Exchange has started levying transaction charges in currency derivatives from August 22, Since then, the Exchange has recorded a decline of approximately 37% in average daily volume in both currency futures and options contracts till March 2012 as compared to the average of April 2011 August The average daily open interest too has registered a decline of 37% in currency options contracts whereas currency futures contracts observed a marginal increase of 4% in open interest. Interest Rate futures had significant growth in volume in the FY after the introduction of futures contracts on 91 Day T- Bill from July 4, The total volume observed in Interest Rate futures segment in was ` 3,959 crores as compared to ` 62 crores in Figure New Development during the year for the year Introduction of derivatives contracts on GOI T-Bill The Exchange introduced Futures contracts on 91 Day GOI Treasury Bill with effect from July 4, 2011.Subsequent to the permission by SEBI and RBI, three monthly and one quarterly contract were introduced for trading. The turnover on the first day was Rs crores. 1.8 Surveillance System The Exchange ensures market safety and integrity through a combination of state of the art surveillance system, wide ranging use of cutting edge data analytics and experienced team of analysts. Page 12 Page 13

9 National Stock Exchange of India Limited Twentieth Annual Report FY The surveillance system which monitors trading activity at every order and trade level has been developed piecing together experience gathered over the years. The system generates alerts based on multiple parameters using a complex algorithm. The parameters and the thresholds beyond which alerts are generated have been decided after detailed statistical analysis and back testing. The Exchange has implemented series of pattern recognition models which unearth manipulative activity such as front running, insider trading, circular trading, etc. Surveillance system has been designed and tuned to sift through the gigantic mix of orders, trades to generate meaningful alerts that point to possible market abuse. The system also has the capability to replay the market at a much slower pace wherever market abuse is suspected, so as to enable the analysts to examine the identified deviant activity order by order to piece together evidence for proving manipulation. Unlike, markets in US and Europe where exchanges have access only up to the first layer of market participants, namely, the trading members, the exchanges in India are in a unique position to identify and monitor trading activity at client level. As on March 31, 2012, there are 1.40 crore unique investors registered with the trading members. During the period from April 1, 2011 to March 31, 2012, 116 reports on the investigations conducted were completed of which 93 reports were submitted to SEBI. NSE's expertise in putting data analytics tools to optimum use to mine this wealth of data to establish patterns in trading activity at client level enables the Exchange to quickly identify potential market abuse and refer the matter to the Regulator. 2. Services to Investors To enhance investor safety, the Exchange has commenced facility to directly send SMS and alerts, providing details of the transactions to the investors at end of the day. The investors are required to register for the facility with the trading members. The registered investors receive a welcome SMS and for confirmation from the Exchange. On confirmation, the facility is activated and the Exchange would then send SMS giving summarised trading activity and an providing the trading details at the end of each trading day to such investors. 3. NSE s Research Initiative NSE Commissioned Research Initiative In , NSE started NSE Commissioned Research Initiative under which the NSE s Economic Policy and Research (EPR) department commissions papers from academicians and practitioners on topical issues related to Indian Securities market. In the first year of the initiative, four papers were completed which are available on NSE website. NSE's Student Research Project' initiative In , NSE started an initiative called NSE Student Research Project with an objective of encouraging research work in the area of securities market among the student fraternity. Under the initiative, university students (Management/ Law/ Economics at Masters or PhD level) undertake research projects (in the form of research papers) on topics related to securities market in India and abroad under the guidance of a faculty of their respective college / university. In the first year of the initiative, six papers were completed which are available on NSE website. Tie up with the Conference Board (TCB), USA NSE collaborated with The Conference Board (TCB), USA to conduct a corporate governance survey in India for developing a handbook on Corporate Governance for India. Tie up with IFMR for NSE-IFMR Financial Inclusion Research Initiative NSE has collaborated with Institute of Financial Management and Research (IFMR), Chennai for research initiative in the area of financial inclusion. Seminars and Panel Discussion In , the Economic Policy and Research department started organising seminars and panel discussions by eminent people on securities market and Corporate Governance issues once a quarter for NSE Staff, Exchange Trading members and NSE Listed Companies. There are also presentations on the state of the Indian economy. Publications of NSE Indian Securities Market Review and the NSE Factbook are two NSE publications which are prepared on an annual basis. In addition to these two publications, NSE had come out with the book on Corporate Governance: an Emerging Scenario. The book has 15 essays on topics related to corporate governance contributed by various eminent people and has been edited by Prof. N. Balasubramanian and Mr. Deepak Satwalekar. This collection offers the experience and insights of authors from a wide spectrum: academics, bureaucrats, regulators, executives and professionals from diverse disciplines. 4. Financial Results and Appropriation of Profits The working of the Company during the year has resulted in a net profit after tax of ` crores as per particulars given in Table 16 below:- Table 16 (` In crores) Particulars Income 1, , Expenditure (excluding Depreciation) Profit before depreciation, prior-period adjustment and tax 1, Depreciation Profit before prior period adjustments Add/(Less): Prior period adjustment (0.41) (0.74) Profit before tax Provision for tax Profit after tax Surplus brought forward from previous year Excess Corporate Dividend Tax for last year transferred back Amount available for appropriation Appropriations General Reserve Investor Compensation Reserve Proposed Dividend Corporate Dividend Tax Staff Welfare Reserve Balance carried to Balance Sheet Dividend In view of the above results, your Directors recommend payment of dividend of ` 40/- per share for the year Subsidiary Companies 6.1 National Securities Clearing Corporation Limited (NSCCL) CM segment: NSCCL successfully continued its track record of completing all settlements in a timely manner. During the period under review, 249 rolling settlements were handled in dematerialised mode. Per settlement figures in value terms in the current year are as given below: The average value of securities handled per settlement was ` 3, crores in compared to ` 3,840 crores in The average funds pay-in per settlement during the above periods was ` 1,011 crores and ` 1,150 crores respectively. The average number of shares processed per settlement was about 1,783 lakhs in compared to 1,954 lakhs in Short deliveries per settlement averaged around 0.16% in as compared to 0.13% in The highest deliverable value of `10, crores was observed on February 28, Percentage of number of shares deliverable to number of shares traded increased to 27.66% in from 27.51% in Percentage of value of shares deliverable to value of shares traded increased to 28.01% in from 27.47% in The Settlement Guarantee Fund stood at ` 4, crores as on 31st March F&O segment: The period witnessed a decrease in the total settlement value from around ` 83, crores in to ` 72, crores. The highest monthly settlement was for ` 9, crores in the month of August March 2012 witnessed the highest monthly trading volumes of ` 29,79, crores while the highest daily trading volumes on NSE during this period was ` 2,59, crores, witnessed on November 24, 2011 with total of 1,11,36,171 contracts being traded. Currency Derivatives segment: The year witnessed an increase in the total settlement values from around ` 2, crores in to ` 7, crores. The highest monthly settlement value was ` crores in the month of September Page 14 Page 15

10 National Stock Exchange of India Limited Twentieth Annual Report FY The highest trading volume in currency futures on NSE during this period was ` 33, crores, witnessed on August 09, 2011 with total of 72,31,120 contracts being traded and in currency options, it was ` 17, crores, witnessed on August 18, 2011 with total of 37,92,800 contracts being traded. NSCCL also began clearing and settlement of Interest Rate Derivatives based on Government of India Treasury Bills in July 2011 as trading in futures on these instruments was launched on NSEIL. Securities Lending & Borrowing Scheme: NSCCL is an Approved Intermediary (AI) for SLBS with SEBI. In , the volumes in SLBS increased over 350% from ` crores in to ` 2, crores As compared to previous year, during , securities traded in SLBS increased from 41 to 87 and number of participants traded too increased from 16 to 25. As on date, total number of participants in SLBS stands at 93. Mutual Fund Service System (MFSS) As on March 31, 2012, 31 mutual fund houses with 1,991 schemes were enabled under the revised MFSS scheme. The average daily value of funds settled for subscription of mutual fund units for the period April 1, 2011 to March 31, 2012 was ` 1.99 crores. The average daily quantity of units allotted under subscription for the period April 1, 2011 to March 31, 2012 was lakhs. The average daily value of funds settled for redemption of mutual fund units for the period April 1, 2011 to March 31, 2012 was ` 1.36 crores. The average daily quantity of units redeemed for the period April 1, 2011 to March 31, 2012 was 6.04 lakhs. During the financial year , NSCCL earned net profit after tax of ` crores as compared to net profit after tax of ` crores during The Board of NSCCL has recommended a dividend of ` 45/- per equity share to its shareholders in respect of the financial year NSE.IT Limited (NSE.IT) Continuing its foray to become a leading vertical specialist enterprise offering end-to-end Information Technology (IT) products, solutions and services as well as specialising in providing complete IT solutions to Stock Exchanges, Clearing Corporations, Brokerage Firms, Insurance Firms and other organisations in the Capital Market, Banking and Insurance industry in India as well as overseas, NSE.IT, achieved a robust turnover of ` 11,989 lakhs during the year which was more than 16% higher than the previous corresponding year. Continuing with its foray in online examinations of IRDA, NSE.IT was successful in achieving 100% online examination status for all its 222 centers covering 26 states and 3 Union Territories was successful in adding new clients to its list. During the year, NSE.IT undertook bidding for examination tenders floated by several entities. The assessments are conducted pan India for the insurance companies and NSE.IT executes the end-to-end process from registration to examination certificates. During the year, NSE.IT embarked on quality journey to certify its online examination centers for ISO 9001:2008 certification from Bureau Veritas Certification Institute (BVCI) and was successful in obtaining the said certification for all its centers on pan India basis. During the year NSE.IT also underwent a surveillance audit which was successfully conducted in all the centers. During the year, NSE.IT has expanded its product portfolio with the introduction of an Algorithmic Trading solution, called AlgoNomics. The product provides various standard algorithmic trading strategies (viz. Cash-Futures arbitrage, Futures-Futures arbitrage, Cash-Cash arbitrage) as well as custom strategies, taken up as be-spoke development. NSE.IT has also tied up with a strategic software partner and has successfully launched a new chart-based automated trading solution named TradeGenie, a joint solution for the Indian Capital Markets. During the year, the US subsidiary of NSE.IT was successful in forging a technology partnership with four companies, all based out of USA. Similarly the US Subsidiary won several contracts from US clients. The most important achievement for the Tea Board e-auction project this year, was the launch of Bulk-tea auction, roll out of e-settlement application, conducting auction of Specialty Tea e-auction, and completion of a major milestone for e-auction of 1 billion KG tea. During the year, NSE.IT conducted Nilgiris Planters Association Specialty Tea Auction. This specialty auction saw specialty teas from South India with participation of buyers from all the six auction centers. NSE.IT also conducted The Golden Leaf India Awards Southern Tea Competition again this year, after successfully conducting it last year. During the financial year , NSE.IT earned net profit after tax of ` crores as compared to the net profit after tax of ` crores in the previous year. The Board of NSE.IT has recommended a dividend of ` 3.70 per equity share to its shareholders in respect of the financial year DotEx International Limited Infofeed Business DotEx manages the infofeed of NSEIL and supplies the same to its clients. Currently, the following products are offered by DotEx namely Real Time Data, Snapshot Data, End of Day Data, Historical Data and Corporate Data The products related to real time data, snapshot data, end of day data and historical data are further segregated into the following segments namely Capital Market [CM] segment, Futures and Options Market [F&O] segment, Wholesale Debt Market [WDM] segment, Securities Lending & Borrowing Market [SLBM] segment and Currency & Interest Rate Futures Market segment Currently, real time feed is being subscribed by 35 clients, snapshot feed by 36 clients, end of day feed by 24 clients and corporate data by 2 clients. During the year, DotEx started disseminating data pertaining to futures contracts on international indices (S&P 500 and DJIA) that are traded in the Futures & Options Market segment of NSE NOW (NEAT on Web) Platform DotEx also provides a shared platform called NEAT on Web (NOW) which is a shared CTCL and risk management tool for the trading members. During the year, DotEx started providing the following additional facilities through NOW platform viz., access to BSE Cash and Derivatives markets, NCDEX market and value added services like advanced charting, technical analysis, third party news, etc. provided by Nest Plus platform of Omnesys. The mobile application was also made available to cater to ipad and other Android based tablet versions. The above initiatives have resulted in a significant increase in the number of users (+35%) and trading turnover through NOW platform during the financial year Know Your Client (KYC) Registration Agency [KRA] As an initiative to serve investors, SEBI has simplified client registration process and introduced uniform KYC in securities market. Further, to serve investors better and to avoid duplication of KYC process with every intermediary, SEBI introduced mechanism for centralisation of KYC records. Accordingly SEBI formulated the KYC Registration Authority (KRA) Regulations and notified the same on December 02, As per the above Regulations, a wholly owned subsidiary of Stock Exchange is permitted to apply for getting certificate from SEBI to provide KRA services as an intermediary. In view of the above, DotEx, with a view to boost SEBI initiative and serve investors community, applied for the same and got SEBI registration certificate on February 28, 2012 to act as a KRA intermediary. DotEx started its operations as KRA with effect from March 06, As on April 23, 2012, 407 intermediaries are recognised by DotEx and 4150 KYC forms are uploaded on the KRA system called Vishwas. DotEx also launched its website and its KRA operations are fully functional. During the year , DotEx earned a profit of ` 1, lakhs as compared to a profit of ` 1, lakhs during The Board of DotEx has recommended a dividend of ` 2/- per equity share to its shareholders in respect of the financial year India Index Services & Products Limited (IISL) During the year under review, IISL continued to be the primary provider of indices and related products and services to various participants in the Capital Market in India in the fourteenth year of its operation. IISL has granted seven additional licenses to asset management companies for launching Exchange traded Index funds. Currently, there are around 41 funds linked to IISL s indices. IISL provides index and index related services to various mutual funds, investment banks and other financial institutions across the globe for business purposes. Apart from the indices being used for Index Funds and trading of index based derivative contracts, the indices of IISL are being used by the mutual funds for benchmarking the performance of their funds. During the year, IISL provided licenses to various clients for using IISL s indices as underlying for their products. These clients issue products such as index linked notes / certificates, index linked bonds, index linked certificates of deposit, Exchange Traded Funds (ETFs) etc., using IISL Indices as the underlying for their products. IISL also provides annual licenses to its clients who issue many structured products with IISL indices as underlying for such products. During the year under review, IISL has widened the client base that uses IISL Indices and index data. IISL has the following major sources of income viz. income from licensing indices to stock exchanges for trading in derivative contracts linked to such indices, income from licensing indices to asset management companies for Index Funds/Exchange Traded Funds, income from licensing indices to finance and insurance companies for debentures/ insurance products, income from licensing indices to investment banks for structured products, income from calculation of customised indices and income from data subscription services. Page 16 Page 17

11 National Stock Exchange of India Limited Twentieth Annual Report FY During the year , IISL earned profit of ` 1, lakhs, portal, Open Ended Mutual Funds as Collaterals, Document process support to NCDEX in respect of its clearing and settlement Year , NSEIL has focused on the implementation of as compared to a profit of ` 1, lakhs during The Repository in ENIT, Intraday margin reports, Automatic Delivery Out, of trades done in derivatives segment. The clearing and settlement the Talent Management Study undertaken in the previous Board of IISL has recommended a dividend of ` 12/- per equity Depository-wise MFSS allocation, Liquidity Enhancement Scheme, covers contracts in 32 products ranging from agricultural financial year. The Company has mapped the behavioral and share to its shareholders in respect of the financial year Optimisation of IP s available per full rack in Co-location and C2N commodities to base metals, ferrous metals, energy, polymers and functional competencies to the training need identification 6.5 NSE Infotech Services Limited (NSETECH) Technology has been a key differentiator and a strategic driver for NSE. Towards this, NSETECH continues to deliver and maintain technology products and services for NSE New Generation Initiatives The Trading system has seen volumes grow in leaps and bounds and the architecture of the system has been changed to meet with the changing requirements. Major architectural changes were carried out in the Trading systems towards achieving the objectives of throughput and latency. The new market in F&O system ushers a new era for the Exchange, by future proofing Trading system to face the ensuing challenges of the coming years. As a move towards next generation trading system in the CM segment, the in-memory database in the Post trade layer has also been moved to state of the art SMFS (Shared Memory File System) Global Benchmarks International Network Services facility has been enabled for DMA clients hosting their Algo engines in the Co-location area. This setup is dedicated for the purpose of accessing NSE s Co-location facilities from across the globe. A few DMA clients have gone live using Transaction Network Services (TNS). Electronic readable news in Co-location has been made live to provide trading firms access to data required to fuel Algorithmic trading strategies. This facility is currently limited to NSE feed data only New Product Launches New business products like Global Indices, 91 day T-Bill, SME segment, Exchange hosted Algorithms (TWAP/VWAP), Secondary Market Listing (SML), Offer for Sale (OFS), NSE s new website, NEATPro (NEAT skin in NEATPLUS), NSE Electronic Application Processing System (NEAPS) Corporate Governance and Share holding Pattern modules have been introduced Customer Benefits (self service) Several initiatives have been taken to provide self service capabilities and improved benefits to customers. Some of these are Voluntary Closeout and Security Specific disablement, SMS intimation to clients for trades executed, Margins UI integration with Member migration from obsolete MPLS to N3 platform Operational Excellence BCP external mock was successfully carried out in October 2011 for CM, F&O and CD market segments along with interfacing applications. Parallel operations were conducted from command center in Kohinoor and DR site. As a step towards capacity readiness for the budget session in the month of March 2012, the Market 1 machine was upgraded to a higher capacity V6308 server capable of handling additional load. Moreover, load balancing of securities across the four market machines has been done so that volumes get distributed across the market machines. Various steps have been taken for automation of operational procedures which will lead to improved reliability of operations. Trading Mock setup, Operational health checks of Production systems management team and Telecom teams are few examples in which automation has been achieved. A full-fledged Security Operations center (SOC) has been established which will help in timely detection, response and resolution of security threats. The development setup has been successfully and smoothly relocated to Kohinoor premises which involved movement of around 150+ servers along with Network equipment and relocation of around 250+ resources Awards/Recognition EMC Cloud Pioneer Award (Nov 2011) NSE on Web (NOW) project was recognised as being one of India s leading Cloud computing implementation During the financial year , NSETECH earned net profit after tax of ` lakhs, as compared to net profit after tax of ` lakhs during As the profit is required to augment operational needs of the Company, the Board of NSETECH did not recommend any dividend to its shareholders. 6.6 National Commodity Clearing Limited NCCL has completed the fifth full year of operations, since its commencement from September 1, 2006, in providing IT and precious metals. NCCL carries out funds settlement through 14 clearing banks. During the financial year , NCCL earned net profit after tax of ` lakhs, as compared to net profit after tax of ` lakhs during As the profit is required to augment operational needs of the Company, the Board of NCCL did not recommend any dividend to its shareholders. 7. Material Developments in Human Resources Following developments have taken place in Human Resources / Industrial Relations front in the Financial Year :- 1) Job Description and Job Evaluation: NSEIL has undertaken a study on Job Description and Job Evaluation in the FY in association with Pricewaterhouse coopers. NSEIL has drafted Job descriptions for 106 unique positions across the Company and accordingly evaluated the positions in terms of its relative worth. The recommendation of the study is been implemented in the Company in terms of organisational restructuring. 2) Employee Engagement Study: The Company has undertaken a study on the Employee Engagement levels in association with Great Place to work. The HR Policies of NSEIL was also audited as part of the culture audit process by Great Place to work team. Based on the report, the Company has devised the action plan to work on the recommendations of Great Place to Work team. The Company has conducted communication sessions to inform the employees on the action plans for the Company to improve the engagement levels. The Company has started various Employee Engagement Initiatives to raise the engagement levels of the employees across the organisation. Some of them are NSE s participation in Standard Chartered Bank s Mumbai Marathon 2012, employees participation in the investothon, zumba training, Kick boxing training, employee appreciation corner, coffee day express outlet, dental awareness and check up camp, cancer awareness program and various Staff Welfare initiatives so as to build synergy among the various teams. 3) Talent Management and Development: During the Financial process. In line with the Business Strategy, the Company has continued to focus on the functional and behavioral training based on the individual and the organisational need. In the past year, the Company has focused more on the Regional offices to meet their strategic learning & development needs. Based on the Talent Assessment vis a vis the Strength finder mechanism, the Company has identified High Potential employees and plotted them on the Performance Potential grid. The Company is working on their career pathing for their career development. 4) Employee Relations: The employee relations scenario has been harmonious throughout the period under consideration. The employee strength as on March 31, 2012 is Corporate Governance The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements. The Company being an unlisted Company has voluntarily adopted compliance of corporate governance norms provided in Clause 49 of the Listing Agreement applicable to the Companies which are listed with the Stock Exchanges. A report on corporate governance for the financial year is accordingly furnished as part of the Annual Report for the information of all its stakeholders. The certificate from a Practicing Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated under clause 49 of Listing Agreement, is also attached with the above report. 9. Management Discussion and Analysis Report Management s Discussion and Analysis Report for the year under review is presented in a separate section forming part of the Annual Report. 10. Corporate Social Responsibility (CSR) Initiatives Your Company, being an integral part of society, recognises its corporate social responsibilities and has been engaged in various CSR initiatives. Several energy efficiency measures have been taken Page 18 Page 19

12 National Stock Exchange of India Limited Twentieth Annual Report FY to reduce the consumption of energy and promote use of renewable energy. The details of various energy conservation measures taken by your Company are given under the heading Conservation of energy, technology absorption and foreign exchange earnings/outgo in the Directors Report. 11. Directors Mr. Y. H. Malegam, Dr. K.R.S Murthy, Dr. V.A. Sastry retire by rotation at the ensuing Annual General Meeting and are eligible for reappointment subject to approval of SEBI. Mrs. Shyamala Gopinath was appointed as a Public Interest Director on the Board of NSEIL with effect from March 5, Mrs. Bhagyam Ramani and Mr. Anjan Barua ceased to be the Directors of the Company consequent upon their resignations from the Board with effect from February 1, 2012 and March 22, 2012 respectively. The Board regrets to report the sad demise of Dr. R. H.Patil, a member of the Board and former Managing Director of NSEIL, on April 12, 2012 and Mr. C. Achuthan, a member of the Board, on September 19, 2011 and their consequent cessation as Directors of the Company. The Board wishes to place on record its sincere appreciation and gratitude for their valuable contribution made during their tenure as Directors. 12. Directors Responsibility Statement Your Your Directors confirm that i. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any; ii. the Directors had selected such 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 Company at the end of the financial year i.e., 31st March, 2012 and of the profit of the Company for that year; iii. the Directors had 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 Company and for preventing iv. the Directors had prepared the annual accounts on a going concern basis. 13. Audit Committee The Audit Committee comprises four Directors viz., *Dr. R. H. Patil, Mr. Y. H. Malegam, Mr. A. P. Kurian and Dr. V. A. Sastry as its members. Mr. Y. H. Malegam is the Chairman of the Audit Committee. The Committee met four times during the year i.e., on April 28, 2011, August 02, 2011, November 14, 2011 and January 17, The details of the attendance of members of the Audit Committee at their meetings held on the above dates are given in Table 17 hereunder:- Table 17 Name Number of Number of meetings meetings held during attended the year during the year *Dr. R. H. Patil 4 4 Mr. Y. H. Malegam 4 4 Mr. A. P. Kurian 4 4 Dr. V. A. Sastry 4 3 *Dr. R. H. Patil ceased to be the Chairman of the Committee wef April 12, 2012 consequent upon his demise 14. Auditors M/s. Khandelwal Jain & Co., Chartered Accountants, Auditors of the Company, retire at the forthcoming Annual General Meeting of the Company and are eligible for re-appointment. The Company has received a certificate from the Auditors to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224 (1B) of the Companies Act, Their re-appointment is required to be made by a Special Resolution pursuant to Section 224A of the Companies Act, Conservation of Energy, Technology Absorption and Foreign Exchange Earnings / Outgo a) Conservation of Energy, Technology Absorption As the Company does not fall under any of the industries listed out in the schedule appended to Companies (Disclosure of Particulars in the report of the Board of Directors) Rules, 1988, particulars and technology absorption in terms of Section 217(1)(e) of the Companies Act, 1956, read with the aforesaid Rules are not applicable to the Company. However, NSEIL continues to use the following major technological initiatives towards Effective Energy Conservation as well as Load Management System 1) Thermal Energy Storage System' for air-conditioning system during the peak hours. 2) Building Management System' for automation in operations of services in the building. 3) Lighting Transformers for regulated voltage of Lighting system. 4) Electronic Ballast and Compact Fluorescent Lamps in lighting system. 5) Automatic Power Factor Control Units to step up power factor of the building. 6) Solar Power Plant which harnesses the solar power to cater the part of lighting load at Exchange Plaza. 7) Rain Water Harvesting System to harvest the rain water in the periphery of Exchange Plaza. 8) Sewerage Treatment Plant to reuse building's domestic and flushing water (i.e. after treatment) for its Cooling Towers associated with HVAC System and for Gardening purposes every day. 9) Vermiculture Plant wherein compostable material like food waste collected from canteen, garden organics and paper & cardboard gets collected and post processing into vermiculture unit manure get generated and used for gardening purposes. In its pursuit of building a system for effective energy conservation, NSEIL has used the following further technological initiatives during the year:- 1) The Tire-IV compatible Services Design for new Data Centres to ensure that the Power Utilisation Effectiveness (PUE) of new Data Centre does not exceed the benchmarked PUE of ) Participating in Demand Response Event programme as and when conducted by M/s. Tata Power Co. (TPC) whereby NSE reduces power consumption at Exchange Plaza for 2 hours in a given time slot of a day as directed by TPC. 3) Wind Energy System In addition to various power saving measures being undertaken at the building, NSE also undertaken a study to ascertain the possible alternatives of energy conservation including sourcing of energy from natural resources which is environment friendly (i.e. Green Power). In that direction, Wind Energy Project of the capacity of 6 MW is under study to set off around 65 % of energy consumption at Exchange Plaza building. b) Foreign Exchange earnings/ outgo during the year under review: The foreign exchange earnings during the year were ` crores whereas the foreign exchange outgo during the year was ` crores. 16. Statement of Particulars of Employees covered under the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 is annexed. 17. Your Directors are grateful for the support and co-operation extended by the Government of India, Securities and Exchange Board of India and Reserve Bank of India. Your Directors would like to place on record their sincere appreciation of support provided by the shareholders and also their deep appreciation of the contribution made by employees at all levels to the continued growth of the Company. For and on behalf of the Board of Directors Place: Mumbai VIJAY KELKAR Date: May 14, 2012 Chairman and detecting fraud and other irregularities; and required to be disclosed with respect to conservation of energy Page 20 Page 21

13 National Stock Exchange of India Limited Twentieth Annual Report FY ANNEXURE TO DIRECTORS' REPORT STATEMENT PURSUANT TO SECTION 217 (2A) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES (PARTICULARS OF EMPLOYEES) RULES, Sr. Name & Qualifications Age in Designation/ Remuneration Experience Date of Last No. years Nature of Duties Received (No.of years) Commencement Employment Gross Net of Employment 1 Mr. Ravi Narain 56 Managing April 15, 1994 Dy. General Manager, Industrial M.A. (Eco.), MBA Director Development Bank of India 2 Ms. Chitra Ramkrishna 49 Joint Managing October 15, 1994 Dy. Manager, Industrial B. Com, FCA Director Development Bank of India 3 Mr. J. Ravichandran 51 Director (F&L) & August 12, 1994 Dy. Secretary & Manager (Legal), B. Com, B.L.,FCS Company Secretary Raymond Synthetics Limited 4 Mr. Yatrik Vin 45 Senior Vice February 21, 2000 Manager (Finance & Accounts), M.Com, AICWA President Godrej & Boyce Mfg. Co. Ltd. 5 Mr. Ravi Varanasi 49 Senior Vice July 3, 1995 Sr. Dy. Manager, B. Sc., ACA President Vysya Bank 6 Mr. R Nandakumar * 46 Senior Vice March 15, 1995 Staff Officer (Finance), B. Com., Grad. CWA, President Unit Trust of India MBA, CAIIB, FIII 7 Ms. Kamala 46 Vice March 16, 2006 Vice President (Risk Mgmt. & Ops.), B.Com, ACA President IL&FS Investsmart Limited 8 Mr. Chandrashekhar 47 Vice April 09, 2010 Associate Vice President Mukherjee, President Bennett Coleman & Company Ltd. B.Com, PGPM & IR 9 Mr. Hari K. 45 Vice May 29, 1995 Cost Accountant, AICWA, ACS President KCP Ltd. 9 Mr. Vidhu Shekhar 47 Vice October 3, 2005 Sr. Vice President, IDBI Capital PGDBM, CFA President Market Services Ltd 11 Mr. T Venkat Rao 54 Vice December 21, 2000 Manager, Global B.Com., LL.B. President Trust Bank Limited 12 Mr. Suresh Narayan # 42 Vice January 24, 2005 Manager, National B.Com, Grad. CWA President Securities Depository Limited 13 Mr. Suprabhat Lala 45 Vice October 1, 2001 Sr. Vice President, B. Sc. President Geojit Securities Ltd. 14 Mr. Chandrakant 48 Asst. Vice September 16, 2004 Executive Director, Saurashtra Kutch Upadhyay, ACA, LL.M President Stock Exchange Limited 15 Mr. Mahesh Haldipur 52 Asst. Vice April 25, 1995 Project Engineer, Tata B.E. (Civil), AMIE President Electric Company Limited Notes: 1 Gross Remuneration includes Salary and other benefits, Company's contribution to Provident Fund, Superannuation Fund, taxable value of perquisites, etc. Net remuneration represents gross remuneration less Company's contribution to provident and superannuation funds, taxable value of perquisites, profession tax and income tax. Where applicable, the amounts also include certain allowances accrued during previous year(s) but claimed in the current year. 2 Mr. Ravi Narain was re-appointed as Managing Director for a period of three years with effect from April 1, Ms. Chitra Ramkrishna was re-appointed as Deputy Managing Director for a period of five years with effect from April 1,2008. She was re-designated as Joint Managing Director with effect from September 1, Other employees are in permanent employment of the Company on contractual basis governed by the employment terms & conditions and service rules. 5 None of the employees mentioned above is a relative of any Director. 6 Employees, in respect of whom Section 217 (2A) applies but are on deputation to subsidiary company and in respect of whom the remuneration is recovered, are shown under statement prepared under Section 217 (2A) of that subsidiary company to avoid duplication. Employee whose name has been marked with # is on deputation to two subsidiary companies and his remuneration has been shared amongst the two subsidiary companies. Employee whose name has been marked with * is also on deputation to subsidiary company and in respect of whom the proportionate remuneration recovered from the subsidiary company is shown in the statement prepared under Section 217 2(A) of that subsidiary company. 7 None of the employees is holding equity share(s) in the Company within the meaning of sub-clause (iii) of clause (a) of sub-section (2A) of Section 217 of the Companies Act, REPORT ON CORPORATE GOVERNANCE Corporate Governance is the application of best management practices, compliance of law and commitment to values and ethical business conduct to achieve the Company s objective of enhancing shareholder value and effective discharge of its social responsibility. National Stock Exchange of India Limited (NSEIL) is a public limited company, whose securities are not listed on any of the stock exchanges and as such Clause 49 of the listing agreement dealing with Corporate Governance for listed companies is not applicable to NSEIL. However, NSEIL has always been involved in good governance practices and endeavours continuously to improve upon the same. In continuation of its pursuit to establish good corporate governance practice and for the information of its stakeholders, NSEIL is furnishing this Report for the financial year ended on 31st March, NSEIL is a company incorporated under the Companies Act, 1956 and is also a recognised stock exchange under Securities Contracts (Regulation) Act, Therefore, NSEIL is additionally required to comply with Securities Contracts (Regulation) Act, 1956, the Rules laid down thereunder and the directives and circulars issued by Securities and Exchange Board of India (SEBI) from time to time for the purpose of its governance. I. Board of Directors A. Composition of the Board The Board consists of 13 Directors of which 3 Directors represent Shareholders, 8 are independent Directors (which includes 3 Public Interest Directors) who are chosen from among eminent persons or experts in the field of Law, Finance, Accounting, Taxation, Information Technology, Economics, Commerce, etc. and 2 are working Directors (1 Managing Director and 1 Joint Managing Director). None of the Directors of the Company are related with each other. 8 The Company does not have any Employees Stock Option Plan(ESOP) Scheme for its employees. Page 22 Page 23

14 National Stock Exchange of India Limited Twentieth Annual Report FY (1) Details of Directors along with the Directorship(s) and Chairmanship(s)/Membership(s) of Committees in other companies as on March 31, 2012: Name of the Director Category No. of Directorships / Chairmanships and Committee Chairmanships / Memberships Other Directorship(s) / Other Committee Other Committee Chairmanship(s) * Membership (s) ** Chairmanship(s) ** Dr. Vijay L. Kelkar, Chairman Independent Mrs. Shyamala Gopinath Public Interest Director 4-1 Mrs. Ranjana Kumar Independent Mr. A.P.Kurian Independent Dr. Rajiv B. Lall Shareholder Mr. Y.H. Malegam Independent 7-4 Mr. S.B. Mainak Shareholder Mr. S. B. Mathur Shareholder Dr. K. R. S. Murthy Public Interest Director Dr. V. A. Sastry Independent Mr. Deepak Satwalekar Public Interest Director Mr. Ravi Narain Managing Director Ms. Chitra Ramkrishna Joint Managing Director Notes: *The Directorships/ Committee memberships held by Directors as mentioned above, do not include Directorships/Committee memberships of Foreign Companies, Section 25 Companies and Private Companies. **Memberships/Chairmanships of only the Audit Committee and Shareholders/Investors Grievances Committee of all Public Companies have been considered. None of the Directors on the Board is a member of more than ten Committees and Chairman of more than five Committees across all companies in which they are Directors. Dr. Vijay Kelkar, Chairman, Mr. Ravi Narain, Managing Director, Ms. Chitra Ramkrishna, Joint Managing Director, Mr. Y.H. Malegam Director and Member Audit Committee (as he then was) and Mr. A.P. Kurian Director and Member Audit Committee attended the 19th Annual General Meeting held on September 28, (2) Separation of Offices of Chairman & Chief Executive Officer (3) Number of companies in which an individual may become Since inception, the Company has been following the principle of a Director separation of the role of Chairman and the Chief Executive Officer. The non executive Directors follow the provisions prescribed under Dr. Vijay L. Kelkar is the Non Executive Chairman of the Board. the Companies Act, 1956 with regard to maximum number of Mr. Ravi Narain is the Managing Director & Chief Executive Officer directorships allowed for a Director. In respect of Executive of the Company and is entrusted with the day to day management Director(s), the number of Directorships other than directorships of the affairs of the Company. Ms. Chitra Ramkrishna, in subsidiary companies is less than seven. Joint Managing Director of the Company, assists the Managing B. Responsibilities of the Board Director in the discharge of his functions on day to day basis. The The Company conducts an orientation programme for new Managing Director and Joint Managing Director carry out their Directors covering various operations of the Exchange so as to functions subject to superintendence, control and management familiarise themselves with the various functions being carried out of the Board of Directors of the Company. by the Exchange. Every director inducted on the Board is well known in the financial services industry and has the ability to understand basic financial statements and information and related documents/papers. The regular updates inter-alia provided by the Company to the Board include the following: Annual operating plans and capital and revenue budgets and updates Quarterly financial results Status report on the Exchange operations and operations of different segments Minutes of the meetings of Audit Committee and other committees of the Board including minutes of the meetings of the Board of material subsidiary company. Details of joint ventures, acquisitions of companies or collaboration agreements, etc Details of foreign exchange exposures and the steps taken to limit the risk of adverse exchange rate movements Details of significant transactions and arrangements entered into by material unlisted subsidiary Review of market surveillance. Other information, which is required to be placed before the Board as per clause 49 of the Listing Agreement, is taken to the Board as and when the event occurs. A quarterly report on compliance of various laws, rules and regulations, to which the Company is subjected, is placed before the Audit Committee for its review. The Audit Committee from time to time reviews the report and gives suggestions for improvement of compliance level/process. On its review, a consolidated report on a quarterly basis is placed before the Board at its subsequent meetings. C. Independent Directors (1) Attributes The Company as a policy inducts only those persons as Independent Directors who have integrity, experience and expertise, foresight, managerial qualities and ability to read and understand financial statements. (2) Tenure The Company, being a stock exchange recognised under Securities Contracts (Regulation) Act, 1956, is required to follow directives issued by SEBI from time to time. As per SEBI directives, no director shall hold office for more than two consecutive terms. The Exchange follows the same with effect from August 18, 2009, being the date of approval granted by SEBI for the reconstituted structure of the Board. (3) Freedom to Independent Directors The Company takes all possible efforts to enable the Independent Directors to perform their functions effectively. However, as per SEBI requirement, the elected directors shall not interfere in the day to day management of the Exchange particularly relating to the surveillance and risk management functions of the Exchange. The Company always strives to strike a balance between both the above requirements without compromising on compliance of such requirements. D. Other Committees of the Board (1) Audit Committee The primary function of the audit committee is to assist the Board of Directors in fulfilling its oversight responsibilities by reviewing the financial information to be provided to the shareholders and others, the systems of internal controls, which the management and the Board of Directors have established, financial reporting and the compliance process. The Committee maintains open communication with statutory auditors and internal auditors. The Audit Committee reviews the reports of the internal auditors and operational auditors. Besides, the role of Audit Committee of NSEIL, inter-alia, also covers the following: (a) Oversight of the company s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. (b) Reviewing with management the annual financial statements before submission to the Board, focusing primarily on- Any changes in accounting policies and practices. Major accounting entries based on exercise of judgment by management. Qualifications in draft audit report. Significant adjustments arising out of audit. The going concern assumption. Compliance with accounting standards. Compliance with legal requirements concerning financial statements. Page 24 Page 25

15 National Stock Exchange of India Limited Twentieth Annual Report FY Any related party transactions i.e. transactions of the company of material nature, with promoters or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of the company at large. (c) Reviewing with the management, external and internal auditors and the adequacy of internal control systems. (d) Reviewing the adequacy of internal audit function including specification of terms of reference to firms conducting internal audit. (e) Discussion with internal auditors any significant findings and follow up there on. (f) Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board. (g) Discussion with external auditors, before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern. (h) Reviewing the company s financial management policies. (i) To look into the reasons for substantial defaults, if any, in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors. The Audit Committee comprises four Directors viz., *Dr. R. H. Patil, Mr. Y. H. Malegam, Mr. A. P. Kurian and Dr. V. A. Sastry as its members. Mr. Y.H.Malegam is the Chairman of the Audit Committee. The Committee met four times during the year i.e., on April 28, 2011, August 2, 2011, November 14, 2011 and January 17, The details of the attendance of members of the Audit Committee at their meetings held on the above dates are given hereunder:- Name Number of Number of meetings meetings held during attended the year during the year *Dr. R. H. Patil 4 4 Mr. A. P. Kurian 4 4 Mr. Y. H. Malegam 4 4 Dr. V. A. Sastry 4 3 * Dr. R.H.Patil ceased to be the Chairman of the Committee with effect from April 12, 2012 consequent upon his demise. (2) Compensation Committee The Compensation Committee has been vested with the powers and authority for overseeing performance evaluation and recommending compensation package for employees including Managing Directors. It is ensured that no Director is involved in deciding his or her own remuneration. The Compensation Committee comprises five non-executive directors viz., Dr. Vijay L Kelkar, Mr. S. B. Mathur, Mr. A.P. Kurian, Mr. Y.H. Malegam and Dr. V.A.Sastry. Dr. Vijay Kelkar is the Chairman of the Compensation Committee. During the year, the Committee met once on April 29, All the members of the Committee were present at the meeting held on April 29, (3) Nomination Committee The primary function of this Committee is to recommend to the Board the broad principles to be followed while co-opting directors and to decide on the issues such as the optimum size for the Board, the Board tenure for directors, qualification, experience and standing of persons to be co-opted including the designation levels for shareholder representatives, rotational or group representation for shareholders with below 10% holding, application of proposed principles to existing directors, etc. Keeping in mind the mandate of the SEBI and the Board of NSEIL, the Nomination Committee follows following guidelines before recommending any individual as a Director on the Board :- (i) Public Interest Directors (PIDs) shall constitute one-fourth of the total strength of the Board. (ii Trading Member Directors shall constitute a maximum of onefourth of the total strength of the Board. (iii) Shareholder Directors shall constitute the balance of the Board. The Nomination Committee comprises Dr. Vijay Kelkar, Mr. S.B.Mathur, Mr. Y.H. Malegam, Mr. Anjan Barua and Mr. Ravi Narain. Mr. Anjan Barua ceased to be the member of Nominations Committee with effect from March 22, Dr. Vijay Kelkar is the Chairman of the Nomination Committee. (4) Share Transfer and Shareholders Grievances Committee The Committee discharges the function of approving share transfers and deciding on any matter incidental to or connected with the transfer, redressal of shareholder complaints like transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends, etc. The Committee comprises of Dr. Vijay Kelkar, Mr. Y. H. Malegam, Mr. S. B. Mathur, Mr. A.P. Kurian and Mr. Ravi Narain. Dr. Vijay Kelkar is the Chairman of the Committee. (5) Risk Assessment and Review Committee The Audit Committee inter-alia periodically reviews the risk impacting the company s business and suggests measures for risk mitigation. In order to carry out the identification and assessment of existing risk and also recommend risk minimisation procedures & reporting system thereof on an ongoing basis, a Risk Assessment and Review Committee comprising Dr. R. H. Patil, Mr. Y. H. Malegam, Mr. A. P. Kurian and Dr. V. A. Sastry (who are also members of Audit Committee) was separately constituted during the year. Dr. R.H.Patil ceased to be the Chairman of the Committee with effect from April 12, 2012 consequent upon his demise. (6) In addition to Committees covered specifically in detail, the Company also has following Committees, namely: (i) Standing Committees under the Rules, Byelaws and Regulations 1. Arbitration Panel 2. Defaulters Committee 3. Disciplinary Action Committee 4. Ethics Committee (Board Committee) 5. Standing Committee (ii) SEBI mandated Committees 1. Executive Committee ( F& O segment) 2. Executive Committee (Currency Derivatives segment) 3. Sub-committee for monitoring compliance of suggestions given in SEBI Inspection Reports (Board Committee) 4. Surveillance Committee (Board Committee) 5. Investor Services Committee (Board Committee) 6. Committee to decide on Compulsory Delisting (iii) Other Functional Committees 1. Executive Committee 2. Executive Committee (SME segment) 3. Membership Approval Committee (Board Committee) 4. Sub-broker Recognition Committee 5. Committee for Declaration of Defaults (Board Committee) 6. Listing Advisory Committee 7. Technology Budget Committee (Board Committee) 8. Committee for Approval of Acquisition of Premises (Board Committee) 9. Business Development Committee (Board Committee) 10. Pricing Committee (Board Committee) E. Remuneration of Directors In order to align compensation levels with market levels and at the same time attract, retain and motivate Directors of the quality required to run the company successfully, the compensation being paid to Managing Directors are periodically reviewed and revised. The composition of their remuneration includes both fixed and variable components. Variable component forms significant portion of the total remuneration. Further, it is ensured that the variable to total pay is higher at senior levels in the organisation and particularly for Managing Directors so that the relationship of remuneration to performance is clear. All of the comparable global exchanges (including an exchange in India) and other BFSI companies in India have liberal ESOP schemes for its employees including executives on the Board over and above the direct employee remuneration. However, the Company does not have ESOP Schemes for its employees and Directors. None of the Directors of the Company hold any shares or any convertible instruments in the Company. Variable incentive schemes are also put in place by the Company for Managing Directors besides employees. A sitting fee is being paid to non executive Directors for the meetings of the Board or the Committees constituted by it attended by them. As Non Executive Chairman, Dr. Vijay Kelkar provides guidance on an ongoing basis in matters of strategic importance to the company management. As his experience and expertise is invaluable to the Board in maintaining strategic leadership and governance, a fixed amount of remuneration of ` 25 lakhs per annum is being paid to Dr. Kelkar in accordance with the terms approved by Board, Shareholders and the Central Government. Page 26 Page 27

16 National Stock Exchange of India Limited Twentieth Annual Report FY The details of remuneration paid to Managing Director and Joint Managing Director during FY is given in the following table:- Name & Designation Salary & Variable Perquisites in Contribution Total Allowances Pay cash or in kind to PF and other Funds Mr. Ravi Narain, Managing Director Ms. Chitra Ramkrishna, Joint Managing Director The sitting fees paid to the Non-executive Directors for attending the meetings of the Board and its Committees are as follows: Name Board meetings Board Committees meetings Total No. of meetings Amount No. of meetings Amount attended attended Dr. Vijay Kelkar 4 80, ,40,000 2,20,000 Mrs. Shyamala Gopinath* Mrs. Ranjana Kumar 3 60, ,000 1,20,000 Mr. A P Kurian 6 1,20, ,20,000 3,40,000 IDFC Limited (Dr. Rajiv B Lall) ,00,000 1,00,000 Mr. Y H Malegam 5 1,00, ,37,500 3,37,500 LIC (Mr. S B Mainak) 5 1,00, ,00,000 Mr. S B Mathur 5 1,00, ,40,000 3,40,000 Dr. K R S Murthy 6 1,20, ,65,000 3,85,000 Dr. V A Sastry 6 1,20, ,77,500 2,97,500 Mr. D M Satwalekar 4 80, ,00,000 1,80,000 *She has become a member of the Board with effect from March 5, 2012 II. Auditors The Audit Committee considers the profile of the audit firms, qualifications and experience of partners auditing books and accounts of the Company, strengths and weaknesses, if any, of the audit firm and other related aspects and then recommends appointment of Auditor and the remuneration payable to them to the Board/shareholders. The Audit Committee also periodically discusses with the Auditor the annual work programme and the depth and detailing of the audit plan to be undertaken by him. The Board appointed an external firm of Chartered Accountants as its internal auditor in order to ensure the independence and credibility of the internal audit process. III. Secretarial Review The Company has engaged the services of M/s. S.N. Ananthasubramanian & Co., Practicing Company Secretaries, to conduct review of compliances under the Companies Act, 1956 and the rules laid down thereunder for the financial year ended 31st March, The report of the Practicing Company Secretary Page 28 is placed before the Audit Committee. IV. Shareholders A. Disclosures regarding the appointment/re-appointment of directors Mr. Y.H.Malegam, Dr.K.R.S. Murthy and Dr. V. A. Sastry retire by rotation at the ensuing Annual General Meeting and are eligible for re-appoinment. Mrs. Shyamala Gopinath was appointed as a Public Interest Director on the Board of NSEIL with effect from March 5, The profiles of all these directors are provided in the Notice convening the Annual General Meeting. B. Communication with Shareholders The Exchange disseminates all material information to its shareholders through periodical communications. Annual Report: Annual report containing, inter alia, Audited Accounts, Directors Report, Report on Corporate Governance, other material and related matters/information is circulated to the shareholders and others entitled thereto. C. Redressal of shareholders complaints NSEIL has Share Transfer and Shareholders Grievances Committee under the chairmanship of Dr. Vijay Kelkar, Non D. General Body Meetings Executive Director, to look into the redressal of shareholder complaints like transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends, etc. Location, date and time of the general meetings held in the last three years till March 31, 2012:- Type of meeting Date Time Venue Special Resolution passed 19th Annual General Meeting September 28, a.m Exchange Plaza, Re-appointment of Auditors under Bandra-Kurla Complex Section 224A Bandra (East) Mumbai th Annual General Meeting September 27, p.m. -do- Re-appointment of Auditors under Section 224A Extra-ordinary General Meeting April 27, p.m. -do- Alteration of Articles of Association of the Company 17th Annual General Meeting September 30, a.m. -do- Re-appointment of Auditors under Section 224A Alteration of Articles of Association of the Company 16th Annual General Meeting July 18, a.m. -do- Re-appointment of Auditors under Section 224A Alteration of Articles of Association of the Company. Extra-ordinary General Meeting April 21, a.m. -do- Alteration of Articles of Association of the Company E. Shareholding pattern of the Exchange and Top 10 Shareholders as on 31st March, Distribution of Shareholding as on 31st March, 2012: Category No. of % to the shareholders % of the No. of total paid up in each category category shares held equity capital Individuals ,71, Corporates-Listed ,00, Corporates-unlisted ,60, Financial Institutions/Banks ,34,38, Insurance Companies ,53, Mutual Funds ,87, Venture capital fund ,08, Foreign holding ,56,80, Total ,50,00,000 Page 29

17 National Stock Exchange of India Limited Twentieth Annual Report FY Top 10 Shareholders as on 31st March, 2012 Sr. Name of the No.. Percentage No. shareholder of shares of held shareholding 1 Life Insurance Corporation of India 47,28, State Bank of India 45,87, Infrastructure Development Finance Company Limited 29,47, IFCI Limited 24,97, Stock Holding Corporation of India Limited 22,50, GA Global Investments Limited 22,50, GS Strategic Investments Limited 22,50, SAIF II SE Investments Mauritius Limited 22,50, Aranda Investments (Mauritius) Pte. Ltd. 22,50, IDBI Bank Limited 22,49, As per Securities Contracts (Regulation) (Manner of Increasing and Maintaining Public Shareholding in Recognised Stock Exchanges) Regulations, 2006, the Exchange is required to ensure that at least 51% of the equity share capital is held by public. The Exchange ensures compliance thereof. Stock Market Data: The equity shares of NSEIL are not listed on any stock exchange. F. Registrar and Transfer Agent: The address for communication and contact details of the Registrar and Transfer Agent are as under: M/s. Link Intime India Pvt Ltd., C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West) Mumbai Tel. No and Fax No G. Addresses for Correspondence Shareholders are requested to intimate all changes pertaining to their Bank details, addresses, Power of Attorney, change of name, change of address, contact details, etc., to their Depository Participants (DP). H. Certificate on compliance of corporate governance norms Clause 49 of the Listing Agreement mandates for the companies which listed their securities with the Stock Exchanges to obtain a certificate, from either the auditors or practicing company secretaries, regarding the compliance of conditions of corporate governance covered therein and annex the certificate with the Directors Report, which is sent annually to the shareholders. NSEIL, being an unlisted company, has voluntarily adopted compliance of corporate governance norms covered in the said clause 49 and has, accordingly, obtained a certificate to this effect from a practicing company secretary. The same is given as an Annexure to the Directors Report. I. Compliance with the non-mandatory requirements of Clause 49 of the Listing agreement In addition to the above, NSEIL also complies with non-mandatory requirements of Clause 49 like maintaining a Chairman s office at the company s expense, reimbursement of expenses incurred by Chairman in performance of his duties, tenure for Directors, requisite qualifications and experience for independent directors, remuneration committee, dissemination of financial results to the shareholders on a quarterly basis, unqualified financial statements, etc. During the year, the Company has established a mechanism for employees to report concerns about unethical behavior, actual or suspected fraud, or violation of the code of conduct or ethics policy. The Company also provides for adequate safeguards against victimisation of employees who avail of the mechanism and also allows direct access to the Chairman of the Ethics committee in exceptional cases. To, The Members, National Stock Exchange of India Limited, Exchange Plaza, C-1, Block G, Bandra Kurla Complex, Bandra (East), Mumbai CORPORATE GOVERNANCE COMPLIANCE CERTIFICATE We have examined all relevant records of National Stock Exchange of India Limited (the Company) for the purpose of certifying compliance of the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement for the financial year ended 31st March The Company being an unlisted Company has voluntarily adopted compliance of Clause 49 of the Listing Agreement applicable to Companies which are listed with the Stock Exchanges. We have obtained all the information and explanations to the best of our knowledge and belief which were necessary for the purpose of this certification. The compliance of the conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. This certificate is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company. On the basis of our examination of the records produced, explanations and information furnished, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement. S. N. ANANTHASUBRAMANIAN & CO. Company Secretaries S. N. ANANTHASUBRAMANIAN Date: 14th May, Proprietor Place: Thane C.P.No.: 1774 Page 30 Page 31

18 National Stock Exchange of India Limited Twentieth Annual Report FY Economic & Business environment Page 32 MANAGEMENT DISCUSSION & ANALYSIS On the backdrop of fragile global economic scenario the Indian economy in the year witnessed substantively pessimistic and lacklustre environment. Akin to this and especially due to huge uncertainties of the international financial markets impacted emerging market economies substantially including that of India. The year witnessed considerable slowdown in the growth. Estimated growth in GDP for FY decelerated sharply to around 6.9 per cent after two successive years of fairly robust growth of around 8 per cent plus. During the year , all the three sectors of the economy namely agriculture sector, industrial sector and the service sector slowed down considerably. The estimated growth in the agriculture sector decreased to around 2.5 per cent from around 7 per cent for previous year. Similarly, on account of weak IIP numbers; the Industrial growth slacked to a meagre 2.8 per cent as compared to 8.2 per cent for the previous year. However, during the same year, the service sector managed to sustain its growth rates helping to partially alleviate the negative impact of the poor growth performances of the agricultural and industrial sectors on the overall GDP growth. Throughout the year , the current account deficit remained range bound at around 3.9 per cent of GDP almost 45% up from the previous year s level of 2.7 per cent whereas capital account remained in the range of around 3.5 per cent of GDP as compared to previous year s 3.7 per cent. Also, there was a huge slowdown witnessed in the overall foreign institutional investor (FII) inflows into the country. During the year , the overall net FII inflows reduced by around 36 per cent as compared to previous year. The cumulative FII net investment from November 1992 to March 31, 2012 stood at US $ billion and the forex reserves of country marginally decreased by around 3 per cent from US$303 billion as on March 25, 2011 to US $ 294 billion at end of March 30, In order to moderate the challenging situation and to provide impetus to the Indian financial markets series of steps in the form of raising of FII limits for investment in long-term infrastructure bonds, corporate bonds and government securities, raising limit on External Commercial Borrowings (ECB) for Indian corporates and permitting Qualified Foreign Investors (QFIs) to invest in India both directly and indirectly were taken. These steps have helped keep the overall investment climate in the country stable to some extent. Further, during the Indian securities industry also experienced number of technological and regulatory developments. In addition, demand for new products and services, particularly new asset classes and need for faster and more cost efficient trade execution increased substantially. Outlook With the strong innate economic fundamentals, India continues to be the highly attractive destination for investment, globally. Indian economy is expected to sustain a growth rate of around 6.9 per cent in the year 2012 as compared to 3.5 per cent for the world economy. Further, the provisional estimates from RBI for the year indicate fiscal deficit of 5.1 per cent of the GDP; down from 5.9 per cent for the year Also, as a natural fall out of the fiscal consolidation the savings and capital formation within the economy would begin to rise rapidly. This would have a significantly positive impact on the capital markets. Additionally, various policy level steps enumerated above are also expected to fetch positive effect on the growth of the Indian Capital market. Similarly, existing products and asset classes which would continue to evince interest, it is expected that there would be attraction towards new asset classes as well. New products and services, technological innovation, robust risk management system and strong regulatory framework would continue to be the key drivers for the securities market. Risks and concerns While the fundamentals of Indian Economy remain strong, the domestic capital market and especially the inflow of foreign funds are to a large extent susceptible to the developments in the global economy. Also, eurozone sovereign debt crisis and lurking fear over the recovery of US economy post sign of initial improvement could have adverse impact on the Indian capital market. However, with key policy changes and domestic growth expectations within the country these risks would be largely mitigated. Internal control systems and their adequacy The Company has well established internal control systems commensurate with the size and nature of its business and are adequate to ensure compliance with various internal processes and procedures as well as with various statutory and legal requirements. The Company has appointed reputed firms of Chartered Accountants to review the effectiveness of the internal control systems and submits its observations, if any to the Audit Committee of the Board for its review / recommendations. Financials The financial statements have been prepared in compliance with the requirements of the Companies Act, 1956, including revised Schedule VI, Generally Accepted Accounting Principles (GAAP) in India and as per the applicable Accounting Standards laid down by the Institute of Chartered Accountants of India. A well known and reputed firm of Chartered Accountants performs the audit and they have confirmed that our practices are as stringent and complete as internationally. Consolidated Financial statements have also been presented. Financial performance ( ) During the year , the total revenue has increased by around 11% from ` 1, crores for the year to ` 1, crores for the year The total expenditure for the year was ` crores as compared to ` crores for the year , an increase of around 9% over the previous year. The total Profit Before tax for the year was ` crores as against ` crores for the year , an increase of around 12% over the previous year. The total Provision for tax (including deferred tax, wealth tax) for the year was ` crores as against ` crores for the year The total Profit after tax for the year was ` crores as against ` crores for the year , an increase of around 11% over the previous year. Operating Revenues Transaction charges During the year, there was a modest decrease of around 3% in the income from Transaction charges from ` crores for the year to ` crores for the year The average daily turnover on the Exchange during the year was ` 11,306 crores in Cash Market (CM segment) as against ` 14,090 crores for the year indicating a decline of around 20%. In F&O segment the average daily turnover (billable) for the year was ` 31,724 crores as against ` 39,628 crores for the year indicating a decline of around 20%. Further effective August 22, 2011 transaction charges were Page 33

19 National Stock Exchange of India Limited Twentieth Annual Report FY introduced in the Currency Derivatives Segment. The average daily turnover (billable) for the period was ` 12,025 crores. Listing Fees Revenue under this head of income increased by around 44% from ` crores for the year to ` crores for the year The Exchange as of March 31, 2012 had 1,608 listed companies. The total market capitalisation of these companies as of March 31, 2012 stood at around ` 60 lakhs crores. Book Building Fees The total book building fees during the year decreased by around 63% from ` crores for the year to ` 4.28 crores for the year Interest & Other Investment income In line with the overall increase in the interest rates in the economy, the during the year , the total investment income increased from ` crores for the year to ` crores for the year NSE s Certification in Financial Markets (NCFM) The income from NCFM activity stood at ` crores for the year Also, the total number of candidates taking examination during the year was around 1,75,000. Other Operating Revenues During the year , the other operating revenues increased by around 33% from ` crores for the year to ` crores for the year Other Income During the year , the other income decreased by around 6% from ` crores for the year to ` crores for the year Expenditure Other expenses Other expenses for the year increased by around 44% from ` crores for the year to ` crores for the year IT & Telecom expenses Technology is the backbone of our business and also the key differentiator. The Exchange continued to invest in the state of the art technology in different areas of its business keeping clear focus on its cost efficiency. Accordingly, during the year, the total IT & Telecom expenses for the year increased by around 2% from ` crores for the year to ` crores for the year Clearing & Settlement charges National Securities and Clearing Corporation Limited (NSCCL), a wholly owned subsidiary of the Exchange, carries out the clearing and settlement of the trades executed in the CM, F&O and CD segments. Consequent to the decrease in income from transaction charges, the clearing & settlement charges for the year paid to NSCCL, decreased by around 3% from ` crores for the year to ` crores for the year Employee cost The Exchange recognises the value of its human capital deployed at all levels. To continue to provide best in class services to its members and other market participants it is essential for the Company to attract and retain the best talent available. In this direction, the Company continues to take various initiatives to follow HR best practices and also keeps benchmarking it with other forward looking organisations. During the year , the Company has taken number of HR initiatives in the areas of employee developments and training, harnessing knowledge and skill levels as well as various staff welfare measures etc. During the year , the total employee strength remained stable as compared to the year and the employee related expenses stood at ` crores which was ` crores for the year For the year , the total employee cost as a percentage to total income was 4.7% and as a percentage of expenditure was 12.6% which is comparable to the industry standards. Depreciation Exchange continued to invest in technology in different areas of its business. Depreciation modestly decreased by around 3% from ` crores for the year to ` crores for the year Financial Statement as on March 31, 2012 Share Capital The total paid up capital of the Company as on March 31, 2012 is ` 45 crores divided in to 4,50,00,000 equity shares of ` 10 each. Reserves & Surplus The total Reserves & Surplus as on March 31, 2012 is ` 3, crores comprising of Share Premium of ` 40 crores, Investor Compensation reserves ` 10 crores, staff welfare reserves of ` 1.50 crores, General reserve of ` 3,155 crores and balance in P&L A/c of ` crores. Thus the total Net worth of the Company as on March 31, 2012 is ` 3, crores and the book value is ` per share. Deposits from members (Unsecured) The total deposits from members as on March 31, 2012 stood at ` 1, crores as against ` 1, crores as on March 31, Fixed Assets Total Gross Block as on March 31, 2012 was ` crores. Total Accumulated depreciation up to March 31, 2012 was ` crores. Net fixed Assets (including Capital W.I.P) were ` crores. As part of the total investments in technology areas, during the year the total additions to fixed assets were ` crores mainly pertaining to the Trading systems, Computer system, telecom equipment s and computer software. Total deletions at cost were at ` crores. These equipments had become obsolete and are fully depreciated. Investments The prudential policy of the Company permits to invest both long term and short term surplus funds in to deposits of highly rated banks, bonds issued by the Central / State governments, institutions and various corporates and into the debt oriented schemes of high performing mutual funds. As on March 31, 2012 the total non-current investments were ` crores as against ` crores as on March 31, 2011, increase of ` crores. Current investments were ` crores as on March 31, 2012 as against ` crores as on March 31, 2011, increase of ` crores. Other Non-Current and Current Assets Total other assets (non-current and current) as on March 31, 2012 stood at ` 3, crores comprising of interest accrued on investments and Fixed Deposits amounting to ` crores, Trade Receivables amounting to ` crores and cash and bank balances in current and Fixed Deposits and certificates of deposits amounting to ` 3, crores and Loans advances of ` crores. Other Non-Current and Current Liabilities Total other liabilities (non-current and current) as on March 31, 2012 stood at ` crores mainly comprising of dues from subsidiary companies ` crores, security deposits as per listing agreement amounting to ` crores, Securities Transaction Tax of ` crores, provision for leave encashment of ` 7.60 crores, proposed dividend of ` crores, corporate dividend tax of ` crores and other current liabilities amounting to ` crores. Taxation The total Provision for tax (including deferred tax, wealth tax) for the year was ` crores as against ` crores for the year Though the present Indian Corporate tax rate is % comprising of base rate and surcharge and cess, due to investments into various debt schemes of mutual funds the effective tax rate works out to 27.62% Event occurring after the balance sheet date There are no transactions of material nature that have occurred after March 31, 2012 which could have any impact on the financial performance of the Company for the year Page 34 Page 35

20 National Stock Exchange of India Limited Twentieth Annual Report FY AUDITORS REPORT To, The Board of Directors National Stock Exchange of India Limited Page 36 CEO - CFO CERTIFICATION We, Ravi Narain, Managing Director & CEO and J. Ravichandran, Director (F&L) of National Stock Exchange of India Limited hereby certify to the Board that: a. We have reviewed financial statements and the cash flow statement for the year ended on March 31, 2012 and that to the best of our knowledge and belief : i. these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; ii. these statements together present a true and fair view of the Company s affairs and are in compliance with existing accounting standards, applicable laws and regulations. b. There are, to the best of our knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violative of the Company s code of conduct. c. We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of internal control systems of the company pertaining to financial reporting and we have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies. d. We have indicated to the auditors and the Audit committee i. significant changes, if any, in internal control over financial reporting during the year; ii. significant changes, if any, in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and iii. instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the company s internal control system over financial reporting. Mumbai RAVI NARAIN J RAVICHANDRAN May 14, 2012 Managing Director Director (F&L) & Company Secretary To, The Members, NATIONAL STOCK EXCHANGE OF INDIA LIMITED 1. We have audited the attached Balance Sheet of NATIONAL STOCK EXCHANGE OF INDIA LIMITED, as at 31st March, 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 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, and read with the amendments made by the Companies (Auditors Report) (Amendment) Order 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, and on the basis of such checks of the books and records as we considered appropriate and according to the information and explanations given to us during the course of audit, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent they are applicable to the Company. 4. Further to our comments in the Annexure referred to 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 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 Companies Act, 1956; e) On the basis of the representations received from the Directors as on 31st March, 2012 and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2012 from being appointed as a Director in terms of Clause (g) of subsection (1) of Section 274 of the Companies Act, 1956; f) In our opinion and to the best of information and according to the explanations given to us, the said accounts read together with the notes thereon, give the information required by the Companies Act, 1956, 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 31st March, 2012; ii) in the case of the Statement of Profit & Loss, of the Profit of the Company for the year ended on that date; and iii) in the case of Cash Flow Statement, of the cash flows for the year ended on that date. For KHANDELWAL JAIN & CO., Chartered Accountants, Firm s Registration No W (NARENDRA JAIN) Place : Mumbai Partner Date : 14th May, 2012 Membership No.: Page 37

21 National Stock Exchange of India Limited ANNEXURE TO THE AUDITORS REPORT Annexure referred to in paragraph 3 of Auditors Report of even date to the members of NATIONAL STOCK EXCHANGE OF INDIA LIMITED on the financial statements for the year ended March 31, 2012 i) a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets. iv) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the Company has not entered into any contracts or arrangements that need to b) The Company has physically verified the fixed assets in be entered in the register maintained under Section 301 of accordance with a programme of verification which in the Companies Act, our opinion provides for physical verification of all fixed assets at reasonable intervals except for VSAT equipments lying with third parties for which confirmations are generally obtained or electronically confirmed. We have been informed that no material discrepancies were v) The Company has not accepted any deposits during the year from the public within the meaning of the provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules made thereunder. noticed on such verification. vi) In our opinion, the Company has an internal audit system c) No substantial part of fixed assets of the Company has been disposed off during the year. which is commensurate with the size of the Company and the nature of its business. ii) a) 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. vii) We are informed that no cost records are required to be maintained by the Company under Section 209(1)(d) of the Companies Act, b) 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. viii) a) According to the information and explanations given to us and the records examined by us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state iii) In our opinion, there is an adequate internal control procedure insurance, income-tax, sales-tax, wealth-tax, service-tax, commensurate with the size of the Company and the nature of custom duty, excise duty, cess and any other statutory its business, for purchase of fixed assets and for rendering of dues wherever applicable. services. During the course of our audit, we have not observed any major weakness in the internal control systems. ix) Twentieth Annual Report FY Sr. Name of the Statute Nature of Period to which Amount Forum where dispute is Pending No. the Dues amount relates (Financial year) 1. Income Tax Act, 1961 Income Tax High Court, Mumbai Income Tax Appellate Tribunal, Mumbai Commissioner of Income Tax, (Appeal) Mumbai 2. Wealth Tax Act, 1957 Wealth Tax Income Tax, Appellate Tribunal, Mumbai - Wealth Tax Bench 3. Finance (No.2) Act, Securities Income Tax Appellate Tribunal, Mumbai 2004-Chapter VII Transaction Commissioner of Income Tax Tax (Appeals), Mumbai Commissioner of Income Tax (Appeals), Mumbai 4. Chapter V of Finance Service Tax to Commissioner of Service tax, Mumbai Act, Chapter V of Finance Act, 1994 Service Tax Commissioner of Service tax, Mumbai 6. The Competition Act, 2002 Penalty to Competition Appellate Tribunal The Company did not have any accumulated losses at the end of the financial year, nor had it incurred any cash loss during the financial year or in the immediately preceding financial year. x) The Company has not taken any loan from banks or financial institutions and the Company has not issued any debentures. xi) xii) xiii) xiv) xv) b) According to the records of the Company, the dues of sales-tax, income-tax, customs, wealth-tax, service tax, securities transaction tax, excise duty, cess which have not been deposited on account of disputes and the forum where the dispute is pending are as under: The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 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. The Company has not taken any term loans during the year. According to the information and explanations given to us and on an examination of the Balance Sheet of the Company, we report that, on an overall basis, funds raised on short term basis have prima facie, not been used during the year for long term investment. The Company has not made any preferential allotment of shares to the parties and companies covered in the register maintained under Section 301 of the Companies Act, xvi) The Company has not issued any Debentures during the year and there were no debenture outstanding at the year-end. xvii) The Company has not raised any money by public issue during the year. xviii) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on the Company or by the Company has been noticed or reported during the course of our audit. xix) The other clauses 4(ii), 4(xiii) and 4(xiv) of para 4 of the Companies (Auditor s Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order 2004, are not applicable to company. For KHANDELWAL JAIN & CO., Chartered Accountants, Firm s Registration No W (NARENDRA JAIN) Place : Mumbai Partner Date : 14th May, 2012 Membership No.: Page 38 Page 39

22 National Stock Exchange of India Limited Twentieth Annual Report FY BALANCE SHEET As at 31 March, 2012 Notes As at As at EQUITY AND LIABILITIES 1. Shareholder's funds a Share Capital b Reserves and surplus 3 3, , , , Non-current liabilities a Deposits (Unsecured) 4 1, , b Deferred tax liabilities (net) c Other long-term liabilities d Long-term provisions , , Current liabilities a Deposits (Unsecured) b Trade payables c Other current liabilities d Short-term provisions Total 5, , ASSETS 1 Non-current assets a Fixed assets 9 Tangible assets Intangible assets Capital work-in-progress Intangible assets under development b Non-current investments c Long-term loans and advances d Other non-current assets , , Current assets a Current investments b Trade receivable c Cash and bank balances 15 2, , d Short-term loans and advances e Other Current assets , , Total 5, , Summary of significant accounting policies 1 STATEMENT OF PROFIT & LOSS For the year ended 31 March, 2012 INCOME Notes For the year ended For the year ended Revenue from operations 16 1, , Other income Total Revenue (I) 1, , EXPENSES Employee benefits expenses Clearing & Settlement charges Other expenses Depreciation and amortisation expenses Total Expenses (II) Profit before prior-period adjustments Add/(Less) : Prior-period adjustments (0.41) (0.74) Profit before tax Less : Provision for tax Current tax Wealth tax Deferred tax (5.41) (1.40) Total tax expenses Profit after tax Basic Diluted Summary of significant accounting policies 1 The accompanying notes are an integral part of the financial statements. As per our report of even date attached For and on behalf of the Board of Directors For KHANDELWAL JAIN & CO., Chartered Accountants NARENDRA JAIN DR. VIJAY L. KELKAR RAVI NARAIN Partner Chairman Managing Director Membership No.:48725 CHITRA RAMKRISHNA Y. H. MALEGAM Jt. Managing Director Director The accompanying notes are an integral part of the financial statements. As per our report of even date attached For and on behalf of the Board of Directors For KHANDELWAL JAIN & CO., Chartered Accountants NARENDRA JAIN DR. VIJAY L. KELKAR RAVI NARAIN Partner Chairman Managing Director Membership No.:48725 CHITRA RAMKRISHNA Y. H. MALEGAM Jt. Managing Director Director Place : Mumbai Date : May 14, 2012 J. RAVICHANDRAN Director (F&L) & Company Secretary Place : Mumbai Date : May 14, 2012 J. RAVICHANDRAN Director (F&L) & Company Secretary Page 40 Page 41

23 National Stock Exchange of India Limited Twentieth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) Basis of preparation The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (India GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, The financial statements have been prepared on an accrual basis and under the historical cost convention. b) Use of estimates The preparation of financial statements in conformity with India GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainly about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. c) Revenue Recognition i) Revenue is being recognised as and when there is reasonable certainty of ultimate realisation. ii) Provision for Doubtful debts and Bad Debts. a) In respect of members who have been declared as defaulter or expelled during the year by the company all amounts remaining to be recovered till the date of being declared defaulter or expelled are written off as bad debts. All subsequent recoveries are accounted for in the year of receipt b) Other overdue amounts are provided for as doubtful debts or are written off as bad debts, if the same are considered doubtful / irrecoverable in the opinion of management. d) Fixed Assets Fixed Assets are stated at historical cost less accumulated depreciation. Historical cost is inclusive of freight, duties, taxes, cost of installation, interest upto the date of installation and other incidental expenses incurred towards acquisition and installation of fixed assets. e) Depreciation i) Depreciation on assets is provided, using the straight line method, pro-rata to the period of use of assets, at the rates specified in Schedule XIV to the Companies Act, 1956 or based on the estimated useful life of the assets, whichever is higher. Where there is a revision of the estimated useful life of an asset, the unamortized depreciable amount is charged over the revised remaining useful life. ii) iii) Page 42 The details of the estimated useful life of the assets where the depreciation is provided at the rate higher than the specified in Schedule XIV of the Companies Act, 1956 are as follows: Assets Computer Systems Office Automation Computer Systems Others Telecommunication Systems Trading & Clearing Systems Electrical Equipments & Installations Furniture & Fixtures Office Equipments Vehicles Fixed assets whose aggregate cost is ` 5,000 or less are depreciated fully in the year of acquisition. Leasehold land is amortised over the period of lease. Computer Software is amortized over a period of 4 years. Estimated Useful Lives 3 years 4 years 4 years 4 years years 5-16 years 4-21 years 3-5 years 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Contd.) f) Computer software i) Cost of development and production software is capitalised, ii) Cost towards software development incurred till the time software is put to use is capitalised, and iii) Standard packaged software products are written off in the year of purchase. g) Investments i) Long term investments are considered as held till maturity and are valued at cost. Provision is made for diminution in the value of investment, if any, other than temporary in nature. ii) Short term investments are valued at cost or fair value whichever is lower. iii) Premium paid/discount received at the time of acquisition of Government / Debt securities is amortised over the residual period of its maturity. iv) The cost of investment includes acquisition charges such as brokerage, etc. Front-end discount / incentive earned in respect of direct subscription is adjusted towards the cost of investment. Income on investments is accounted for on accrual basis. h) Foreign currency transactions i) Transactions denominated in foreign currency are recorded at the exchange rate prevailing at the time of the transaction. ii) Monetary items denominated in foreign currency at the year end are translated at the year end rate except for those covered by forward cover contracts which are translated at contracted rates. iii) Any income or expense on account of exchange difference between the date of transaction and settlement or translation is recognised in the profit and loss account as income or expense. The premium or discount on forward exchange contract are amortised and recognized in the profit and loss account over the period of contract. i) Employee Benefits i) Provident Fund: The Company has established National Stock Exchange of India Limited Employee Provident Fund Trust to which both the employee and the employer make monthly contribution equal to 12% of the employee s basic salary respectively. Company's contribution to the provident fund for all employees, are charged to revenue. In case of any liability arising due to short fall between the return from its investments and the administered interest rate, the same is required to be provided for by the Company. ii) Superannuation: Superannuation benefits for employees designated as chief managers and above are covered by group policies with the Life Insurance Corporation of India. Company s contribution payable for the year is charged to revenue. There are no other obligations other than the annual contribution payable. iii) Gratuity: The Company has maintained a Group Gratuity Cum Life Assurance Scheme with the Life Insurance Corporation of India (LIC) towards which it annually contributes a sum determined by LIC. The Company provides for the defined benefit with respect to gratuity liability based on the present value of defined benefit obligation as reduced by the fair value of plan assets as per the actuarial valuation calculation. iv) Other Long term benefits: Liability on account of other long term benefits such as Leave encashment, medical reimbursement and Leave Travel Allowance is made on the basis of actuarial valuation at the end of the year. v) Short term employee benefits are charged to revenue in the year in which the related service is rendered. j) Taxation Tax expense for the year, comprising current tax and deferred tax is included in determining the net profit for the year. A provision is made for the current tax based on tax liability computed in accordance with relevant tax rates and tax laws. A provision is made for deferred tax for all timing differences arising between taxable income and accounting income at currently enacted tax rates. Deferred tax assets are recognised only if there is a reasonable certainty that they will be realised and are reviewed for the appropriateness of their respective carrying values at each balance sheet date. Page 43

24 National Stock Exchange of India Limited Twentieth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, SHARE CAPITAL As at As at Authorised 5,00,00,000 (Previous Year 5,00,00,000) Equity Shares of ` 10 each Issued, Subscribed and Paid-up 4,50,00,000 (Previous year 4,50,00,000) Equity shares of ` 10 each fully paid up. Total There is no movement either in the number of shares or in amount between previous year and current year. The company has only one class of equity shares having a par value of ` 10/- per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board of directors, in their meeting on May 14, 2012, proposed a dividend of ` 40/- Per equity share. The proposal is subject to the approval of shareholders at the Annual General Meeting. The total dividend appropriation for the year ended March 31, 2012 amounted to ` 180/- crores excluding Dividend Distribution Tax During the year ended March 31, 2011, the amount of per share dividend recognized as distribution to equity shareholders was ` 21/. The dividend appropriation for the year ended March 31, 2011 amounted to ` crores excluding Dividend Distribution Tax In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distributional of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. 3 RESERVE AND SURPLUS (Contd.) As at As at Staff welfare reserve As per last balance sheet Less: Expenses incurred Transferred from profit & loss account Add : Transferred from surplus balance in the statement of profit & loss account General reserve As per last balance sheet 2, , Add : Transferred from surplus balance in the statement of profit & loss account Add : Transferred from Technology Upgradation Reserve - 3, , Surplus/(deficit) in the statement of profit and loss Balance as per last financial statements Profit for the year Excess provision of Dividend Distribution Tax reversed Less : Appropriations Transfer to general reserve Transfer to Investor compensation reserve Proposed dividend Tax on proposed dividend Transfer to Staff welfare reserve Total reserves and surplus 3, , Details of shareholders holding more than 5% share in the company As at As at No. % holding No. % holding Life Insurance Corporation of India 4,728, % 4,728, % State Bank of India 4,587, % 4,587, % Infrastructure Development Finance Company Limited 2,947, % 3,547, % IFCI Limited 2,497, % 2,497, % 4 DEPOSITS (UNSECURED) Non-current Current As at As at As at As at Deposits from trading members 1, , Deposits from applicants for membership Deposits towards equipments Total 1, , RESERVE AND SURPLUS As at As at Share premium As per last balance sheet Investor compensation reserve As per last balance sheet Less : Expenses Transferred from Profit & Loss account Add : Transferred from surplus balance in the statement of profit & loss account Technology upgradation reserve As per last balance sheet Less: Transferred to General Reserve account DEFERRED TAX LIABILITIES (NET) As at As at Deferred Tax Liabilities Related to depreciation and other expenditure Related to other items Total (A) Less : Deferred Tax Assets Related to disallowance u/s 43B Related to other items - - Total (B) Net Deferred Tax liabilities (A-B) Page 44 Page 45

25 National Stock Exchange of India Limited Twentieth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, OTHER LONG-TERM LIABILITIES As at As at Trade payables Others Deposit - premises Total PROVISION Long - term Short - term As at As at As at As at Provision for employee benefits Medical benefits Provision for Leave Travel allowance Provision for gratuity Provision for Leave encashment Other Provisions Wealth Tax Proposed dividend Corporate dividend tax Total OTHER CURRENT LIABILITIES As at As at Trade payables Subsidiary Company Others Liability for expenses (Ref note no. 28) Creditors for Capital expenditure Subsidiary Companies Security deposit - Listing agreement Deposit - premises Unpaid matured deposits Other deposits Income received in advance Securities Transaction Tax payable Tax deducted at source - payable Defaulters committee account Deposits of defaulters members - SEBI Other liabilities Total NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, FIXED ASSETS (Note No 1d, 1e & 1f) GROSS BLOCK DEPRECIATION/AMORTISATIONS NET BLOCK Sr. As on Additions Deductions As on Total upto For the Deductions Total upto As on As on No. Description Year Tangible Assets 1 Land Leasehold Land Building Trading Systems Computer Systems Office Automation Computer Systems Others Telecommunication Systems Office Equipments Electrical Equipment & Installations Furniture & Fixtures TOTAL (A) Intangible Assets 11 Computer Software TOTAL (B) TOTAL (A + B) Previous Year Trading system of ` crores, Computer Systems Office Automation of ` 0.64 crore and Telecommunication Systems of ` 3.25 crores having gross book value aggregating to ` crores (Previous Year: ` 4.12 Crores) and net book value of ` Nil (Previous Year : ` Nil) have become obsolete and therefore have been earmarked for disposal or scrap. The net realisable value of the obsolete assets cannot be estimated and therefore taken as ` Nil. Page 46 Page 47

26 National Stock Exchange of India Limited Twentieth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, NON CURRENT INVESTMENTS (VALUED AT COST UNLESS STATED OTHERWISE) I INVESTMENTS IN EQUITY SHARES A) QUOTED EQUITY SHARES IN OTHER COMPANIES Maturity Number of Face Value Face As at Number of As at Date Units per Unit Value Units MCX LIMITED 1,250, ,000, SUB-TOTAL (I) B) UNQUOTED EQUITY SHARES IN SUBSIDIARY COMPANIES NATIONAL SECURITIES CLEARING CORPORATION LTD. 45,000, ,000, ,000, NSE.IT LTD. 10,000, ,000, ,000, DOTEX INTERNATIONAL LTD. 12,000, ,000, ,000, NATIONAL COMMODITY CLEARING LTD. 3,087, ,875, ,087, INDIA INDEX SERVICES & PRODUCTS LTD. 663, ,630, , NSE INFOTECH SERVICES LTD 50, , , SUB-TOTAL (II) IN ASSOCIATE COMPANIES NATIONAL SECURITIES DEPOSITORY LTD. 20,036, ,360, ,036, POWER EXCHANGE INDIA LTD 13,000, ,000, ,000, SUB-TOTAL (III) IN OTHER COMPANIES NATIONAL COMMODITY & DERIVATIVE EXCHANGE LTD. 5,067, ,675, ,625, MCX LIMITED ,250, SUB-TOTAL (IV) TOTAL (I) II INVESTMENTS IN PREFERENCE SHARES UNQUOTED PREFERENCE SHARES IN ASSOCIATE COMPANY 10% OPTIONALLY CONVERTIBLE REDEEMABLE OF INDIA LIMITED PREFERENCE SHARES OF POWER 5,000, ,000, EXCHANGE (THESE SHARES ARE REDEEMABLE OR CONVERTIBLE ON OR BEFORE 31-DEC AT PAR I.E. `10.00 EACH) TOTAL (II) NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, NON CURRENT INVESTMENTS (VALUED AT COST UNLESS STATED OTHERWISE) Maturity Number of Face Value Face As at Number of As at Date Units per Unit Value Units III QUOTED BONDS TAX FREE BONDS 6.85% INDIA INFRASTRUCTURE FINANCE COMPANY LIMITED 22-Jan , ,600, , % INDIA INFRASTRUCTURE FINANCE COMPANY LIMITED 20-Mar , ,500, , % NATIONAL HIGHWAYS AUTHORITY OF INDIA 25-Jan-22 37,086 1,000 37,086, % INDIAN RAILWAY FINANCE CORPORATION LIMITED 27-Jan-22 32,626 1,000 32,626, % INDIAN RAILWAY FINANCE CORPORATION LIMITED 28-Feb ,000, ,000, % INDIAN RAILWAY FINANCE CORPORATION LIMITED 08-Mar , ,000, , % INDIAN RAILWAY FINANCE CORPORATION LIMITED 20-Dec ,000 50,000, % POWER FINANACE CORPORATION LIMITED 01-Feb-22 92,718 1,000 92,718, %POWER FINANACE CORPORATION LIMITED 25-Nov-21 1, , ,000, %NUCLEAR POWER CORPORATION OF INDIA LIMITED 14-Aug ,000 20,000, %NUCLEAR POWER CORPORATION OF INDIA LIMITED 23-Mar ,000, ,000, Sub-Total (I) TAXABLE BONDS 7.10% POWER FINANCE CORPORATION 15-Jul ,000,000 20,000, Sub-Total (II) Total ( III ) IV MUTUAL FUNDS QUOTED FIXED MATURITY PLAN SUNDARAM FIXED TERM PLAN CQ 370 DAYS GROWTH 4-Apr-13 4,000, ,000, Total ( IV ) Grand Total (I+II+III+IV) Notes : As at As at ` in Crores ` in Crores (a) Aggregate Book Value - Quoted Investments (b) Aggregate Market Value of Quoted Investments (c) Aggregate Book Value - Unquoted Investments Page 48 Page 49

27 National Stock Exchange of India Limited Twentieth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, LOANS AND ADVANCES Long - term Short - term As at As at As at As at Capital advances Secured, considered good Unsecured, considered good (A) Security deposit Secured, considered good Unsecured, considered good (B) Loan and advances to related parties Unsecured, considered good (C) Advances recoverable in cash or kind Secured, considered good Unsecured, considered good (D) Other loans and advances (unsecured, considered good) Income Tax paid including TDS (Net of Provisions) Prepaid expenses Loans to employees Fringe Benefit Tax (Net of Provisions) Securities Transaction Tax paid (E) Total (A+B+C+D+E) (` in crore) (` in crore) Loans and advances to related parties pertains to : National Securities Clearing Corporation Limited National Commodity Clearing Limited NSE Infotech Services Limited India Index Services & Products Limited Total Loans to employees includes Due from executive directors OTHER ASSETS Non-current Current As at As at As at As at Unsecured, considered good unless stated otherwise Non-current bank balances (note no.15) Others Interest accrued on Investments Interest accrued on certificate of deposits Interest accrued on Bank deposits Total NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, CURRENT INVESTMENTS Maturity Number of Face Value Face As at Number of As at Date Units per Unit Value Units I. CURRENT PORTION OF LONG TERM INVESTMENTS (VALUED AT COST UNLESS STATED OTHERWISE) A) BONDS QUOTED TAXABLE BONDS 7.10 % POWER FINANCE CORPORATION 15-Jul ,000,000 20,000, % POWER FINANCE CORPORATION 24-Dec ,000,000 50,000, SUB-TOTAL (I) UNQUOTED TAXABLE BONDS 5.25% RURAL ELECTRIFICATION CORPORATION LTD. 31-Jul-11 10,000 70,850,000-7, % RURAL ELECTRIFICATION CORPORATION LTD. 31-Mar-12 10,000 5,000, SUB-TOTAL (II) B) MUTUAL FUNDS QUOTED FIXED MATURITY PLANS DSP BLACKROCK FMP - 12 MONTHS - SERIES 20 - GROWTH 31-May-12 6,001, ,011, DWS FTF - SERIES 80 - GROWTH 02-May-12 5,000, ,000, DWS FTF - SERIES 83 - GROWTH 11-Jun-12 5,000, ,000, HDFC FMP - 370D - JUN 2011 (18) GROWTH 26-Jun-12 5,000, ,000, HDFC FMP - 370D - MAY 2011 (18) GROWTH 29-May-12 5,000, ,000, KOTAK FMP - SERIES 45 (370 DAYS) - GROWTH 09-May-12 5,000, ,000, KOTAK FMP - SERIES 46 (370 DAYS) - GROWTH 28-May-12 5,000, ,000, KOTAK FMP - SERIES 52 (370 DAYS) - GROWTH 09-Jul-12 5,000, ,000, ICICI PRUDENTIAL FMP - S 55-1 YEARS - PLAN G - GROWTH 21-May-12 5,000, ,000, ICICI PRUDENTIAL FMP - S 56-1 YEARS - PLAN E - GROWTH 30-Apr-12 5,000, ,000, ICICI PRUDENTIAL FMP - S 54-1 YEARS - PLAN D - GROWTH 25-Apr-12 5,000, ,000, UTI FTIF - SERIES IX - PLAN 2 - GROWTH 16-Apr-12 5,000, ,000, UTI FTIF - SERIES IX - PLAN 4 - GROWTH 21-May-12 5,000, ,000, SBI MAGNUM DFS DAYS GROWTH 29-May-12 5,000, ,000, BIRLA SUN LIFE FTP - SERIES CY - GROWTH 28-Apr-12 5,000, ,000, BIRLA SUN LIFE FTP - SERIES DD - GROWTH 07-Jun-12 5,000, ,000, TATA FMP - SERIES 34 - PLAN B - GROWTH 21-May-12 5,009, ,091, RELIANCE FHF 19 - SERIES 4 - GROWTH 09-May-12 5,000, ,000, RELIGARE FMP - SERIES VII - PLAN A - GROWTH 16-Apr-12 5,000, ,000, RELIGARE FMP - SERIES VII - PLAN C - GROWTH 15-May-12 5,000, ,000, AXIS FIXED TERM PLAN - SERIES 13 (370 DAYS) - GROWTH PLAN 26-Mar-12 5,000, ,000,000-5,000, Page 50 Page 51

28 National Stock Exchange of India Limited Twentieth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, CURRENT INVESTMENTS(Contd.) Maturity Number of Face Value Face As at Number of As at Date Units per Unit Value Units BIRLA SUN LIFE FIXED TERM PLAN - SERIES CF - GROWTH 11-Oct-11 5,000, ,006,820-5,000, BIRLA SUN LIFE FIXED TERM PLAN - SERIES CG - GROWTH 31-Oct-11 5,000, ,000,000-5,000, BIRLA SUN LIFE FIXED TERM PLAN SERIES CI - GROWTH 28-Nov-11 5,000, ,000,000-5,000, BIRLA SUN LIFE FIXED TERM PLAN SERIES CR GROWTH 01-Mar-12 5,000, ,000,000-5,000, BNP PARIBAS FIXED TERM FUND SER 21G - GROWTH 26-Mar-12 5,000, ,000,000-5,000, CANARA ROBECO - FMP - SERIES 5-13 MONTHS (PLAN A) - GROWTH 12-Apr-11 5,000, ,000,000-5,000, DSP BLACKROCK FMP - 12 M SERIES 6 - GROWTH 22-Aug-11 5,000, ,000,000-5,000, DSP BLACKROCK FMP - 12 M SERIES 7 - GROWTH 19-Sep-11 5,000, ,000,000-5,000, DSP BLACKROCK FMP - 12 M SERIES 9 - GROWTH 21-Nov-11 5,000, ,000,000-5,000, DSP BLACKROCK FMP 13M SERIES 2 - GROWTH 05-Apr-11 5,000, ,000,000-5,000, DWS FIXED TERM FUND - SERIES 71- GROWTH PLAN 14-Jun-11 5,000, ,006,008-5,000, DWS FIXED TERM FUND - SERIES 75 - GROWTH PLAN 28-Sep-11 5,000, ,006,321-5,000, DWS FIXED TERM FUND - SERIES 76 - GROWTH PLAN 01-Nov-11 5,000, ,000,000-5,000, DWS FIXED TERM FUND SERIES 67- GROWTH PLAN 24-Apr-11 5,000, ,004,129-5,000, DWS FIXED TERM FUND- SERIES 72- GROWTH PLAN 28-Jun-11 5,000, ,000,000-5,000, HDFC FMP 370D MARCH 2011 (2) - GROWTH - SERIES XVI 13-Mar-12 5,000, ,000,000-5,000, HDFC FMP 370D SEPTEMBER 2010 (1) - GROWTH - XV 19-Sep-11 5,000, ,000,000-5,000, ICICI PRUDENTIAL FIXED MATURITY PLAN - SERIES 53-1 YEAR PLAN B CUMULATIVE 21-Nov-11 5,000, ,007,300-5,000, ICICI PRUDENTIAL FMP SERIES 56-1 YEAR PLAN B CUMULATIVE 26-Mar-12 5,000, ,000,000-5,000, IDBI FMP DAYS SERIES - I(MARCH 2011) - C - GROWTH 08-Mar-12 5,000, ,008,435-5,000, IDBI FMP DAYS SERIES-I(MARCH 2011) - D - GROWTH 26-Mar-12 3,000, ,005,445-3,000, IDFC FIXED MATURITY - YEARLY SERIES 32 - GROWTH 19-Aug-11 5,000, ,000,000-5,000, IDFC FIXED MATURITY - YEARLY SERIES 33 - GROWTH 20-Sep-11 5,000, ,000,000-5,000, IDFC FIXED MATURITY YEARLY SERIES 38 GROWTH 25-Feb-12 5,000, ,000,000-5,000, IDFC FMP - YEARLY SERIES 42-GROWTH 25-Mar-12 5,000, ,000,000-5,000, JM FIXED MATURITY FUND SERIES XIX PLAN C - GROWTH PLAN 29-Mar-12 5,000, ,000,000-5,000, JP MORGAN INDIA FIXED MATURITY PLAN 367 D SERIES 1 - GROWTH PLAN 28-Mar-12 3,000, ,004,918-3,000, KOTAK FMP 15M SERIES 7 - GROWTH 23-Feb-12 5,000, ,000,000-5,000, KOTAK FMP 370 DAYS SERIES 10 - GROWTH 03-Nov-11 5,000, ,000,000-5,000, KOTAK FMP 370 DAYS SERIES 9 - GROWTH 25-Oct-11 5,000, ,000,000-5,000, KOTAK FMP SERIES 39 - GROWTH 13-Mar-12 5,000, ,000,000-5,000, NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, CURRENT INVESTMENTS(Contd.) Maturity Number of Face Value Face As at Number of As at Date Units per Unit Value Units RELIANCE FIXED HORIZON FUND - XIX - SERIES 9-GROWTH PLAN 22-Mar-12 2,000, ,000,000-2,000, RELIGARE FIXED MATURITY PLAN - SERIES III - PLAN D (370 DAYS) - GROWTH 05-Sep-11 5,000, ,000,000-5,000, RELIGARE FIXED MATURITY PLAN SERIES III - PLAN A (12 MONTHS) - GROWTH 20-Jun-11 5,000, ,000,000-5,000, RELIGARE FIXED MATURITY PLAN SERIES VI - PLAN D (370 DAYS) - GROWTH PLAN 26-Mar-12 2,200, ,000,000-2,200, RELIGARE FIXED MATURITY PLAN-SERIES - II PLAN A - GROWTH 11-Apr-11 5,000, ,003,770-5,000, SBI DEBT FUND SERIES - 15 MONTHS GROWTH 08-Jun-11 5,000, ,003,433-5,000, SBI DEBT FUND SERIES DAYS GROWTH 30-Aug-11 5,000, ,005,580-5,000, SUNDARAM FIXED TERM PLAN AN 367 DAYS GROWTH 12-Sep-11 5,000, ,000,000-5,000, SUNDARAM FIXED TERM PLAN AO 367 DAYS GROWTH 30-Sep-11 5,000, ,000,000-5,000, SUNDARAM FIXED TERM PLAN AP 367 DAYS GROWTH 04-Nov-11 5,000, ,000,000-5,000, TATA FIXED MATURITY PLAN SERIES 26 SCHEME C - GROWTH 05-Sep-11 5,000, ,000,000-5,000, TATA FIXED MATURITY PLAN SERIES 26 SHEME A - GROWTH 25-Apr-11 6,725, ,250,020-6,725, TATA FIXED MATURITY PLAN SERIES 27 SCHEME A - GROWTH 07-Sep-11 5,000, ,005,790-5,000, TATA FIXED MATURITY PLAN SERIES 29 SCHEME A - GROWTH 07-Nov-11 5,000, ,000,000-5,000, TATA FIXED MATURITY PLAN SERIES 31 SCHEME B - GROWTH 12-Mar-12 5,000, ,000,000-5,000, UTI FIXED MATURITY PLAN-YEARLY FMP SERIES:YFMP (08/10)-INSTITUTIONAL GROWTH PLAN 23-Sep-11 5,000, ,005,770-5,000, Sub-Total (iii) UNQUOTED FIXED MATURITY PLANS SUNDARAM FTP 367 DAYS SERIES U - GROWTH 01-Apr-11 50,004,200-5,000, Sub-Total (iv) TOTAL (I) Page 52 Page 53

29 National Stock Exchange of India Limited Twentieth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, CURRENT INVESTMENTS(Contd.) Maturity Number of Face Value Face As at Number of As at Date Units per Unit Value Units II. CURRENT INVESTMENTS (VALUED AT LOWER OF COST OR FAIR VALUE) DEBENTURES A) QUOTED 9.15% TATA POWER COMPANY LIMITED 23-Jul ,500, ,000, % CAIRN INDIA LIMITED 12-Oct ,000, ,000, % SUNDARAM FINANCE LIMITED 19-Nov ,000, ,000, % CAIRN INDIA LIMITED 12-Jul ,000, ,000, % INDIAN OIL CORPORATION LIMITED 24-Jul ,000, ,000, Sub-Total (i) UNQUOTED 7.45% TATA SONS LIMITED 15-Apr ,000, ,000, % AXIS BANK LIMITED 25-Jul ,000, ,000, Sub-Total (ii) B) MUTUAL FUNDS QUOTED FIXED MATURITY PLANS BIRLA SUN LIFE FTP - SERIES DB - GROWTH 22/May/12 5,000, ,000, Sub-Total (iii) UNQUOTED ICICI PRUDENTIAL INTERVAL FUND ANNUAL INTERVAL PLAN - I INSTITUTIONAL CUMULATIVE 21-Aug-11 50,005,772-4,997, ICICI PRUDENTIAL INTERVAL FUND ANNUAL INTERVAL PLAN -II INSTITUTIONAL CUMULATIVE 05-Oct-11 50,006,870-3,913, ICICI PRUDENTIAL INTERVAL FUND - ANNUAL INTERVAL PLAN III - INSTITUTIONAL CUMULATIVE 18-Oct-11 50,007,009-4,999, ICICI PRUDENTIAL INTERVAL FUND HALF YEARLY INTERVAL PLAN - I INSTITUTIONAL DIV 12-Apr-11 51,375,593-5,136, KOTAK FMP 6M SERIES 10 - DIVIDEND 02-May-11 50,000,000-5,000, Sub-Total (iv) UNQUOTED LIQUID DIVIDEND PLANS KOTAK FLOATER - SHORT TERM - DAILY DIVIDEND - 11,865, RELIANCE LIQUID FUND-TREASURY PLAN-INSTITUTIONAL OPTION-DAILY DIVIDEND - 1,963, Sub-Total (v) NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, CURRENT INVESTMENTS (Contd.) Maturity Number of Face Value Face As at Number of As at Date Units per Unit Value Units C) DEPOSITS HDFC LTD 11-May ,000, ,000, HDFC LTD 09-Nov ,000, ,000, Sub-Total (vi) D) COMMERCIAL PAPER ADITYA BIRLA FINANCE LIMITED 06-Jan , ,000, ADITYA BIRLA FINANCE LIMITED 10-Aug , ,000, BLUE STAR LIMITED 07-Apr , ,000, HDFC LIMITED 15-Jul , ,000, L&T FINANCE COMPANY LIMITED 27-May , ,000, L&T INFRASTRUCTURE FINANCE COMPANY LIMITED 29-Jul ,000 50,000, L&T INFRASTRUCTURE FINANCE COMPANY LIMITED 05-Aug , ,000, TATA MOTORS FINANCE LIMITED 12-Oct , ,000, TATA MOTORS LIMITED 04-Apr , ,000, APOLLO TYRES LIMITED 23-May , ,000, BAJAJ ELECTRICALS LIMITED 20-Apr , ,000, BALLARPUR INDUSTRIES LIMITED 16-Apr , ,000, BLUE STAR LIMITED 13-Jul ,000 60,000, BLUE STAR LIMITED 27-Sep ,000 50,000, INDIAN OIL CORPORATION LIMITED 24-Sep , ,000, ADITYA BIRLA FINANCE LIMITED 14-May , ,000, ADITYA BIRLA FINANCE LIMITED 11-Sep , ,000, ADITYA BIRLA FINANCE LIMITED 14-Sep , ,000, ADITYA BIRLA FINANCE LIMITED 07-Nov , ,000, BAJAJ FINANCE LIMITED 06-Jul , ,000, BAJAJ FINANCE LIMITED 02-Aug , ,000, BAJAJ FINANCE LIMITED 01-Nov , ,000, GODREJ INDUSTRIES LIMITED 25-Apr , ,000, HCL INFOSYSTEMS LIMITED 04-May , ,000, HCL INFOSYSTEMS LIMITED 14-May , ,000, HCL INFOSYSTEMS LIMITED 31-May ,000 50,000, HDFC LIMITED 07-Jun , ,000, Page 54 Page 55

30 National Stock Exchange of India Limited Twentieth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, CURRENT INVESTMENTS (Contd.) Maturity Number of Face Value Face As at Number of As at Date Units per Unit Value Units IL&FS Financial Services Limited 22-May , ,000, IL&FS Financial Services Limited 15-Oct , ,000, IL&FS Financial Services Limited 16-Nov , ,000, IL&FS Financial Services Limited 21-Dec , ,000, Infrastructure Development Finance Company Limited 24-Aug , ,000, North Delhi Power Limited 12-Jun , ,000, Ranbaxy Laboratories Limited 22-Oct , ,000, Sundaram Finance Limited 12-Oct , ,000, Tata Capital Limited 17-May , ,000, Tata Capital Limited 16-Jul , ,000, Tata Motors Finance Limited 25-May , ,000, Tata Motors Limited 03-Dec , ,000, Sub-Total (vii) Total (ii) Grand Total (i + ii) Notes : As at As at ` in Crores ` in Crores (a) Aggregate Book Value - Quoted Investments (b) Aggregate Market Value of Quoted Investments (c) Aggregate Book Value - Unquoted Investments (d) Provision for diminution in value of Current quoted debenture (0.15) TRADE RECEIVABLES Non-current Current As at As at As at As at Unsecured, considered good unless stated otherwise Outstanding for a period of over six months from the date they are due from payment Secured, considered good Unsecured, considered good Other debts Secured, considered good Unsecured, considered good Total CASH AND BANK BALANCES Non-current Current As at As at As at As at Cash and cash equivalents Balances with banks : On current accounts Certificate of Deposits with original maturity of less than three months Cash on hand Other bank balances Bank Deposits with original maturity for more than 12 months , , Earmarked Deposits with original maturity for more than 12 months Bank Deposits with original maturity for more than 3 months but less than 12 months Certificate of Deposits with original maturity for more than 3 months but less than 12 months Earmarked Deposits with original maturity for more than 3 months but less than 12 months , , Amount disclosed under non-current assets (note 12) Total - - 2, , Page 56 Page 57

31 National Stock Exchange of India Limited Twentieth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, REVENUE FROM OPERATIONS Page 58 For the year ended For the year ended Operating revenues Transaction charges Annual subscription Book building Fees Listing fees Other operating revenues NCFM Registration & Test enrolment fees Processing Fees - Listing Strategic Co-operation fees Data Centre charges Operational expenses recovery Interest on Bank Deposits Others Total 1, , OTHER INCOME For the year ended For the year ended Interest Income On Investment Current Long Term On Bank Deposits On Certificate of Deposits On Inter Corporate Deposits On Income Tax Refund On Others Dividend income Long Term : from Subsidiary Companies from Others Current Net gain / loss on sale of long term Investment Net gain / loss on sale of current Investment Rent Income Usage charges Amortisation of Premium / Discount on Govt/Debt Securities Profit on exchange fluctuation Miscellaneous Income Total EMPLOYEE BENEFITS EXPENSES 19 OTHER EXPENSES For the year ended For the year ended Salaries, wages and bonus Contribution to provident and other fund (note 21) Staff welfare expenses Less : Transferred to Staff Welfare Reserve Total For the year ended For the year ended Rent Transponder lease charges License fee for operating VSAT network License fees for Index Lease line charges Repairs & maintenance - To buildings To computers, trading & telecommunication systems To others Network Infrastructure Management charges IT management and consultancy charges Web Trading related expenses Insurance Rates & taxes Postage, telephone and fax charges Advertisement & publicity Printing & stationary and consumables Legal & Professional fees Travelling & Conveyance expenses Payment to auditor (Refer note below) Electricity charges Directors' sitting fees Software expenses Contribution to Investor protection fund trust Investor education expenses Compensation paid to Investors Less : Transferred to Investor Compensation Reserve SEBI Regulatory Fees Donations Bad debts/sundry balance written off Loss on sale /discard of assets (Net) Amortisation of Premium / Discount on Govt/Debt Securities Loss on exchange fluctuation Adjustments to the carrying amount of current investments Liquidity enhancement incentive Other Expenses Total Page 59

32 National Stock Exchange of India Limited Twentieth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, OTHER EXPENSES (Contd.) 20 In accordance with Accounting Standard 20 - Earning per Share notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956 Earning per share Page 60 Year ended Year ended Net Profit attributable to Shareholders (` In Crores) Weighted Average number of equity shares issued (No. in Crores) Basic earnings per share of ` 10/- each (in `) The Company does not have any outstanding dilutive potential equity shares. Consequently, the basic and diluted earning per share of the Company remain the same. 21 DISCLOSURE UNDER REVISED ACCOUNTING STANDARD 15 ON EMPLOYEE BENEFITS: For the year For the year ended ended Note : Payment to auditor As auditor : Audit fees Tax audit fee Limited review In other capacity Taxation matters Certification matters Other services Total i) Defined Contribution Plan: Company s contribution towards superannuation amounting to `1.37 Crore (Previous Year : ` 1.16 Crore) has been charged to Profit & Loss account. ii) Defined Benefit Plan : (a) Provident Fund: The Company has contributed ` 1.84 Crores and ` 1.65 Crores towards Provident Fund during the year ended March 31, 2012 and March 31, 2011, respectively. As per Implementation Guidance on AS 15 (Revised 2005) Employee Benefits issued by the Accounting Standard Board (ASB), benefit involving employer established provident funds which require interest short fall to be recompensed are to be considered as defined benefit plans. The Actuarial Society of India has issued the final guidance for measurement of provident fund liabilities. The actuary has accordingly provided an actuarial valuation and arrived at the interest shortfall liability of ` 0.04 Crores and after considering the reserves available with the company s Provident Fund Trust, no provision towards the same has been considered necessary. Assumptions used in determining the present value obligation of the interest rate guarantee are as follows: a. Approach used Deterministic b. Increase in compensation levels 5% p.a. c. Discount Rate 8.15% (b) Gratuity: Company has charged the Gratuity expense to Profit & Loss account based on the actuarial valuation of gratuity liability at the end of the year. The projected unit credit method used to show the position as at March 31, 2012 is as under. 21 DISCLOSURE UNDER REVISED ACCOUNTING STANDARD 15 ON EMPLOYEE BENEFITS (Contd.) (I) Assumptions: Current Year Previous Year Discount Rate 8.50% 8.25% Rate of Return on Plan Assets 8.00% 8.00% Salary Escalation 5.00% 5.00% Attrition Rate 2.00% 2.00% (II) Table showing change in benefit obligation Current Year Previous Year Liability at the beginning of the year Interest cost Current Service Cost Benefits Paid (0.09) (0.40) Actuarial (gains) / loss on obligations Liability at the end of the year (III) Table of Fair value of plan assets Current Year Previous Year Fair Value of plan assets at the beginning of the year Expected return on plan assets Contributions Benefits paid (0.09) (0.40) Actuarial gain / (loss) on Plan Assets Fair Value of plan assets at the end of the year Total Actuarial Gain/(Loss) to be recognised (IV) Actual Return on Plan Assets (V) Amount recognised in the balance sheet (VI) Expenses recognised in the profit & loss account Current Year Current Year Current Year Previous Year Expected return on plan assets Actuarial gain/(loss) on plan assets Actual Return on plan assets Previous Year Liability as at the end of the year Fair value of plan assets as at the end of the year Net liability / (asset) disclosed in the Balance Sheet Previous Year Current Service cost Interest Cost Expected return on plan assets (0.57) (0.40) Actuarial (Gain) or Loss Expenses recognised in the profit & loss account Page 61

33 National Stock Exchange of India Limited Twentieth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, DISCLOSURE UNDER REVISED ACCOUNTING STANDARD 15 ON EMPLOYEE BENEFITS (Contd.) (VII)Balance Sheet Reconciliation Current Year Previous Year Opening Net Liability Expense as above Employers Contribution (1.91) (0.92) Amount recognised in the Balance Sheet (VIII) Category of Assets Current Year Previous Year Insurer Managed Funds Total (IX) Experience Adjustment Current Year Previous Year On Plan Liability (Gain) / Loss On Plan asset (Loss) / Gain In accordance with Accounting Standard 19 - Leases notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956, the details of obligation on long term non - cancellable operating lease in respect of certain vehicles and office premises taken by the Company are as follows. Lease obligations Year ended Year ended Total of future minimum lease payments - Lease rentals paid during the year Not later than one year Later than one year and not later than five years Later than five years The terms of the Leases range from 3 years to 10 years. NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, The Company has a Joint Venture interest in India Index Services & Products Ltd.(IISPL) which is a jointly controlled entity and is incorporated in India. The company has a 51% ownership interest in the joint venture. As per Accounting Standard 27 Financial Reporting of Interests in the Joint Ventures, the aggregate amounts related to Company s interest in the joint venture are as follows. Particulars As at As at Assets Reserve & Surplus Liabilities Income Expenses Dividend received Contingent Liability The Company has no capital commitments in relation to its interest in Joint Ventures. 24 In the opinion of the management, as the Company s operations comprise of only facilitating trading in securities and the activities incidental thereto within India, the disclosures required in terms of Accounting Standard 17 - Segment Reporting notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956 are not applicable. However the Company while presenting the consolidated financial statements in the annual report has disclosed the segment information in the consolidated financial statements to the extent applicable as required under Accounting Standard 17 - Segment Reporting. 25 In compliance with Accounting Standard 18 - Related Party Disclosures notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956, the required disclosures are given in the table below: (a) Names of the related parties and related party relationship Sr. Related Party Nature of No. Relationship 1 National Securities Clearing Corporation Limited Subsidiary Company 2 NSE.IT Limited Subsidiary Company 3 DotEx International Limited Subsidiary Company 4 India Index Services & Products Limited Subsidiary Company 5 National Commodity Clearing Limited Subsidiary Company 6 NSE Infotech Services Limited Subsidiary Company 7 NSE.IT (UK) Limited Subsidiary Company 8 NSE.IT (US) Inc. Subsidiary Company 9 Power Exchange India Limited Associate Company 10 National Securities Depository Limited Associate Company 11 Omnesys Technologies Private Limited Subsidiary's Associate 12 INXS Technologies Limited Subsidiary's Associate 13 (1) Dr. Vijay L. Kelkar - Chairman Key Management Personnel (2) Mr. Ravi Narain - Managing Director (3) Ms. Chitra Ramkrishna - Jt. Managing Director Page 62 Page 63

34 National Stock Exchange of India Limited Twentieth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, (Contd.) (b) Details of transactions (including service tax wherever levied) with related parties are as follows : Name of the Related Party Nature of Transaction Year ended Year ended National Securities Clearing Usage charges received Corporation Ltd. Space and Infrastructure usage charges received Reimbursement received for expenses on staff on deputation Reimbursement received for other expenses incurred Dividend received Clearing and Settlement charges paid Closing balance (Credit)/Debit Investment in Equity Share Capital NSE.IT Ltd. Reimbursement received for other expenses incurred Software license procured Software Development Charges paid Repairs and maintenance Computer trading, Telecommunication systems STP charges received Rent received NCFM Test expenses paid CTCL Empanelment charges received IT Mgt. & Consultancy charges paid Installation commissioning & warranty charges for trading system Dividend received Closing balance (Credit)/Debit (4.91) (1.75) Investment in Equity Share Capital DotEx International Ltd. Space and Infrastructure usage charges received Reimbursement received for expenses on staff on deputation Reimbursement for expenses incurred CTCL Empanelment charges received Amount received towards revenue sharing on account of info feed services Web trading related expenses Dividend received Closing balance (Credit)/Debit (14.19) (15.99) Investment in Equity Share Capital India Index Services & Products Ltd. License fees paid Space and Infrastructure usage charges received Reimbursement received for expenses on staff on deputation Reimbursement received for other expenses incurred Dividend received Closing balance (Credit)/Debit 0.50 (0.06) Investment in Equity Share Capital (Note no.23) (Contd.) (b) Details of transactions (including service tax wherever levied) with related parties are as follows : Name of the Related Party Nature of Transaction Year ended Year ended National Commodity Clearing Ltd. Space and Infrastructure usage charges received Reimbursement received for expenses on staff on deputation Reimbursement received for other expenses incurred Closing balance (Credit)/Debit Investment in Equity Share Capital NSE Infotech Services Ltd. IT Mgt. & Consultancy charges paid Repairs and maintenance Computer trading, Telecommunication systems Rent received Reimbursement for expenses incurred Advance paid Closing balance (Credit)/Debit (1.45) (2.19) Investment in Equity Share Capital Power Exchange India Ltd. Space and Infrastructure usage charges received Reimbursement received for expenses on staff on deputation Reimbursement received for other expenses incurred Security Deposit received Investment in equity shares Investment in Preference shares Closing balance (Credit)/Debit 1.93 (0.18) Investment in Preference Share Capital Investment in Equity Share Capital National Securities Depository Limited Reimbursement received for expenses incurred Reimbursement paid for other expenses incurred Dividend received Investment in equity shares - - Closing balance (Credit)/Debit Investment in Equity Share Capital Key Management Personnel Gross remuneration including allowances, non-cash perquisites and contribution to Provident Fund and Superannuation Fund etc Housing Loan Closing Balance Interest received on Housing Loan [` 3,991/- (Prev Year : ` 5991/-)] CAPITAL AND OTHER COMMITMENTS Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for ` Crores (Previous year : ` Crores). Page 64 Page 65

35 National Stock Exchange of India Limited Twentieth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, CONTINGENT LIABILITY (i) (ii) Claims against the company not acknowledged as debts: ` 5.92 Crores (Previous Year : ` 5.80 Crores) During the year the company has received an order passed by the Competition Commission of India, directing the Company to pay a penalty of ` crores. The Company has appealed against the said order before the Competition Appellate Tribunal. The Competition Appellate Tribunal has granted the stay against the recovery of said penalty amount pending disposal of the appeal and hence no provision has been made. (iii) On account of disputed demand of Income Tax: ` Crores (Previous Year: ` Crores), disputed demand of Fringe Benefit Tax: ` 2.21 Crores (Previous Year: ` 2.21 Crores) and disputed demand of Wealth Tax: ` 1.94 Crores (Previous Year: 1.94 Crores). Wealth Tax liability includes ` 1.86 Crores (Previous Year: ` 1.86 Crores) on account of Tax Department appeals pending disposal before the Bombay High Court. On account of disputed demand of Service Tax: ` crores (Previous Year: ` crores) alongwith interest and penalty thereon, for the period from April, 2004 to March, 2009 and disputed demand of service tax of ` crore (previous year NIL) for the year (iv) On account of disputed demand of Securities Transaction Tax : ` Crores (Previous Year : ` Crores). 28 Details of dues to micro and small enterprises as defined under the MSMED Act, 2006 Liability for expenses includes ` 0.10 Crore (Previous Year: ` 0.19 Crore) due to Micro, Small & Medium Enterprises. Total outstanding dues to Micro, Small & Medium Enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company. 29 C.I.F. value of import in respect of Capital goods : 9.51 Crores (Previous year : Crores) NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, In the opinion of the Board, current assets, loans and advances are approximately of the value stated, if realised in the ordinary course of business. 34 During the year ended March 31, 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. As per our report of even date attached For KHANDELWAL JAIN & CO., Chartered Accountants For and on behalf of the Board of Directors NARENDRA JAIN DR. VIJAY L. KELKAR RAVI NARAIN Partner Chairman Managing Director Membership No.:48725 CHITRA RAMKRISHNA Y. H. MALEGAM Jt. Managing Director Director Place : Mumbai Date : May 14, 2012 J. RAVICHANDRAN Director (F&L) & Company Secretary 30 EXPENDITURE IN FOREIGN CURRENCY (ACCRUAL BASIS) Particulars Current Year Previous Year Travelling expenses Professional and technical fees Others NET DIVIDEND REMITTED IN FOREIGN EXCHANGE Year of remittance (ending on) Period to which it relates to to Number of non-resident shareholders to whom dividend remitted in foreign currency 8 5 Number of equity shares held on which dividend was due 6,208,405 5,205,357 Amount remitted INR equivalent USD (` In Crores) EARNINGS IN FOREIGN CURRENCY (ACCRUAL BASIS) Particulars Current Year Previous Year Earnings in foreign exchange: Page 66 Page 67

36 National Stock Exchange of India Limited Twentieth Annual Report FY CASH FLOW STATEMENT For the year ended 31st March, CASH FLOW STATEMENT For the year ended 31st March, A) CASHFLOW FROM OPERATING ACTIVITIES NET PROFIT BEFORE TAX Add : Adjustments for : Depreciation Amortisation of Premium / Discount on Govt/Debt Securities (0.33) 0.33 Adjustments to the carrying amount of current investments 0.15 Bad debts/sundry balances written off Loss on sale /discard of assets (Net) Less : Adjustments for : Sundry Balances written back - (0.11) Staff welfare expenses debited to staff welfare Reserve (0.50) (0.35) Compensation paid to Investors debited to Investor compensation reserve (0.06) (0.14) Interest income on short term investments (28.02) (4.45) Interest income on long term investment (10.19) (9.78) Interest income on Bank deposit (198.87) (32.46) Interest income on Certificate of deposits (9.68) (5.26) - Interest income on Inter Corporate deposits (1.95) (2.40) Interest on Income tax refund - (4.33) - (Profit)/Loss on sale/redemption of long term investments (25.34) (0.86) - (Profit)/Loss on sale/redemption of short term investments (1.21) (54.84) - Dividend on investment Long Term (102.65) (95.54) Short Term (13.88) (55.42) OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES Adjustments for : Sundry Debtors 4.62 (35.00) Loans & Advances 0.42 (11.84) Current Liabilities & Provisions Other Current Assets (24.17) (48.56) CASH GENERATED FROM OPERATIONS Direct Taxes paid (Net of Refunds) (259.36) (208.33) NET CASH FROM (USED IN) OPERATING ACTIVITIES - Total (A) B) CASHFLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets/Capital work-in-progress (68.50) (71.30) Sale of Fixed Assets Interest received Dividend received Intercorporate Deposit Share Application money (Increase)/Decrease in Fixed deposit & Certificate of deposits (230.77) (2,743.86) (Increase)/Decrease in Investment (324.00) 2, NET CASH FROM (USED IN) INVESTING ACTIVITIES - Total (B) (312.95) (399.28) C) CASHFLOW FROM FINANCING ACTIVITIES Proceed of deposit from trading members/applicant Refund of deposit to trading members/applicant (40.60) (28.70) Refund of Equipments deposits (Net) (3.25) (1.77) Dividend paid (94.50) (90.00) NET CASH FROM (USED IN) FINANCING ACTIVITIES - Total (C) (89.63) (18.38) NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) CASH AND CASH EQUIVALENTS : OPENING BALANCE [includes Certificate of deposits with banks of ` crores (Previous Year ` crores)] CLOSING CASH AND CASH EQUIVALENTS : CLOSING BALANCE [includes Certificate of deposits with banks of ` crores (Previous Year ` crores)] NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENT Notes to Cash Flow Statement : 1. Cash and cash equivalent represent cash, bank balances and certificate of deposits with original maturity of less than three months. 2. The above Cash Flow Statement has been prepared under the "Indirect Method" as set out in the Accounting Standard-3 on Cash Flow Statements notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, As per our report of even date attached For KHANDELWAL JAIN & CO., Chartered Accountants For and on behalf of the Board of Directors NARENDRA JAIN DR. VIJAY L. KELKAR RAVI NARAIN Partner Chairman Managing Director Membership No.:48725 CHITRA RAMKRISHNA Y. H. MALEGAM Jt. Managing Director Director Place : Mumbai Date : May 14, 2012 J. RAVICHANDRAN Director (F&L) & Company Secretary Page 68 Page 69

37 National Stock Exchange of India Limited STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956, RELATING TO SUBSIDIARY COMPANY Twentieth Annual Report FY STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956, RELATING TO SUBSIDIARY COMPANY 1. Name of the subsidiary : National Securities Clearing Corporation Limited 2. Financial Year of the subsidiary company ended on : 31st March, Holding Company Interest Number of Shares : 4,50,00,000 Extent of Holding : 100% 4 The Net Aggregate amount of the subsidiary Profits / (losses) so far as it concerns members of the holding company and is not dealt with In Holding Company s account (i) for the financial year of the company : ` 2,40,91,18,375 (ii) for the previous financial years of the subsidiary since it became the holding Company s subsidiary : ` 12,94,73,22,192 5 Net aggregate amount of the Profit/(Losses) of the Subsidiary dealt with in the company s account (i) for the financial year of the subsidiary : ` 2,02,50,00,000 (ii) for the previous financial years of the subsidiary since it became the subsidiary of the holding company : ` 4,33,12,50,000 For and on behalf of the Board of Directors 1. Name of the subsidiary : NSE.IT Limited 2. Financial Year of the subsidiary company ended on : 31st March, Holding Company Interest Number of Shares : 1,00,00,010 Extent of Holding : 100% 4. The Net Aggregate amount of the subsidiary Profits / (losses) so far as it concerns members of the holding company and is not dealt with In Holding Company s account (i) for the financial year of the company : ` 14,30,87,914 (ii) for the previous financial years of the subsidiary since it became the holding Company s subsidiary : ` 41,84,49, Net aggregate amount of the Profit/(Losses) of the Subsidiary dealt with in the company s account (i) for the financial year of the subsidiary : ` 3,70,00,037 (ii) for the previous financial years of the subsidiary since it became the subsidiary of the holding company : ` 12,00,00,120 For and on behalf of the Board of Directors DR. VIJAY L. KELKAR Chairman RAVI NARAIN Managing Director DR. VIJAY L. KELKAR Chairman RAVI NARAIN Managing Director CHITRA RAMKRISHNA Jt. Managing Director Y. H. MALEGAM Director CHITRA RAMKRISHNA Jt. Managing Director Y. H. MALEGAM Director J. RAVICHANDRAN Director (F&L) & Company Secretary J. RAVICHANDRAN Director (F&L) & Company Secretary Place : Mumbai Date : May 14, 2012 Place : Mumbai Date : May 14, 2012 Page 70 Page 71

38 National Stock Exchange of India Limited STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956, RELATING TO SUBSIDIARY COMPANY Twentieth Annual Report FY STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956, RELATING TO SUBSIDIARY COMPANY 1. Name of the subsidiary : DotEx International Limited 2. Financial Year of the subsidiary company ended on : 31st March, Holding Company Interest Number of Shares : 1,20,00,000 Extent of Holding : 100% 4. The Net Aggregate amount of the subsidiary Profits / (losses) so far as it concerns members of the holding company and is not dealt with In Holding Company s account (i) for the financial year of the company : ` 14,56,70,074 (ii) for the previous financial years of the subsidiary since it became the holding Company s subsidiary : ` 47,88,10, Net aggregate amount of the Profit/(Losses) of the Subsidiary dealt with in the company s account (i) for the financial year of the subsidiary : ` 2,40,00,000 (ii) for the previous financial years of the subsidiary since it became the subsidiary of the holding company : ` 5,40,00, Name of the subsidiary : India Index Services & Products Limited 2. Financial Year of the subsidiary company ended on : 31st March, Holding Company Interest Number of Shares : 6,63,000 Extent of Holding : 51% 4 The Net Aggregate amount of the subsidiary Profits / (losses) so far as it concerns members of the holding company and is not dealt with In Holding Company s account (i) for the financial year of the company : ` 7,67,15,435 (ii) for the previous financial years of the subsidiary since it became the holding Company s subsidiary : ` 18,31,33, Net aggregate amount of the Profit/(Losses) of the Subsidiary dealt with in the company s account (i) for the financial year of the subsidiary : ` 79,56,000 (ii) for the previous financial years of the subsidiary since it became the subsidiary of the holding company : ` 1,75,69,500 For and on behalf of the Board of Directors For and on behalf of the Board of Directors DR. VIJAY L. KELKAR Chairman RAVI NARAIN Managing Director DR. VIJAY L. KELKAR Chairman RAVI NARAIN Managing Director CHITRA RAMKRISHNA Jt. Managing Director Y. H. MALEGAM Director CHITRA RAMKRISHNA Jt. Managing Director Y. H. MALEGAM Director J. RAVICHANDRAN Director (F&L) & Company Secretary J. RAVICHANDRAN Director (F&L) & Company Secretary Place : Mumbai Date : May 14, 2012 Place : Mumbai Date : May 14, 2012 Page 72 Page 73

39 National Stock Exchange of India Limited STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956, RELATING TO SUBSIDIARY COMPANY Twentieth Annual Report FY STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956, RELATING TO SUBSIDIARY COMPANY 1. Name of the subsidiary : National Commodity Clearing Limited 2. Financial Year of the subsidiary company ended on : 31st March, Holding Company Interest Number of Shares : 30,87,500 Extent of Holding : 65% 4. The Net Aggregate amount of the subsidiary Profits / (losses) so far as it concerns members of the holding company and is not dealt with In Holding Company s account (i) for the financial year of the company : ` 68,94,155 (ii) for the previous financial years of the subsidiary since it became the holding Company s subsidiary : ` 1,61,92, Net aggregate amount of the Profit/(Losses) of the Subsidiary dealt with in the company s account (i) for the financial year of the subsidiary : Nil (ii) for the previous financial years of the subsidiary since it became the subsidiary of the holding company : Nil 1. Name of the subsidiary : NSE Infotech Services Limited 2. Financial Year of the subsidiary company ended on : 31st March, Holding Company Interest Number of Shares : 50,000 Extent of Holding : 100% 4. The Net Aggregate amount of the subsidiary Profits / (losses) so far as it concerns members of the holding company and is not dealt with In Holding Company s account (i) for the financial year of the company : ` 51,55,638 (ii) for the previous financial years of the subsidiary since it became the holding Company s subsidiary : ` 3,33,40, Net aggregate amount of the Profit/(Losses) of the Subsidiary dealt with in the company s account (i) for the financial year of the subsidiary : Nil (ii) for the previous financial years of the subsidiary since it became the subsidiary of the holding company : Nil For and on behalf of the Board of Directors For and on behalf of the Board of Directors DR. VIJAY L. KELKAR Chairman RAVI NARAIN Managing Director DR. VIJAY L. KELKAR Chairman RAVI NARAIN Managing Director CHITRA RAMKRISHNA Jt. Managing Director Y. H. MALEGAM Director CHITRA RAMKRISHNA Jt. Managing Director Y. H. MALEGAM Director J. RAVICHANDRAN Director (F&L) & Company Secretary Place : Mumbai Date : May 14, 2012 J. RAVICHANDRAN Director (F&L) & Company Secretary Place : Mumbai Date : May 14, 2012 Page 74 Page 75

40 National Stock Exchange of India Limited STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956, RELATING TO SUBSIDIARY COMPANY Twentieth Annual Report FY STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956, RELATING TO SUBSIDIARY COMPANY 1 Name of the subsidiary : NSE.IT (UK) Limited 2 Financial Year of the subsidiary company ended on : 31st March, Holding Company Interest Number of Shares : 1 Equity Share of UK pound 1 face value Extent of Holding : 100% 4 The Net Aggregate amount of the subsidiary Profits / (losses) so far as it concerns members of the holding company and is not dealt with In Holding Company s account (i) for the financial year of the company : ` (1,06,266) (ii) for the previous financial years of the subsidiary since it became the holding Company s subsidiary : ` (4,99,397) 5. Net aggregate amount of the Profit/(Losses) of the Subsidiary dealt with in the company s account (i) for the financial year of the subsidiary : Nil (ii) for the previous financial years of the subsidiary since it became the subsidiary of the holding company : Nil 1. Name of the subsidiary : NSE.IT (US) Inc. 2. Financial Year of the subsidiary company ended on : 31st March, Holding Company Interest Number of Shares : 1 Equity Share of US dollar 1 face value Extent of Holding : 100% 4. The Net Aggregate amount of the subsidiary Profits / (losses) so far as it concerns members of the holding company and is not dealt with In Holding Company s account (i) for the financial year of the company : ` (2,82,39,705) (ii) for the previous financial years of the subsidiary since it became the holding Company s subsidiary : ` (21,87,470) 5. Net aggregate amount of the Profit/(Losses) of the Subsidiary dealt with in the company s account (i) for the financial year of the subsidiary : Nil (ii) for the previous financial years of the subsidiary since it became the subsidiary of the holding company : Nil For and on behalf of the Board of Directors For and on behalf of the Board of Directors DR. VIJAY L. KELKAR Chairman RAVI NARAIN Managing Director DR. VIJAY L. KELKAR Chairman RAVI NARAIN Managing Director CHITRA RAMKRISHNA Jt. Managing Director Y. H. MALEGAM Director CHITRA RAMKRISHNA Jt. Managing Director Y. H. MALEGAM Director J. RAVICHANDRAN Director (F&L) & Company Secretary J. RAVICHANDRAN Director (F&L) & Company Secretary Place : Mumbai Date : May 14, 2012 Place : Mumbai Date : May 14, 2012 Page 76 Page 77

41 National Stock Exchange of India Limited Twentieth Annual Report FY AUDITORS REPORT ON CONSOLIDATED FINANCIAL STATEMENTS To, The Board of Directors of NATIONAL STOCK EXCHANGE OF INDIA LIMITED 1. We have examined the attached Consolidated Balance Sheet of NATIONAL STOCK EXCHANGE OF INDIA LIMITED ( the Company ) and its subsidiaries ( the Group ) as at 31st March, 2012 and the Consolidated Statement of Profit & Loss and the Consolidated Cash Flow Statement for the year ended on that date annexed thereto. The Consolidated Financial Statements include investments in associates accounted on equity method in accordance with Accounting Standard (AS) 23 (Accounting for Investments in Associates in Consolidated Financial Statements) as prescribed by the Central Government under section 211 (3C) of the Companies Act, These Consolidated financial statements are the responsibility of the Company s Management and have been prepared by them on the basis of separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are prepared, in all material respects, in accordance with the identified financial framework and are free of material misstatements. 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 consolidated financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We did not audit financial statements of six subsidiaries, whose individual financial statements reflect total assets of ` 4, crores as at 31st March, 2012, total revenue of ` crores and net cash outflow amounting to ` crores for the year then ended. These financial statements have been audited by other auditors whose reports have been furnished to us and our opinion, in so far as it relates to the amounts included in respect of these entities, is based solely on the reports of those respective auditors. 4. We further report that in respect of two subsidiaries and four associates, we did not carry out the audit. These financial statements have been certified by management and have been furnished to us, and in our opinion, insofar as it relates to the amounts included in respect of the subsidiaries and associates, are based solely on these certified financial statements. Since, the financial statements for the financial year / period ended 31st March, 2012, which were compiled by management of these companies, were not audited, any adjustments to their balances could have consequential effects on the attached consolidated financial statements. However, the size of these subsidiaries and associates, in the consolidated position is not significant in relative terms. The total assets of ` 3.67 crores as at 31st March, 2012, total revenues of ` 3 crores and net cash inflow amounting to ` 1.91 crores for the year / period then ended in respect of these subsidiaries and the net carrying cost of investment of ` crores as at 31st March, 2012 and current year s share of profit (net) of ` crores for the year then ended in respect of these associates, are reflected in the consolidated financial statements. 5. We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of the Accounting Standards (AS) 21 on Consolidated Financial Statements and (AS) 23, Accounting for Investments in Associates in Consolidated Financial Statements as notified under the Companies (Accounting Standard) Rules, 2006 and on the basis of the separate audited financial statements of the components of the Group included in the consolidated financial statements. 6. On the basis of the information and according to the explanations given to us, and on the consideration of the separate audit report on individual financial statements of the components of the Group, we are of the opinion that the attached consolidated financial statements and read together with the notes thereon, give a true and fair view in conformity with the accounting principles generally accepted in India: i) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at 31st March, 2012; ii) in the case of the Consolidated Statement of Profit & Loss, of the consolidated profit of the Group for the year ended on that date; and iii) in case of the Consolidated Cash Flow Statement, of the consolidated cash flows of the Group for the year ended on that date. For KHANDELWAL JAIN & CO., Chartered Accountants, Firm s Registration No W (NARENDRA JAIN) Place : Mumbai Partner Date : 14th May, 2012 Membership No.: Page 78 Page 79

42 National Stock Exchange of India Limited Twentieth Annual Report FY CONSOLIDATED BALANCE SHEET As at March 31, 2012 Page 80 Notes As at Equity and liabilities 1. Shareholder's funds a Share Capital b Reserves and surplus 3 4, , Minority Interest Non-current liabilities a Deposits (Unsecured) 4 1, b Deferred tax liabilities c Other long-term liabilities d Long-term provisions , Current liabilities a Deposits (Unsecured) b Trade payables c Other current liabilities 8 3, d Short-term provisions , Total 9, Assets 1 Non-current assets a Fixed assets 9 Tangible assets Intangible assets Capital work-in-progress 7.42 Intangible assets under development b Non-current investments c Deferred tax Assets d Long-term loans and advances e Other non-current assets 13 1, , Current assets a Current investments b Inventories c Short-term loans and advances d Trade receivable e Cash and bank balances 17 6, f Other Current assets , Total 9, Summary of significant accounting policies 1 The accompanying notes are an integral part of the financial statements. As per our report of even date attached For and on behalf of the Board of Directors For KHANDELWAL JAIN & CO., Chartered Accountants NARENDRA JAIN DR. VIJAY L. KELKAR RAVI NARAIN Partner Chairman Managing Director Membership No.:48725 CHITRA RAMKRISHNA Y. H. MALEGAM Jt. Managing Director Director Place : Mumbai Date : May 14, 2012 J. RAVICHANDRAN Director (F&L) & Company Secretary STATEMENT OF CONSOLIDATED PROFIT & LOSS For the year ended March 31, 2012 Income Notes For the year ended Revenue from operations 18 1, Other income Total Revenue (I) 1, Expenses Purchases of Stock-in-Trade Changes in inventories of Stock-in-Trade 15 (0.01) Employee benefits expenses Other expenses Depreciation and amortisation expenses Total Expenses (II) Profit before prior-period adjustments 1, Add/(Less) : Prior-period adjustments (0.58) Profit before tax 1, Less : Provision for tax Current tax Wealth tax 0.20 Deferred tax (5.35) Total tax expenses Profit after taxation before Minority Interest Less: Minority Interest (7.74) Add / (Less) : Share of profit / (Loss) of associate Profit after taxation Basic Diluted Summary of significant accounting policies 1 The accompanying notes are an integral part of the financial statements. As per our report of even date attached For KHANDELWAL JAIN & CO., Chartered Accountants For and on behalf of the Board of Directors NARENDRA JAIN DR. VIJAY L. KELKAR RAVI NARAIN Partner Chairman Managing Director Membership No.:48725 CHITRA RAMKRISHNA Y. H. MALEGAM Jt. Managing Director Director Place : Mumbai Date : May 14, 2012 J. RAVICHANDRAN Director (F&L) & Company Secretary Page 81

43 National Stock Exchange of India Limited Twentieth Annual Report FY Statutory Audit for the year ended 31 March, 2012 Notes to Consolidated Financial Statements for the year ended 31 March, 2012 Notes to Consolidated Financial Statements for the year ended 31 March, Summary of significant accounting policies to the consolidated financial statement (CFS) The consolidated financial statements relates to National Stock Exchange of India Limited ( the company or the parent company ), its subsidiary companies, associate and its Joint Venture collectively referred to as the Group. a) Basis of Accounting The consolidated financial statements of the Company, its subsidiaries and associate are prepared under the historical cost convention and in accordance with the requirements of the Companies Act, 1956, Accounting Standard 21 Consolidated Financial Statements, Accounting Standard 23 Accounting for Investments in Associates in Consolidated Financial Statements and Accounting Standard (AS) 27 Financial Reporting of Interests in Joint Ventures as notified by Companies (Accounting Standards) Rules 2006 (as amended) and the related provisions of the Companies Act, 1956 b) Use of estimates The preparation of financial statements in conformity with India GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainly about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. c) Principles of Consolidation The Consolidated Financial Statements are prepared on the following basis: i. The financial statements of the parent company, its subsidiaries and jointly controlled entity are consolidated / proportionately consolidated on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and transactions resulting in unrealized profits or losses on intra-group transactions and are presented to the extent possible, in the same manner as the Company s independent financial statements except in respect of accounting policy for depreciation on fixed assets. ii. Interest in jointly controlled entities (incorporated Joint Ventures), if any, is accounted using proportionate consolidation method. iii. The excess of the cost to the company of its investment in subsidiary / jointly controlled entity over the company s portion of equity of the subsidiary / jointly controlled entity as at the date on which investment in subsidiary / jointly controlled entity is made, is recognized in the financial statement as Goodwill. The excess of Company s share of equity and reserve of the subsidiary / joint venture Company over the cost of acquisition is treated as Capital Reserve. iv. Investment in associate companies have been accounted for, by using equity method whereby investment is initially recorded at cost and the carrying amount is adjusted thereafter for post acquisition change in company s share of net assets of the associate. The carrying amount of investment in associate companies is reduced to recognize any decline which is other than temporary in nature and such determination of decline in value, if any, is made for investment individually. v. Minority Interests in the CFS is identified and recognized after taking into consideration: - The amount of equity attributable to minority s at the date on which investments in a subsidiary is made. - The minority s share of movements in equity since the date parent subsidiary relationships came into existence. Page 82 1 Summary of significant accounting policies to the consolidated financial statement (CFS) (Contd.) d) The particulars of subsidiaries and associates which are considered for consolidation and the percentage of voting power therein of the company as on 31st March, 2012 are as under: Name of Company w.e.f. Country of Percentage of Reporting Financial Relationship Incorporation voting power Date Status as at 31st Audited / March 2012 Unaudited National Securities Clearing Corporation Limited 31-Aug-1995 India % 31-Mar-12 Audited Subsidiary NSE. IT Limited 29-Oct-1999 India % 31-Mar-12 Audited Subsidiary NSE. IT (US) Inc. 04-Dec-2006 United States % 31-Mar-12 Unaudited Subsidiary NSE. IT (UK) Limited 09-Nov-2006 United Kingdom % 31-Mar-12 Unaudited Subsidiary DotEx International Limited 02-Jun-2000 India % 31-Mar-12 Audited Subsidiary India Index Services & Products Limited 02-Aug-2006 India 51.00% 31-Mar-12 Audited Subsidiary National Commodity Clearing Limited 04-Aug-2006 India 65.00% 31-Mar-12 Audited Subsidiary NSE Infotech Services Limited 02-Aug-2006 India % 31-Mar-12 Audited Subsidiary Power Exchange India Limited 20-Feb-2008 India 32.50% 31-Mar-12 Unaudited Associate National Securities Depository Limited 15-Feb-2010 India 25.05% 31-Mar-12 Unaudited Associate Omnesys Technologies Private Limited 2-Jul-2008 India 26.00% 31-Mar-12 Unaudited Associate INXS Technologies Limited 30-Nov-2011 India 32.50% 31-Mar-12 Unaudited Associate e) Revenue Recognition (i) Revenue is being recognised as and when there is reasonable certainty of ultimate realisation. (ii) Revenue from sale of software product licenses, sale of digital certificates and resale of hardware & software is recognised on dispatch. (iii) Revenue from e-learning activity is recognised on the basis of enrollment. (iv) Revenues from software development and maintenance on time and material basis and consultancy charges are recognised based on the terms agreed with the customers. (v) Revenue from IT & Process support charges are recognised on accrual basis when services are rendered and there is reasonable certainty of ultimate realization. (vi) Clearing and Settlement charges, IT & support charges are recognized on accrual basis as and when the services are rendered. (vii) Revenue from subscription fees received for dissemination of data (data feed) is recognised on time proportion method. (viii) Penal Charges, in the year of declaration of default, in respect of shortages due from the respective member, are booked to the extent such charges are recoverable. (ix) Interest is recognized on time proportionate basis taking into consideration the amount outstanding and the rate applicable. (x) Dividends on Investments are recognized when a right to receive the same is established (xi) Income excludes applicable taxes and other levies (xii) Provision for Doubtful debts and Bad Debts. (a) In respect of members who have been declared as defaulter or expelled during the year by the company all amounts remaining to be recovered till the date of being declared defaulter or expelled are written off as bad debts. All subsequent recoveries are accounted for in the year of receipt (b) Other overdue amounts are provided for as doubtful debts or are written off as bad debts, if the same are considered doubtful / irrecoverable in the opinion of the management. Page 83

44 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, Summary of significant accounting policies to the consolidated financial statement (CFS) (Contd.) f) Expenditure Expenses are accounted on accrual basis and provisions are made for all known losses and liabilities. Since the company does not visualise any major expenditure on account of warranty given for maintaining the software product licenses sold, no provisions are made on this account. Any expenditure that may have to be incurred towards honouring the warranty shall be accounted for in the year in which it is incurred. g) Fixed Assets Fixed Assets are stated at historical cost less accumulated depreciation. Historical cost is inclusive of freight, duties, taxes, cost of installation, interest upto the date of installation and other incidental expenses incurred towards acquisition and installation of fixed assets. h) Depreciation (i) Depreciation on assets is provided, using the straight line method, pro-rata to the period of use of assets, at the rates specified in Schedule XIV to the Companies Act, 1956 or based on the estimated useful life of the assets, whichever is higher. Where there is a revision of the estimated useful life of an asset, the unamortized depreciable amount is charged over the revised remaining useful life. The details of the estimated useful life of the assets where the depreciation is provided at the rate higher than the specified in Schedule XIV of the Companies Act, 1956 are as follows: Assets Computer Systems Office Automation Computer Systems Others Telecommunication Systems Trading & Clearing Systems Electrical Equipments & Installations Furniture & Fixtures Office Equipments Vehicles Estimated Useful Lives 3 years 4 years 4 years 4 years years 5-16 years 4-21 years 3-5 years Fixed assets whose aggregate cost is ` 5,000 or less are depreciated fully in the year of acquisition. (ii) Leasehold land is amortised over the period of lease. (iii) Computer Software is amortized over a period of 4 years In case of Subsidiaries NSE. IT Limited & DotEx International Limited, expenditure incurred during the year for acquiring software copyright, source code and other deliverables along with the in-house development cost is capitalised and 33 1/3 % on Straight Line Method, which is higher than the rates prescribed in the aforesaid schedule and Software products/ licenses purchased/ acquired for internal use of the Company which have expected longer life are capitalised and 33 1/3 % on Straight Line Method, which is higher than the rates prescribed in the aforesaid schedule. Depreciation on fixed assets other than above is provided using straight line method at the rates specified in schedule XIV to Companies Act, (iv) In case of Subsidiary National Commodity Clearing Limited Depreciation on Office Equipment is provided using Straight Line Method at the rates specified in Schedule XIV of the Companies Act, 1956 and in case of DotEx International Limited Depreciation on Office Equipment is 25% based on estimated useful life of assets at the following rates which are higher than those prescribed in Schedule XIV (Inserted by the Companies (Amendment) Act, 1988 and Notification GSR No. 756E dated 16th December, 1993) to the Companies Act, i) Computer software (i) Cost of development and production software is capitalised, (ii) Cost towards software development incurred till the time software is put to use is capitalised, and (iii) Standard packaged software products are written off in the year of purchase in case of Parent Company. Notes to Consolidated Financial Statements for the year ended 31 March, Summary of significant accounting policies to the consolidated financial statement (CFS) (Contd.) j) Investments (i) Long term investments are considered as held till maturity and are valued at cost. Provision is made for diminution in the value of investment, if any, other than temporary in nature. (ii) Short term investments are valued at cost or fair value whichever is lower. (iii) Premium paid/discount received at the time of acquisition of Government / Debt securities is amortised over the residual period of its maturity. (iv) The cost of investment includes acquisition charges such as brokerage, etc. Front-end discount / incentive earned in respect of direct subscription is adjusted towards the cost of investment. Income on investments is accounted for on accrual basis. k) Foreign currency transactions (i) Transactions denominated in foreign currency are recorded at the exchange rate prevailing at the time of the transaction. (ii) Monetary items denominated in foreign currency at the year end are translated at the year end rate except for those covered by forward cover contracts which are translated at contracted rates. (iii) Any income or expense on account of exchange difference between the date of transaction and settlement or translation is recognised in the profit and loss account as income or expense. The premium or discount on forward exchange contract are amortised and recognized in the profit and loss account over the period of contract. l) Foreign Exchange Contract Forward exchange contracts entered into to hedge foreign currency risk of an existing asset/liability. The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expense/income over the life of the contract. Exchange differences on such contracts, are recognized in the statement of profit and loss in the period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or as expense for the period. m) Inventory The Inventory is valued at cost or net realizable value whichever is lower. n) Employee Benefits (i) Provident Fund: The Company has established National Stock Exchange of India Limited Employee Provident Fund Trust to which both the employee and the employer make monthly contribution equal to 12% of the employee s basic salary respectively. Company's contribution to the provident fund for all employees, are charged to revenue. In case of any liability arising due to short fall between the return from its investments and the administered interest rate, the same is required to be provided for by the Company. (ii) Superannuation: Superannuation benefits for employees designated as chief managers and above are covered by group policies with the Life Insurance Corporation of India. Company s contribution payable for the year is charged to revenue. There are no other obligations other than the annual contribution payable. (iii) Gratuity: The Company has maintained a Group Gratuity Cum Life Assurance Scheme with the Life Insurance Corporation of India (LIC) towards which it annually contributes a sum determined by LIC. The Company provides for the defined benefit with respect to gratuity liability based on the present value of defined benefit obligation as reduced by the fair value of plan assets as per the actuarial valuation calculation. (iv) Other Long term benefits: Liability on account of other long term benefits such as Leave encashment, medical reimbursement and Leave Travel Allowance is made on the basis of actuarial valuation at the end of the year. (v) Short term employee benefits are charged to revenue in the year in which the related service is rendered. o) Taxation Tax expense for the year, comprising current tax and deferred tax is included in determining the net profit for the year. Page 84 Page 85

45 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, 2012 Notes to Consolidated Financial Statements for the year ended 31 March, Summary of significant accounting policies to the consolidated financial statement (CFS) (Contd.) A provision is made for the current tax based on tax liability computed in accordance with relevant tax rates and tax laws. A provision is made for deferred tax for all timing differences arising between taxable income and accounting income at currently enacted tax rates. Deferred tax assets are recognised only if there is a reasonable certainty that they will be realised and are reviewed for the appropriateness of their respective carrying values at each balance sheet date. p) Provisions, contingent liabilities & contingent assets :- Provisions involving substantial degree of estimations in measurement are recognized when there is present obligation as result of past events and it is probable that there will be outflow of economic resources. Contingent liabilities are not recognised but are disclosed while, contingent assets neither are recognized nor disclosed in financial statements. q) Earning Per Share:- Basic and diluted earning per share is computed by dividing the net profit attributable to equity shareholders for the year, by weighted average number of equity shares outstanding during the year. 2 Share Capital There is no movement either in the number of shares or in amount between previous year and current year. As at Authorised 5,00,00,000 (Previous Year 5,00,00,000 ) Equity Shares of ` 10 each Issued, Subscribed and Paid-up 4,50,00,000 (Previous year 4,50,00,000) Equity shares of ` 10 each fully paid up Total Reserve and surplus As at Share premium As per last balance sheet Special Contingency Reserve As per last balance sheet Less : Transferred to General Reserve account Investor compensation reserve As per last balance sheet Less : Expenses Transferred from Profit & Loss account 0.06 Add : Transferred from surplus balance in the statement of profit & loss account Capital Redemption Reserve As per last balance sheet Staff welfare reserve As per last balance sheet 1.00 Less : Expenses incurred Transferred from profit & loss account 0.50 Add : Transferred from surplus balance in the statement of profit & loss account Capital Reserve (on consolidation) Currency Translation Reserve 0.10 The company has only one class of equity shares having a par value of ` 10/- per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board of directors, in their meeting on May 14, 2012, proposed a dividend of ` 40 per equity share. The proposal is subject to the approval of shareholders at the Annual General Meeting. The total dividend appropriation for the year ended March 31, 2012 amounted to ` 180 crores excluding Dividend Distribution Tax. General reserve As per last balance sheet 3, Add : Transferred from surplus balance in the statement of profit & loss account Add : Transferred from Special Contingency Reserve , In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distributional of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. Details of shareholders holding more than 5% share in the company As at No. % holding Life Insurance Corporation of India 4,728, % State Bank of India 4,587, % Infrastructure Development Finance Company Limited 2,947, % IFCI Limited 2,497, % Surplus/(deficit) in the statement of profit and loss Balance as per last financial statements Profit for the year Excess provision of Dividend Distribution Tax reversed Less : Appropriations Transfer to general reserve Transfer to Investor compensation reserve 0.06 Proposed dividend Tax on proposed dividend Transfer to Staff welfare reserve Total reserves and surplus 4, Page 86 Page 87

46 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, 2012 Notes to Consolidated Financial Statements for the year ended 31 March, Deposits (Unsecured) 7 Provision Non-current Current Long-term Short-term As at As at As at As at Deposits from trading members 1, Deposits from applicants for membership Deposits towards equipments Security Deposit from Clearing Members Security Deposit in lieu of Bank Guarantee/securities Deposits from applicants for membership Deposits from Clearing Banks Total 1, Deferred Tax Liabilities (net) As at Deferred Tax Liabilities Related to depreciation and other expenditure Related to other items 0.31 Total (A) Less : Deferred Tax Assets Related to disallowance u/s 43B 4.94 Related to depreciation and other expenditure 0.20 Related to other items - Total (B) 5.14 Net Deferred Tax liabilities (A-B) Other long-term liabilities As at Others Deposit - Premises Total Provision for employee benefits Medical benefits Provision for Leave Travel allowance Provision for gratuity Provision for Leave encashment Other Provisions Income tax (net of advance tax including TDS) Wealth Tax Proposed Dividend Corporate Dividend Tax Total Other current liabilities As at Trade payables Others Liability for expenses Creditors for Capital expenditure 9.45 Margins from Members Settlement Obligation payable 2, Amount payable to NSEIL IPFT 1.11 Security deposit Deposit - premises 0.32 Other deposits 6.50 Income received in advance Securities Transaction Tax payable Tax deducted at source - payable Service Tax - payable 0.56 Defaulters committee account Deposits of defaulters members - SEBI 0.14 Other liabilities , Total 3, Page 88 Page 89

47 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, FIXED ASSETS (Note No 1g, 1h & 1i) Gross Block Depreciation/Amortisations Net Block Sr. As on Additions Deductions As on Total upto For the Deductions Total upto As on No. Description Year A Tangible Assets 1 Land Leasehold Land Building Trading Systems Clearing and Settlement Systems Computer Systems Office Automation Computer Systems Others Telecommunication Systems Office Equipments Electrical Equipment & Installations Furniture & Fixtures Total (A) B Intangible Assets 12 Computer Software Software Copy Rights Goodwill ( on consolidation) Total (B) Total (A + B) , Trading system of ` crores, Computer Systems Office Automation of ` 0.64 crore and Telecommunication Systems of ` 3.25 crores having gross book value aggregating to ` crores and net book value of ` Nil have become obsolete and therefore have been earmarked for disposal or scrap. The net realisable value of the obsolete assets cannot be estimated and therefore taken as ` Nil. Notes to Consolidated Financial Statements for the year ended 31 March, Non current investments Maturity Number of Face Value Face As at Sr. Date Units per unit Value No. Particulars (` in crores) I INVESTMENTS IN EQUITY SHARES (VALUED AT COST UNLESS STATED OTHERWISE) A) QUOTED EQUITY SHARES IN OTHER COMPANIES MCX LIMITED 1,250, ,000, Sub-Total (i) 1.00 B) UNQUOTED EQUITY SHARES IN ASSOCIATE COMPANY NATIONAL SECURITIES DEPOSITORY LTD. (EXTENT OF HOLDING 25.05%) 20,036, ,360, POWER EXCHANGE INDIA LTD. (EXTENT OF HOLDING 32.50%) 13,000, ,000, OMNESYS TECHNOLOGIES PVT. LTD. (EXTENT OF HOLDING 26%) 833, ,339, INXS TECHNOLOGIES LIMITED (EXTENT OF HOLDING 32.50%) 4,505, ,609, Sub-Total (ii) IN OTHER COMPANIES NATIONAL COMMODITY & DERIVATIVE EXCHANGE LTD. 5,067, ,675, Sub-Total (iii) Total ( I ) II INVESTMENTS IN PREFERENCE SHARES UNQUOTED PREFERENCE SHARES IN ASSOCIATE COMPANY 10% OPTIONALLY CONVERTIBLE REDEEMABLE PREFERENCE SHARES OF POWER EXCHANGE OF INDIA LIMITED 5,000, ,000, (These shares are redeemable or convertible on or before 31-Dec-2012 at par i.e. ` each) Total ( II ) 5.00 Page 90 Page 91

48 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, Non current investments (Contd...) Maturity Number of Face Value Face As at Sr. Date Units per unit Value No. Particulars (` in crores) III QUOTED BONDS TAX FREE BONDS 5.25% NUCLEAR POWER CORPORATION OF INDIA LIMITED 23-Mar ,000, ,000, % NUCLEAR POWER CORPORATION OF INDIA LIMITED Mar ,000, ,000, % NUCLEAR POWER CORPORATION OF INDIA LIMITED 14-Aug ,000 20,000, % NUCLEAR POWER CORPORATION OF INDIA LTD Aug ,000 20,000, % INDIAN RAILWAY FINANCE CORPORATION LIMITED 08-Mar-15 1, , ,000, % INDIAN RAILWAY FINANCE CORPORATION LIMITED 20-Dec ,000 50,000, % INDIAN RAILWAY FINANCE CORPORATION LIMITED - SERIES DEC Dec ,000 50,000, % INDIA INFRASTRUCTURE FINANCE COMPANY LIMITED Jan ,000 10,000, % INDIA INFRASTRUCTURE FINANCE COMPANY LIMITED 20-Mar-14 3, , ,600, % INDIA INFRASTRUCTURE FINANCE COMPANY LIMITED 22-Jan-14 6, , ,600, % INDIA INFRASTRUCTURE FINANCE COMPANY LIMITED Jan ,000 10,000, % INDIA INFRASTRUCTURE FINANCE COMPANY LIMITED - SERIES I - 22 JAN Jan-14 6, , ,000, % INDIA INFRASTRUCTURE FINANCE COMPANY LIMITED - SERIES II - 20 MAR Mar-14 2, , ,500, % RURAL ELECTRIFICATION CORPN LTD - TRANCHE 1 - SERIES 1 27-Mar-22 61,238 1,000 61,238, % INDIAN RAILWAY FINANCE CORPN LTD - TRANCHE 1 - SERIES 1 23-Feb-22 32,626 1,000 32,626, % INDIAN RAILWAY FINANCE CORPORATION LIMITED 27-Jan-22 32,626 1,000 32,626, % - POWER FINANCE CORPORATION - SERIES 80 A - 25 NOV Nov ,000 50,000, % POWER FINANACE CORPORATION LIMITED 25-Nov-21 1, , ,000, % NATIONAL HIGHWAYS AUTHORITY OF INDIA 25-Jan-22 37,086 1,000 37,086, % NATIONAL HIGHWAYS AUTHORITY OF INDIA - TRANCHE 1 - SERIES 1-25 JAN Jan-22 37,086 1,000 37,086, % POWER FINANACE CORPORATION LIMITED 01-Feb-22 92,718 1,000 92,718, % POWER FINANCE CORPORATION LIMITED - TRANCHE 1 - SERIES 1-01 FEB Feb-22 42,718 1,000 42,718, %-INDIAN RAILWAY FINANCE CORPORATION Feb ,000, ,000, Total (III) Notes to Consolidated Financial Statements for the year ended 31 March, Non current investments (Contd...) Maturity Number of Face Value Face As at Sr. Date Units per unit Value No. Particulars (` in crores) IV MUTUAL FUNDS QUOTED SUNDARAM FIXED TERM PLAN CQ 370 DAYS GROWTH 4-Apr-13 4,000, ,000, RELIANCE FIXED HORIZON FUND - XXI - SERIES 18-GROWTH PLAN 3-Apr , ,400, JPMORGAN INDIA FIXED MATURITY PLAN 400D SERIES 6 - GROWTH PLAN 4-Apr , ,327, RELIANCE FIXED HORIZON FUND - XXI - SERIES 18 - GROWTH 3-Apr , , CAN LIQUID FUND INSTITUTIONAL GROWTH PLAN 4, HDFC CASH MANAGEMENT SAVING PLAN GROWTH 579, DSP MERILL LYNCH LIQUIDITY FUND - GROWTH 302, UTI LIQUID CASH PLAN REGULAR - GROWTH 4, Total (IV) 7.30 Grand Total (I+II+III+IV) Notes : As at ` in Crores (a) Aggregate Book Value - Quoted Investments (b) Aggregate Market Value of Quoted Investments (c) Aggregate Book Value - Unquoted Investments Note: Investment in associates include goodwill of ` crores Page 92 Page 93

49 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, Deferred Tax Assets (net) As at Deferred Tax Assets Related to disallowance u/s 43B 0.03 Related to depreciation and other expenditure 0.63 Related to other items 0.64 Total (A) 1.30 Less : Deferred Tax Liabilities Related to depreciation and other expenditure - Related to other items - Total (B) - Net Deferred Tax liabilities (A-B) Loans and advances Long-term Short-term As at As at Capital advances Unsecured, considered good (A) Security deposit Secured, considered good - - Unsecured, considered good (B) Loan and advances to related parties Unsecured, considered good - - (C) - - Advances recoverable in cash or kind Unsecured, considered good (D) Other loans and advances (unsecured, considered good) Loans to employees Income Tax paid including TDS (Net of Provisions) Fringe Benefit Tax (Net of Provisions) Prepaid Expenses Securities Transaction Tax paid (E) Total (A+B+C+D+E) (` in crores) Loans to employees includes Due from executive directors Other assets Non-current Current As at As at Unsecured, considered good unless stated otherwise Non-current bank balances (note no.17) 1, Unsecured, considered good , Others Interest accrued on Investments Interest accrued on certificate of deposits Interest accrued on Bank deposits Unsecured, considered good Total 1, Notes to Consolidated Financial Statements for the year ended 31 March, Current investments Maturity Number of Face Value Face As at Sr. Date Units per unit Value No. Particulars (` in crores) I CURRENT PORTION OF LONG TERM INVESTMENTS (valued at lower of cost or fair value, unless stated otherwise) A) BONDS QUOTED TAXABLE BONDS 7.10 % POWER FINANCE CORPORATION 15-Jul ,000,000 30,000, Sub-Total (i) 3.00 UNQUOTED TAXABLE BONDS 5.25% RURAL ELECTRIFICATION CORPORATION LTD. 31-Jul-11 10, ,350, % RURAL ELECTRIFICATION CORPORATION LTD. 31-Mar-12-10,000 11,930,000 - Sub-Total (ii) - B) MUTUAL FUNDS QUOTED FIXED MATURITY PLANS BIRLA SUN LIFE FIXED TERM PLAN SERIES CY GROWTH 28-Apr-12 10,000, ,000, BIRLA SUN LIFE FIXED TERM PLAN SERIES DB GROWTH 21-May , ,150, BIRLA SUN LIFE FIXED TERM PLAN SERIES DT GROWTH 29-Nov-12 2,000, ,000, BIRLA SUN LIFE FTP - SERIES DD - GROWTH 07-Jun-12 5,000, ,000, DSP BLACKROCK FMP - 12 MONTHS - SERIES 20 - GROWTH 31-May-12 6,001, ,011, DSP BLACKROCK FMP - SERIES 23-12M - GROWTH 13-Dec , ,900, DWS FIXED TERM FUND - SERIES 80 - GROWTH PLAN 02-May-12 5,000, ,000, DWS FTF - SERIES 80 - GROWTH 02-May-12 5,000, ,000, DWS FTF - SERIES 83 - GROWTH 11-Jun-12 5,000, ,000, FIDELITY FMP SERIES 6 - PLAN F - GROWTH 21-Jan , HDFC FMP - 370D - JUN 2011 (18) GROWTH 26-Jun-12 5,000, ,000, HDFC FMP - 370D - MAY 2011 (18) GROWTH 29-May-12 5,900, ,000, HDFC FMP 370D JANUARY 2012 (2) - GROWTH - SERIES XIX 14-Jan , ,400, ICICI PRUDENTIAL FMP - S 54-1 YEARS - PLAN D - GROWTH 25-Apr-12 5,000, ,000, ICICI PRUDENTIAL FMP - S 55-1 YEARS - PLAN G - GROWTH 21-May-12 5,000, ,000, ICICI PRUDENTIAL FMP - S 56-1 YEARS - PLAN E - GROWTH 30-Apr-12 5,000, ,000, ICICI PRUDENTIAL FMP SERIES 57-1 YEAR PLAN A CUMULATIVE 04-Jun-12 1,000, ,000, ICICI PRUDENTIAL FMP SERIES 62-1 YEAR PLAN B CUMULATIVE 25-Feb-13 1,000, ,000, ICICI PRUDENTIAL FMP SERIES 62-1 YEAR PLAN C CUMULATIVE 01-Mar-13 1,000, ,000, KOTAK FIXED MATURITY PLAN - SERIES DAYS - GROWTH 25-Apr-12 5,000, ,000, KOTAK FMP - SERIES 45 (370 DAYS) - GROWTH 09-May-12 5,000, ,000, KOTAK FMP - SERIES 46 (370 DAYS) - GROWTH 28-May-12 5,000, ,000, KOTAK FMP - SERIES 52 (370 DAYS) - GROWTH 09-Jul-12 5,000, ,000, Page 94 Page 95

50 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, Current investments (Contd...) Maturity Number of Face Value Face As at Sr. Date Units per unit Value No. Particulars (` in crores) B) MUTUAL FUNDS (contd..) QUOTED FIXED MATURITY PLANS RELIANCE FHF 19 - SERIES 4 - GROWTH 09-May-12 5,000, ,000, RELIANCE FIXED HORIZON FUND - XXI - SERIES 14-GROWTH PLAN 26-Nov-12 1,000, ,000, RELIGARE FIXED MATURITY PLAN - SERIES X - PLAN F (371 DAYS) - GROWTH 03-Dec-12 1,000, ,000, RELIGARE FMP - SERIES VII - PLAN A - GROWTH 16-Apr-12 5,000, ,000, RELIGARE FMP - SERIES VII - PLAN C - GROWTH 15-May-12 5,000, ,000, RELIGARE FMP - SERIES X - PLAN F - GROWTH 03-Dec-12 1,000, RELIGARE FMP Series XIII Plan A Days - Growth 06-Mar , ,700, SBI DEBT FUND SERIES DAYS GROWTH 23-Nov-12 1,000, ,000, SBI DEBT FUND SERIES DAYS GROWTH 29-May-12 5,000, ,000, SBI MAGNUM DFS DAYS GROWTH 29-May-12 5,000, ,000, SUNDARAM FIXED TERM PLAN CB 366 DAYS GROWTH 03-Dec-12 1,000, ,000, TATA FMP - SERIES 34 - PLAN B - GROWTH 21-May-12 5,009, ,091, UTI FIXED TERM INCOME FUND - SERIES X - IX (368 DAYS) - GROWTH PLAN 25-Feb-13 1,000, ,000, UTI FTIF - SERIES IX - PLAN 2 - GROWTH 16-Apr-12 5,000, ,000, UTI FTIF - SERIES IX - PLAN 4 - GROWTH 21-May-12 5,000, ,000, Sub-Total (iii) UNQUOTED MUTUAL FUNDS AXIS TREASURY ADVANTAGE FUND - INSTITUTIONAL DAILY DIVIDEND 10,821 10,821, CANARA ROBECO TREASURY ADVANTAGE FUND - RET - DAILY DIVIDEND 4, DWS CASH OPPORTUNITIES FUND - REG - WEEKLY DIVIDEND 491,409 4,966, HDFC CASH MGMT FUND - SAVINGS PLAN - DAILY DIV ICICI PRUDENTIAL FLEXIBLE INCOME PLAN - DAILY DIVIDIEND 67,843 7,174, ICICI PRUDENTIAL FLEXIBLE INCOME PLAN - PREMIUM - DAILY DIVIDEND 141, IDFC MONEY MANAGER FUND -TREASURY PLAN - INST PLAN B - DAILY DIV 233, JM MONEY MANAGER FUND - SUPER PLUS PLAN - DAILY DIVIDEND 747, JP MORGAN INDIA TREASURY FUND - SUPER IP - DAILY DIVIDEND 373, JPMORGAN INDIA LIQUID FUND - SUPER IP - DAILY DIVIDEND 152 1,517 - JPMORGAN INDIA TREASURY FUND - SUPER IP - DAILY DIVIDEND 1,143 11,439 - RELIANCE LIQUID FUND -TREASURY PLAN - INSTITUTIONAL OPTION - DAILY DIVIDEND 388,556 5,940, RELIGARE ULTRA SHORT TERM FUND - IP - DAILY DIVIDEND 13,346 13,369, TEMPLETON INDIA ULTRA SHORT BOND FUND - IP - DIVIDEND 934,375 9,354, TEMPLETON INDIA ULTRA SHORT BOND FUND - IP - WEEKLY DIVIDEND 1,111,174 11,331, UTI TREASURY ADVANTAGE FUND - IP - DLY DIVIDEND 1, , Sub-Total (iv) 9.89 Total ( I ) Notes to Consolidated Financial Statements for the year ended 31 March, Current investments (Contd...) Maturity Number of Face Value Face As at Sr. Date Units per unit Value No. Particulars (` in crores) II CURRENT INVESTMENTS (valued at lower of cost or fair value, unless stated otherwise) QUOTED 9.15% TATA POWER COMPANY LIMITED 23-Jul ,500, ,000, % CAIRN INDIA LIMITED 12-Oct ,000, ,000, % SUNDARAM FINANCE LIMITED 19-Nov ,000, ,000, % CAIRN INDIA LIMITED 12-Jul ,000, ,000, % INDIAN OIL CORPORATION LIMITED 24-Jul ,000, ,000, %SUNDARAM FINANCE LIMITED - NCD - 26 JUL Jul ,000, ,000, Sub-Total (v) UNQUOTED 7.45% TATA SONS LIMITED 15-Apr ,000, ,000, % AXIS BANK LIMITED 25-Jul ,000, ,000, Sub-Total (vi) C) MUTUAL FUNDS QUOTED FIXED MATURITY PLANS BIRLA SUN LIFE FTP - SERIES DB - GROWTH 12-May-12 5,000, ,000, Sub-Total (vii) 5.00 UNQUOTED LIQUID DIVIDEND PLANS AXIS LIQUID FUND - INSTITUTIONAL - DAILY DIVIDEND 65,402 1,000 65,403, BARODA PIONEER TREASURY ADVANTAGE FUND - INSTITUTIONAL DAILY DIVIDEND PLAN 102,206 1, ,298, BIRLA SUN LIFE CASH PLUS - INSTL PREM - DAILY DIVIDEND - REINVESTMENT 3, , DWS ULTRA SHORT TERM FUND - INSTITUTIONAL DAILY DIVIDEND 116, ,164, ICICI PRUDENTIAL FLEXIBLE INCOME PLAN PREMIUM - DAILY DIVIDEND 18, ,912, ICICI PRUDENTIAL ULTRA SHORT TERM PLAN SUPER PREMIUM WEEKLY DIVIDEND 11,186, ,444, IDFC MONEY MANAGER FUND - TP - SUPER INST PLAN C - DAILY DIVIDEND 569, ,696, JM HIGH LIQUIDITY FUND - SUPER INSTITUTIONAL PLAN - DAILY DIVIDEND 32,632, ,867, JPMORGAN INDIA LIQUID FUND - SUPER INST DAILY DIVIDEND PLAN - REINVEST 118, ,190, KOTAK FLOATER - SHORT TERM - DAILY DIVIDEND 54,951, ,898, KOTAK FLOATER LONG TERM - DAILY DIVIDEND 132, ,332, RELIANCE LIQUID FUND - TREASURY PLAN-INSTITUTIONAL OPTION - DAILY DIVIDEND 13,874, ,107, RELIANCE MEDIUM TERM FUND - DAILY DIVIDEND PLAN 1,137, ,454, Page 96 Page 97

51 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, Current investments (Contd...) Maturity Number of Face Value Face As at Sr. Date Units per unit Value No. Particulars (` in crores) RELIGARE LIQUID FUND - SUPER INSTITUTIONAL DAILY DIVIDEND 24 1,001 23,897 - TATA FLOATER FUND - DAILY DIVIDEND 263, ,641, TEMPLETON INDIA TREASURY MGMT ACCOUNT SUPER INSTITUTIONAL PLAN - DAILY DIVIDEND 142,364 1, ,460, TEMPLETON INDIA ULTRA SHORT BOND FUND SUPER INST PLAN - DAILY DIVIDEND REINVEST 788, ,895, UTI MONEY MARKET FUND - INSTITUTIONAL PLAN - DAILY DIVIDEND 51 1,003 50, Sub-Total (viii) D) DEPOSITS HDFC LTD 11-May ,000, ,000, HDFC LTD 09-Nov ,000, ,000, Sub-Total (ix) E) COMMERCIAL PAPER ADITYA BIRLA FINANCE LIMITED 14-May , ,000, ADITYA BIRLA FINANCE LIMITED 11-Sep , ,000, ADITYA BIRLA FINANCE LIMITED 14-Sep , ,000, ADITYA BIRLA FINANCE LIMITED 07-Nov , ,000, ADITYA BIRLA FINANCE LIMITED 12-Nov , ,000, ADITYA BIRLA FINANCE LIMITED 12-Apr , ,000, ADITYA BIRLA FINANCE LIMITED 23-Apr , ,000, ADITYA BIRLA FINANCE LIMITED 14-May ,000 50,000, APOLLO TYRES LIMITED 23-May , ,000, BAJAJ ELECTRICALS LIMITED 20-Apr , ,000, BAJAJ FINANCE LIMITED 06-Jul , ,000, BAJAJ FINANCE LIMITED 02-Aug , ,000, BAJAJ FINANCE LIMITED 01-Nov , ,000, BALLARPUR INDUSTRIES LIMITED 16-Apr , ,000, BLUE STAR LIMITED 13-Jul ,000 60,000, BLUE STAR LIMITED 27-Sep ,000 50,000, GODREJ INDUSTRIES LIMITED 25-Apr , ,000, HCL INFOSYSTEMS LIMITED 04-May , ,000, HCL INFOSYSTEMS LIMITED 14-May , ,000, HCL INFOSYSTEMS LIMITED 31-May ,000 50,000, HCL INFOSYSTEMS LIMITED 31-May , ,000, HDFC LIMITED 07-Jun , ,000, Notes to Consolidated Financial Statements for the year ended 31 March, Current investments (Contd...) Maturity Number of Face Value Face As at Sr. Date Units per unit Value No. Particulars (` in crores) IL&FS FINANCIAL SERVICES LIMITED 22-May , ,000, IL&FS FINANCIAL SERVICES LIMITED 15-Oct , ,000, IL&FS FINANCIAL SERVICES LIMITED 16-Nov , ,000, IL&FS FINANCIAL SERVICES LIMITED 21-Dec , ,000, IL&FS FINANCIAL SERVICES LIMITED 16-Nov , ,000, INDIAN OIL CORPORATION LIMITED 24-Sep , ,000, INFRASTRUCTURE DEVELOPMENT FINANCE COMPANY LIMITED 24-Aug , ,000, NORTH DELHI POWER LIMITED 12-Jun , ,000, RANBAXY LABORATORIES LIMITED 22-Oct , ,000, SUNDARAM FINANCE LIMITED 12-Oct , ,000, TATA CAPITAL LIMITED 17-May , ,000, TATA CAPITAL LIMITED 16-Jul , ,000, TATA CAPITAL LIMITED 25-May , ,000, TATA MOTORS FINANCE LIMITED 25-May , ,000, TATA MOTORS LIMITED 03-Dec , ,000, Sub-Total (x) Total (II) Grand Total (I +II) Notes : As at ` in Crores (a) Aggregate Book Value - Quoted Investments (b) Aggregate Market Value of Quoted Investments (c) Aggregate Book Value - Unquoted Investments (d) Provision for diminution in value of Current quoted debenture (0.15) Page 98 Page 99

52 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, 2012 Notes to Consolidated Financial Statements for the year ended 31 March, Changes in inventories of stock-in-trade 18 Revenue from operations As at For the year ended Opening Inventories of Digital Certificates 0.02 Closing Inventories of Digital Certificates 0.03 Total (0.01) 16 Trade receivables Non-current Current As at As at Unsecured, considered good unless stated otherwise Outstanding for a period of over six months from the date they are due from payment Secured, considered good Unsecured, considered good Doubtful Provision for doubtful receivables Other debts Secured, considered good Unsecured, considered good Total Cash and bank balances Non-current Current As at As at Operating revenues Transaction charges Annual subscription Book building Fees 4.28 Listing fees Income - Online Datafeed Service Fees Application Development & Maintenance Services Infrastructure Management Services 9.24 E-Learning Solutions IT & Process Support Charges 4.24 Index License Fees Outside India 8.19 ETF Licensing Outside India 1.06 Data Subscription Fees 2.15 Others Other operating revenues NCFM Registration & Test enrolment fees Interest on Bank Deposits Processing Fees - Listing Strategic Co-operation fees Data Centre charges Operational expenses recovery Others Sale of Products Software Products 3.31 Traded Goods Total 1, Cash and cash equivalents Balances with banks : On current accounts Certificate of Deposits with original maturity of less than three months Deposits with original maturity of less than three months - 2, Earmarked Deposits with original maturity of less than three months Cheques in hand Cash on hand , Other bank balances Bank Deposits with original maturity for more than 12 months , Earmarked Deposits with original maturity for more than 12 months Bank Deposits with original maturity for more than 3 months but less than 12 months Certificate of Deposits with original maturity for more than 3 months but less than 12 months Earmarked Deposits with original maturity for more than 3 months but less than 12 months , , Amount disclosed under non-current assets (note 13) 1, Total - 6, Page 100 Page 101

53 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, Other income For the year ended Interest Income on On Investment Current Long Term On Bank Deposits On Certificate of Deposits On Inter Corporate Deposits 1.95 On Income Tax Refund 0.07 On Others Dividend income Long Term : from Others 2.47 Current Net gain / loss on sale of long term Investment Net gain / loss on sale of current Investment 1.81 Rent Income Amortisation of Premium / Discount on Govt/Debt Securities 0.13 Miscellaneous Income 4.68 Total Purchases Of Stock-In-Trade 21 Employee benefits expenses For the year ended Purchase of Digital Certificates 0.07 Purchase of Licenses (Algo Products) 0.37 Total 0.44 For the year ended Salaries, wages and bonus Contribution to provident and other fund 8.33 Staff welfare expenses 5.54 Less : Transferred to Staff Welfare Reserve Total Notes to Consolidated Financial Statements for the year ended 31 March, Other expenses For the year ended Rent Transponder lease charges 3.55 License fee for operating VSAT network 3.75 Lease line charges 7.95 Repairs & maintenance - To buildings To computers, trading & telecommunication systems To others 4.59 Network Infrastructure Management charges 4.72 IT management and consultancy charges 2.69 Insurance 2.56 Rates & taxes 3.05 Postage, telephone and fax charges 4.71 Advertisement & publicity Printing & stationary and consumables 5.04 Legal & Professional fees Travelling & Conveyance expenses 7.93 Payment to auditor (Refer note below) 0.59 Electricity charges Directors' sitting fees 0.14 Software expenses Contribution to Investor protection fund trust Investor education expenses 3.57 SEBI Regulatory Fees 5.34 Donations 1.07 Bad debts/sundry balance written off 0.10 Loss on sale /discard of assets (Net) 0.48 Loss on exchange fluctuation 0.56 Adjustments to the carrying amount of current investments 0.19 Liquidity enhancement incentive 7.10 Technical & Sub Contract Charges Other Expenses Total Note : Payment to auditor As auditor : Audit fees 0.20 Tax audit fee 0.03 Limited review 0.03 In other capacity Taxation matters 0.14 Certification matters 0.05 Other services 0.14 Total 0.59 Page 102 Page 103

54 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, In accordance with Accounting Standard 20 - Earning per Share notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956 Earning per share Year ended Net Profit attributable to Shareholders (` In Crores) Weighted Average number of equity shares issued (No. in Crores) 4.50 Basic earnings per share of ` 10/- each (in `) The Company does not have any outstanding dilutive potential equity shares. Consequently, the basic and diluted earning per share of the Company remain the same. 24 Disclosure under revised accounting standard 15 on Employee benefits: i) Defined Contribution Plan: Company s contribution towards superannuation amounting to ` 1.48 Crore has been charged to Profit & Loss account. ii) Defined Benefit Plan : (a) Provident Fund: The Company has contributed ` 2.42 Crores towards Provident Fund during the year ended March 31, As per Implementation Guidance on AS 15 (Revised 2005) Employee Benefits issued by the Accounting Standard Board (ASB), benefit involving employer established provident funds which require interest short fall to be recompensed are to be considered as defined benefit plans. The Actuarial Society of India has issued the final guidance for measurement of provident fund liabilities. The actuary has accordingly provided an actuarial valuation and arrived at the interest shortfall liability of ` 0.12 Crores and after considering of ` 0.04 crore reserves available with the company s Provident Fund Trust, 0.08 crores has been provided in the books of accounts. Assumptions used in determining the present value obligation of the interest rate guarantee are as follows: a. Approach used Deterministic b. Increase in compensation levels 5% p.a. c. Discount Rate 8.15% (b) Gratuity: Company has charged the Gratuity expense to Profit & Loss account based on the actuarial valuation of gratuity liability at the end of the year. The projected unit credit method used to show the position as at March 31, 2012 is as under. (i) Assumptions: Current year Discount Rate 8.50% Rate of Return on Plan Assets 8.00% Salary Escalation 5.00% Attrition Rate 2.00% (ii) Table showing change in benefit obligation: Current year Liability at the beginning of the year Interest cost 0.94 Current Service Cost 1.43 Benefits Paid (0.45) Actuarial (gains) / loss on obligations 1.15 Liability at the end of the year Notes to Consolidated Financial Statements for the year ended 31 March, Disclosure under revised accounting standard 15 on Employee benefits (Contd.) (iii) Tables of Fair value of plan assets: Current year Fair Value of plan assets at the beginning of the year 7.56 Expected return on plan assets 0.75 Contributions 2.21 Benefits paid (0.45) Actuarial gain / (loss) on Plan Assets 0.10 Fair Value of plan assets at the end of the year Total Actuarial Gain/(Loss) to be recognised 0.07 (iv) Actual Return on Plan Assets: Current year Expected return on plan assets 0.75 Acturial gain/(loss) on plan assets 0.10 Actual Return on plan assets 0.86 (v) Amount recognised in the balance sheet Current year Liability as at the end of the year Fair value of plan assets as at the end of the year Net liability / (asset) disclosed in the Balance Sheet 3.10 (vi) Expenses recognised in the profit & loss account Current year Current Service cost 1.43 Interest Cost 0.94 Expected return on plan assets (0.75) Actuarial (Gain) or Loss 1.06 Expenses recognised in the profit & loss account 2.68 (vii) Balance Sheet Reconciliation Current year Opening Net Liability 3.01 Expense as above 2.68 Employers Contribution (2.21) Amount recognised in the Balance Sheet 3.48 (viii) Category of Assets Current year Insurer Managed Funds Total Page 104 Page 105

55 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, Disclosure under revised accounting standard 15 on Employee benefits (Contd.) (ix) Experience Adjustment Current year On Plan Liability (Gain) / Loss 1.20 On Plan asset (Loss) / Gain In accordance with Accounting Standard 19 - Leases notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956, the details of obligation on long term non - cancellable operating lease in respect of certain vehicles and office premises taken by the Company are as follows. Lease obligations Year ended Total of future minimum lease payments - Lease rentals paid during the year Not later than one year Later than one year and not later than five years Later than five years 8.52 The terms of the Leases range from 3 years to 10 years. 26. In compliance with Accounting Standard 18 - Related Party Disclosures notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956, the required disclosures are given in the table below: (a) Names of the related parties and related party relationship Sr. Related Party Nature of No. Relationship 1 Dr. Vijay L. Kelkar - Chairman of NSEIL 2 Mr. Ravi Narain - Managing Director of NSEIL 3 Ms. Chitra Ramkrishna - Jt. Managing Director of NSEIL Key Management Personnel 4 Mr. Ramesh Padmanabhan - Managing Director & CEO of NSE. IT Limited 5 Mr. Suresh Narayan - Executive Director of Dotex International Limited and Executive Director & CEO of India Index Services & Products Limited 6 Power Exchange India Limited 7 National Securities Depository Limited Associate 8 Omnesys Technologies Private Limited 9 INXS Technologies Limited Notes to Consolidated Financial Statements for the year ended 31 March, (Contd...) (b) Names of the related parties and relationship Name of the Related Party Nature of Transaction Year ended Key Management Personnel Gross remuneration including allowances, non-cash perquisites and contribution to Provident Fund and Superannuation Fund etc Housing Loan Closing Balance 0.01 Interest received on Housing Loan [` 3,991/-) 0.00 Power Exchange India Ltd. Space and Infrastructure usage charges received 3.09 Application Development and Maintenance Services 3.23 Infrastructure Management Services 0.75 Reimbursement received for other expenses incurred 0.70 Investment in equity shares 5.00 Closing balance (Credit)/Debit 6.09 Investment in Equity Share Capital (Note no.19(ii)) National Securities Depository Limited Reimbursement received for expenses incurred 0.03 Dividend received 5.01 Closing balance (Credit)/Debit - Investment in Equity Share Capital Omnesys Technologies Pvt. Ltd. License Fees Paid 8.30 Receipt of fees for Online Data Feed Services 0.06 Investment in Equity Shares (Closing Balance) 4.68 Outstanding balance included in Current Liabilities 0.65 INXS Technologies Limited License Fees Paid 0.63 Investment in Equity Shares (Closing Balance) 9.80 Outstanding balance included in Current Liabilities Segment Reporting The disclosure in respect of Segment information as per Accounting Standard - 17 on "Segment Reporting" issued by the Institute of Chartered Accountants of India for the period ended 31st March, 2012 is given as follows: The Company has identified segments viz. Trading Services, Clearing Services, End to End Solutions, E-Learning Solutions, Data Feed, Web trading, IT services, IT Process Support charges, Index licensing and Software application development. Out of these, reportable segments are Trading Services and Clearing Services. Segments have been identified and reported taking into account nature of products and services, the differing risks and returns and the internal business reporting systems. The accounting policies adopted for segment reporting are in line with the accounting policy of the Company with following additional policies for segment reporting. a) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as Unallocable. Page 106 Page 107

56 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, 2012 Notes to Consolidated Financial Statements for the year ended 31 March, Segment Reporting (contd...) b) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as Unallocable. Business Segments: Trading Clearing Particulars Services Services Others Elimination Total REVENUE : External Revenue 1, , Inter-segment Revenue (227.44) - Total Revenue 1, (227.44) 1, RESULT Segment Result Add:Unallocable Income net of unallocable expenditure Add:Interest Income Profit Before Prior Period Adjustment 1, Less/(Add): Prior Period Adjustment (0.58) Profit Before Taxation & exceptional item 1, Less:Provision for Current Tax Less:Provision for Deferred Tax (5.35) Less: Wealth Tax 0.20 Profit After taxation and before Minority Interest and share of loss of associate Less: Minority Interest (7.74) Add: Share of profit (net) of associate(s) Profit After taxation OTHER INFORMATION Segment Assets 1, , , Unallocable Assets 4, Total Assets 9, Segment Liabilities 1, , , Unallocable Liabilities Total Liabilities 5, Capital Expenditure Segment Capital Expenditure Unallocable Capital Expenditure 4.07 Total Capital Expenditure Depreciation/Amortisation Segment Depreciation / Amortisation Unallocable Depreciation / Amortisation 3.13 Total Depreciation / Amortisation The businesses, which were not reportable segments during the year, have been grouped under the Others segment which comprises of: End to End Solution, E-learning Solutions, Data Feed, Web trading, IT services, IT Process Support charges, Index licensing and Software application development. 28 Capital and other commitments Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for ` Crores. 29 Contingent liability (i) Claims against the company not acknowledged as debts: ` Crores (ii) During the year the company has received an order passed by the Competition Commission of India, directing the Company to pay a penalty of ` crores. The Company has appealed against the said order before the Competition Appellate Tribunal. The Competition Appellate Tribunal has granted the stay against the recovery of said penalty amount pending disposal of the appeal and hence no provision has been made (iii) On account of disputed demand of Income Tax: ` Crores, disputed demand of Fringe Benefit Tax: ` 2.22 Crores and disputed demand of Wealth Tax: ` 1.94 Crores. Wealth Tax liability includes ` 1.86 Crores on account of Tax Department appeals pending disposal before the Bombay High Court. On account of disputed demand of Service Tax: ` crores alongwith interest and penalty thereon, for the period from April, 2004 to March, 2009 and disputed demand of service tax of ` crore provided for the demand for the year (iv) On account of disputed demand of Securities Transaction Tax : ` Crores 30. In the opinion of the Board, current assets, loans and advances are approximately of the value stated, if realised in the ordinary course of business. 31. The company has filed for winding of its subsidiary NSE.IT (UK) Limited, as of 31st March The Company has constituted separate Settlement Guarantee Funds (SGF) in respect of the Capital Market, Futures & Options Market, Retail Debt Market segments and Currency Derivatives Market. The Clearing members are required to contribute to the respective fund in the form of interest free security deposit and also make additional deposits in the form of cash, securities, fixed deposit receipts or bank guarantees. Besides the same, the Clearing members are also required to deposit margin money which, subject to hair cut, forms part of the SGF. While the interest free security deposit is not refundable during the tenure of a clearing membership, the margin money is refundable, subject to adjustments, if any. Of this, the interest free security deposit and security deposit in the form of cash collected from members amounting to ` 357 Crores are grouped under the head Unsecured Deposits whereas the cash margin amounting to ` Crores collected from members (` Crores after applying hair cut) has been grouped under the head Current Liabilities & Provisions. The non cash portion of the SGF comprising of collaterals such as bank guarantees, securities and fixed deposit receipts received from the members amounting to ` 38, Crores (` 30, Crores after applying hair cut) does not form part of the Balance Sheet. Non Cash Component Fixed Sr. Total Cash Bank Deposit No. Segment SGF Component Guarantees Securities Receipts 1 Capital market 4, , , Futures & Options 25, , , , Retail Debt Market Currency Derivatives 1, Total 31, , , , *after adjusting net shortages amounting to ` 0.14 Crore Page 108 Page 109

57 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, 2012 Notes to Consolidated Financial Statements for the year ended 31 March, (Contd...) The breakup of Cash Component in each SGF is as follows: March 2012 Interest Free Sr. Security Security No. Segment Deposit Deposit Margins Total 1 Capital market Less : Net Shortages 0.14 Net Amount Futures & options Retail Debt Market Currency Derivatives Total Amount not forming part of SGF TOTAL The above cash component of SGF has been earmarked as under: Sr. Amount Balance Sheet Earmarked No. Particulars Reference No. Amount 1 Non Current Investments Current Investments Balances with Banks in Current Account in Deposit Accounts 3, Total (1 to 3) 4, A) Capital Market Segment: Particulars Amount Mutual Funds RELIANCE MEDIUM TERM FUND - DAILY DIVIDEND PLAN 0.15 TATA FMP - SERIES 29 - PLAN A - GROWTH 2.56 Total Mutual Funds 2.71 Flexi Fixed Deposits FLEXI FIXED DEPOSITS WITH HDFC BANK FLEXI FIXED DEPOSITS WITH ICICI BANK 4.87 FLEXI FIXED DEPOSITS WITH STAN CHART BANK 0.97 Total Flexi Fixed Deposits (Contd...) A) Capital Market Segment: (Contd...) Particulars II. Cash Component in form of Security Deposit of ` Crores is earmarked as under: Particulars Amount Fixed Deposits 7.45% YES BANK LIMITED % BANK OF BARODA % AXIS BANK LIMITED Total Fixed Deposits Certificate Of Deposit CORPORATION BANK - CD - 07 SEP % AXIS BANK LIMITED - CD - 16 JAN % ICICI BANK LIMITED - CD - 19 AUG % Total Certificate Of Deposit Commercial Paper ADITYA BIRLA FINANCE LIMITED 9.10 Total Commercial Paper 9.10 Amount Flexi Fixed Deposits with HDFC Bank Total Flexi Fixed Deposits III Cash component in form of Margins of ` Crores is earmarked as under: Particulars Amount Mutual Funds Axis Liquid Fund-Institutional- Daily Dividend BARODA PIONEER TREASURY ADVANTAGE FUND - IP - DLY DIVIDEND 0.03 JM HIGH LIQ FUND - SUPER INST DAILY REINVEST KOTAK FLOATER LONG TERM - DAILY DIVIDEND 0.32 SBI-MAGNUM INSTA CASH FUND-DAILY DIVIDEND OPTION 5.00 UTI TREASURY ADVANTAGE FUND - IP - DAILY DIVIDEND 0.47 Total Mutual Funds Flexi Fixed Deposits FLEXI FIXED DEPOSITS WITH HDFC BANK FLEXI FIXED DEPOSITS WITH AXIS BANK 5.86 FLEXI FIXED DEPOSITS WITH CANARA BANK 0.03 FLEXI FIXED DEPOSITS WITH ICICI BANK 7.88 FLEXI FIXED DEPOSITS WITH CITIBANK 7.31 FLEXI FIXED DEPOSITS WITH HSBC BANK 7.09 FLEXI FIXED DEPOSITS WITH STANDARD CHARTERED BANK Total Flexi Fixed Deposits Fixed Deposits 7.50% STATE BANK OF TRAVANCORE % STATE BANK OF BIKANER & JAIPUR % YES BANK LIMITED - CM MARGIN % CENTRAL BANK OF INDIA - CM MARGIN % IDBI BANK - CM MARGIN 0.95 Total Fixed Deposits Page 110 Page 111

58 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, 2012 Notes to Consolidated Financial Statements for the year ended 31 March, (Contd...) B) Futures & Options Segment: I Cash component in form of Interest Free Security Deposit of ` Crores earmarked as under: Particulars Amount Taxfree Bonds 6.85% INDIA INFRASTRUCTURE FINANCE COMPANY LIMITED - SERIES I - 22 JAN Total Taxfree Bonds Fixed Deposits 8.66% IDBI BANK - F&O SETT FUND % BANK OF BARODA % PUNJAB NATIONAL BANK % FEDERAL BANK LIMITED % AXIS BANK LIMITED 5.27 Total Fixed Deposits Commercial Paper NABARD - CP - 22 SEP % 9.26 Total Commercial Paper 9.26 Certificate Of Deposit AXIS BANK LIMITED CD16 JAN % 8.47 IDBI BANK - CD - 10 MAY % 9.60 Total Certificate of Deposit I Cash component in form of Interest Free Security Deposit of ` Crores earmarked as under: Particulars Page 112 Amount Mutual Funds ICICI PRUDENTIAL ULTRA SHORT TERM PLAN SUPER PREMIUM WEEKLY DIVIDEND 0.25 Total Mutual Funds 0.25 Flexi Fixed Deposits FLEXI FIXED DEPOSIT ICICI BANK FLEXI FIXED DEPOSIT HDFC BANK 1.95 FLEXI FIXED DEPOSIT BANK OF INDIA Total Flexi Fixed Deposits II Cash component in form of Security Deposit of ` Crores earmarked as under: Particulars Amount Flexi Fixed Deposits FLEXI FIXED DEPOSIT HDFC BANK Total Flexi Fixed Deposits (Contd...) III Cash component in form of Margins of ` Crores is earmarked as under:- Particulars Amount Mutual Funds BARODA PIONEER TREASURY ADVANTAGE FUND - IP - DLY DIVIDEND 0.38 DSP BLACKROCK LIQUIDITY FUND - INSTITUTIONAL PLAN - DAILY DIVIDEND DWS ULTRA SHORT TERM FUND - INSTITUTIONAL DAILY DIVIDEND 0.24 TEMPLETON INDIA TREASURY MGMT ACCOUNT SUPER INSTITUTIONAL PLAN - DAILY DIVIDEND TEMPLETON INDIA ULTRA SHORT BOND FUND SUPER INST PLAN - DAILY DIVIDEND REINVEST 1.82 TEMPLETON FLOATING RATE INCOME FUND LONG TERM SUPER INST - DAILY DIVIDEND REINV 0.13 BNP PARIBAS MONEY PLUS IP FUND - DAILY DIVIDEND 0.93 HDFC CASH MANAGEMENT FUND -TREASURY ADVANTAGE PLAN - WHOLESALE - DAILY DIVIDEND 0.01 IDBI LIQUID FUND - DAILY DIVIDEND - REINVESTMENT JM MONEY MANAGER SUPER PLUS PLAN - DAILY DIVIDEND 0.40 JPMORGAN INDIA TREASURY FUND - SUPER INST. DAILY DIV PLAN - REINVEST 1.00 KOTAK FLOATER - SHORT TERM - DAILY DIVIDEND ICICI PRUDENTIAL FLEXIBLE INCOME PLAN PREMIUM - DAILY DIVIDEND 3.91 RELIANCE LIQUIDITY FUND -DAILY DIVIDEND REINVESTMENT RELIGARE ULTRA SHORT TERM FUND - INSTITUTIONAL DAILY DIVIDEND 1.67 SUNDARAM MONEY FUND - SUPER INSTITUTIONAL - DIVIDEND - DAILY REINVEST UTI TREASURY ADVANTAGE FUND - INSTITUTIONAL PLAN - DAILY DIVIDEND - RE-INVEST 1.71 Total Mutual Funds Particulars Amount Fixed Deposits 7.50% STATE BANK OF TRAVANCORE % IDBI BANK - F&O MARGIN - AUGUST ' % IDBI BANK - F&O MARGIN % STATE BANK OF PATIALA - F&O MARGIN % AXIS BANK LIMITED - F&O MARGIN % AXIS BANK LIMITED - F&O MARGIN % YES BANK LIMITED - F&O MARGIN % AXIS BANK LIMITED - F&O MARGIN % AXIS BANK LIMITED - F&O MARGIN Total Fixed Deposits Flexi Fixed Deposits FLEXI FIXED DEPOSIT BANK OF INDIA FLEXI FIXED DEPOSIT AXIS BANK FLEXI FIXED DEPOSIT CANARA BANK 6.13 FLEXI FIXED DEPOSIT HDFC BANK FLEXI FIXED DEPOSIT ICICI BANK 3.27 FLEXI FIXED DEPOSIT INDUSIND BANK 6.45 FLEXI FIXED DEPOSIT HSBC BANK 4.35 FLEXI FIXED DEPOSIT KOTAK MAHINDRA BANK LTD FLEXI FIXED DEPOSIT IDBI BANK 3.15 FLEXI FIXED DEPOSIT CITI BANK LTD FLEXI FIXED DEPOSIT STANDARD CHARTERED BANK 5.83 FLEXI FIXED DEPOSIT UNION BANK Total Flexi Fixed Deposits Page 113

59 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, 2012 Notes to Consolidated Financial Statements for the year ended 31 March, (Contd...) C) Retail Debt Market Segment : Cash component in form of Cash Deposit of ` 1.70 Crores is earmarked as under: Particulars Amount Flexi Fixed Deposits FLEXI FIXED DEPOSITS WITH HDFC BANK 1.70 D) CURRENCY DERIVATIVE SEGMENT : I Cash component in form of Interest Free Security Deposit of ` Crores is earmarked as under: Particulars Amount Mutual Funds BARODA PIONEER TREASURY ADVANTAGE FUND - IP - DLY DIVIDEND ICICI PRUDENTIAL FMP SERIES 56-1 YEAR PLAN D CUMMULATIVE 5.00 ICICI PRUDENTIAL ULTRA SHORT TERM PLAN SUPER PREMIUM WEEKLY DIVIDEND Total Mutual Funds Bank Balances BANK OF INDIA 0.06 CITI BANK 0.11 Total Bank Balances 0.17 I Cash component in form of Interest Free Security Deposit of ` Crores is earmarked as under: Particulars Amount Fixed Deposits Flexi HDFC Bank - CITI BANK 0.85 BANK OF INDIA 1.72 STANDARD CHARTERED BANK 0.41 KOTAK MAHINDRA BANK LTD 0.51 CANARA BANK 0.15 AXIS BANK 1.19 Total Flexi Fixed Deposits 4.83 II. Cash component in form of CDS Security Deposit of ` 7.82 Crores is earmarked as under: Particulars Amount Flexi Fixed Deposits HDFC BANK LTD 3.01 AXIS BANK 0.74 Total Flexi Fixed Deposits 3.75 Bank Balances ICICI (Contd...) III Cash component in form of CDS Margins of ` Crores is earmarked as under: Particulars Amount BARODA PIONEER TREASURY ADVANTAGE FUND - IP - DLY DIVIDEND Total Mutual Funds Particulars Amount Bank Balances ICICI Bank Total Bank Balances Flexi Fixed Deposits HDFC Bank 3.96 CITI BANK 5.06 STANDARD CHARTERED BANK 2.66 BANK OF INDIA 1.45 INDUSIND BANK 0.41 AXIS BANK 9.06 Total Flexi Fixed Deposits Minority Interest Reconciliation Particulars Amount Opening Balance as on 1-Apr Add: Share in Profit of Subsidiary National Commodity Clearing Limited 0.37 Add: Share in Profit of Subsidiary India Index Services & Products Limited 7.37 Closing Balance as on 31-Mar Share of Profit / (loss) for AS - 23 "Accounting for Investments in Associates in Consolidated Financial Statements" Particulars Amount Power Exchange India Limited (5.15) National Securities Depository Limited Omnesys Technologies Private Limited 2.58 INXS Technologies Limited (1.30) Total Page 114 Page 115

60 National Stock Exchange of India Limited Twentieth Annual Report FY Notes to Consolidated Financial Statements for the year ended 31 March, Shares reserved for issue under options in case of Subsidiary NSE. IT Limited In terms of the authority granted by the General Meeting held on September 25th, 2006, the Company has formulated an Employee Stock Option Plan 2006 (ESOP). Under the said ESOP, 3,47,350 Options for equivalent number of Equity Shares of the company have been granted as an incentive scheme to the employees covered under the scheme. The Scheme provides that the Options shall vest in a graded manner over a period of 4 years in the ratio of 25%, 30%, 35% and 10% respectively. The exercise period shall be three years from the vesting of each tranche of the aforesaid options. Each option entitles the holder of the option to 1 Equity Share of the Company at an exercise price of ` 53/- per share, which is also the Fair Market Value (FMV) of the share on the date of the grant as determined by a valuation report obtained from an independent valuer. The Guidance Note issued by the Institute of Chartered Accountants of India on Accounting for Employee Share Based Payments requires accounting of the expense in regard to the ESOPs. The Company has adopted the Intrinsic Value Method as given in the said Guidance for accounting for the same. The Company has obtained expert opinion that since the Exercise Price is equal to the FMV of the shares on the grant date; it would not be required to recognize any compensation expense since the intrinsic value of the options is NIL. Particulars F.Y Qty. (Nos.) Options at the beginning of the year 144,840 Options granted during the year Nil Options lapsed during the year 82,809 Options Exercised during the year Nil Options expired during the year Nil Balance Options in force 62, During the year ended March 31, 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. 37. Previous Years figures are not given since it is first year of consolidation. As per our report of even date attached For KHANDELWAL JAIN & CO., Chartered Accountants For and on behalf of the Board of Directors NARENDRA JAIN DR. VIJAY L. KELKAR RAVI NARAIN Partner Chairman Managing Director Membership No.:48725 CHITRA RAMKRISHNA Y. H. MALEGAM Jt. Managing Director Director Place : Mumbai Date : May 14, 2012 J. RAVICHANDRAN Director (F&L) & Company Secretary CONSOLIDATED CASH FLOW STATEMENT For the year ended March 31, A) CASHFLOW FROM OPERATING ACTIVITIES NET PROFIT BEFORE TAX 1, Add: Adjustments for : Depreciation and amortisation expenses Adjustments to the carrying amount of current investments 0.19 Bad debts/sundry balances written off 0.10 Loss on sale /discard of assets (Net) 0.48 Less : Adjustments for : Staff welfare expenses debited to staff welfare Reserve (0.50) Compensation paid to Investors debited to Investor compensation reserve (0.06) Amortisation of Premium / Discount on Govt/Debt Securities (0.13) Interest income on short term investments (33.34) Interest income on long term investment (19.47) Interest income on Bank deposit (253.13) Interest income on Certificate of deposits (18.94) Interest income on Inter Corporate deposits (1.95) (Profit)/Loss on sale/redemption of long term investments (29.16) (Profit)/Loss on sale/redemption of short term investments (1.81) Dividend - Long Term (2.47) Dividend - Short Term (34.83) OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES Adjustments for : Sundry Debtors 7.06 Inventory (0.01) Loans & Advances Other Current Assets (30.03) Long Term Liabilities 0.37 Current Liabilities & Provisions (336.29) CASH GENERATED FROM OPERATIONS Direct Taxes paid (Net of Refunds) (382.26) NET CASH FROM (USED IN) OPERATING ACTIVITIES - Total (A) B) CASHFLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets/Capital work-in-progress (74.33) Sale of Fixed Assets 0.58 Interest received Dividend received (Increase)/Decrease in Fixed deposit & Certificate of deposits (387.00) (Increase)/Decrease in Investment (7.52) NET CASH FROM (USED IN) INVESTING ACTIVITIES - Total (B) (163.35) Page 116 Page 117

61 National Stock Exchange of India Limited CONSOLIDATED CASH FLOW STATEMENT For the year ended March 31, C) CASHFLOW FROM FINANCING ACTIVITIES Proceed of deposit from trading & Clearing members/applicant Refund of deposit to trading & Clearing members/applicant (102.93) Refund of Equipments deposits (Net) (3.25) Dividend paid (94.50) Dividend tax (15.64) NET CASH FROM (USED IN) FINANCING ACTIVITIES - Total (C) (105.33) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) (10.48) CASH AND CASH EQUIVALENTS : OPENING BALANCE 2, CLOSING CASH AND CASH EQUIVALENTS : CLOSING BALANCE 2, NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENT (10.48) National Securities Clearing Corporation Limited (A wholly owned subsidiary of National Stock Exchange of India Limited) Notes to Cash Flow Statement : 1 Cash and cash equivalent represent cash, bank balances, certificate of deposits with original maturity of less than three months, fixed deposits with original maturity of less than three months and earmarked deposits of ` Crores with original maturity of less than three months. 2 The above Cash Flow Statement has been prepared under the "Indirect Method" as set out in the Accounting Standard-3 on Cash Flow Statements notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, Previous Years figures are not given since it is first year of consolidation. As per our report of even date attached For KHANDELWAL JAIN & CO., Chartered Accountants For and on behalf of the Board of Directors NARENDRA JAIN DR. VIJAY L. KELKAR RAVI NARAIN Partner Chairman Managing Director Membership No.:48725 CHITRA RAMKRISHNA Y. H. MALEGAM Jt. Managing Director Director Place : Mumbai Date : May 14, 2012 J. RAVICHANDRAN Director (F&L) & Company Secretary Seventeenth Annual Report Page 118

62 National Securities Clearing Corporation Limited Seventeenth Annual Report FY CORPORATE INFORMATION Board of Directors* Mr. Ravi Narain : Chairman Ms. Chitra Ramkrishna : Managing Director & CEO Mr. Anjan Barua Mr. Sudhir M. Joshi Mr. Y. H. Malegam Mr. K.R. Ramamoorthy Dr. Ajay N. Shah Mr. C. M. Vasudev Mr. S. Venkiteswaran Secretary Mr. R. Jayakumar : Asst. Company Secretary CONTENT Corporate Information Directors Report Auditor s Report Balance Sheet Auditors : M/s. Haribhakti & Co. Chartered Accountants 701, Leela Business Park Andheri Kurla Road Andheri (East) Mumbai Registered Office : Exchange Plaza Plot No. C-1, Block G Bandra Kurla Complex, Bandra (East) Mumbai * As on August 23, 2012 Statement of Profit and Loss Notes to Financial Statements Cash Flow Statement Page 1

63 National Securities Clearing Corporation Limited Seventeenth Annual Report FY DIRECTORS REPORT Table No.1 : Settlement Statistics for Capital Market segment Month Quantity Quantity % of Shares Value of Value of % of % of Short Funds- Settlement No. of of Shares of Shares Deliverable Shares Shares Delivery Delivery Pay-in Guarantee settlements Traded Deliverable to Total Traded Deliverable to Value to (` Cr) Fund (lakh) (lakhs) Shares (` Cr) (` Cr) of Shares Delivery closing Traded Traded balances (` Cr) Page 2 Your Directors have pleasure in presenting the Seventeenth Annual Report and Audited Accounts of the Company for the year ended March 31, I. Operations Your company, a wholly-owned subsidiary of National Stock Exchange of India Limited (NSEIL), carries out the clearing and settlement of the trades executed on the Capital Market (CM), Futures & Options (F&O), Currency Derivatives (CD), Securities Lending and Borrowing (SLBS), Mutual Funds (MFSS) segment and OTC trades in Corporate Bonds. National Securities Clearing Corporation Limited (NSCCL) guarantees settlement of trades executed on the Capital Market, Futures and Options, Securities Lending & Borrowing and Currency Derivatives segments. 1. Settlement Capital Market segment NSCCL successfully continued its track record of completing all settlements in a timely manner. During the period under review, 249 rolling settlements were handled in de-materialised mode. Per settlement figures in value terms in the current year are as follows: The average value of securities handled per settlement was ` 3, crores in compared to ` 3,840 crores in The average funds pay-in per settlement during the above periods was `1,011 crores and ` 1,150 crores respectively. The average number of shares processed per settlement was about 1,783 lakhs in compared to 1,954 lakhs in Short deliveries per settlement averaged around 0.16% in as compared to 0.13% in The highest trading volume of ` 23, crores was observed on February 24, 2012 and the highest deliverable value of ` 10, crores was observed on February 28, Percentage of number of shares deliverable to number of shares traded increased to 27.66% in from 27.51% in Percentage of value of shares deliverable to value of shares traded increased to 28.01% in from 27.47% in During the year under review, there was no physical settlement. The Settlement Guarantee Fund stood at ` 4, crores as on 31st March The details of settlements carried out by NSCCL are presented in Table 1. Apr % % 0.28% May % % 0.32% Jun % % 0.13% Jul % % 0.13% Aug % % 0.12% Sep % % 0.13% Oct % % 0.17% Nov % % 0.15% Dec % % 0.12% Jan % % 0.17% Feb % % 0.10% Mar % % 0.09% Securities Lending and Borrowing segment NSCCL is an Approved Intermediary (AI) for SLBS with SEBI. In , the volumes in SLBS increased over 350% from ` crore in to ` 2, crore. As compared to previous year, during , securities traded in SLBS increased from 41 to 87 and number of participants traded too increased from 16 to 25. As on March 31, 2012, there are 85 participants, 3 custodian-cumparticipants and 5 custodians registered in SLBS. ` 3. Settlement F&O segment The period April March 2012 witnessed a decrease in the total amount settled. The total value of settlement decreased from around ` 83, crores in to ` 72, crores in The highest monthly settlement was ` 9, crores in the month of August March 2012 witnessed the highest monthly trading volumes of ` 29,79, crores while the highest daily trading volumes on NSE during this period was ` 2,59, crores, witnessed on November 24, 2011 with total of 1,11,36,171 contracts being traded. Page 3

64 National Securities Clearing Corporation Limited Seventeenth Annual Report FY The details of turnover and month-wise settlement values during the year April 01, 2011 to March 31, 2012 are tabulated below: Month No. of Turnover MTM Final Premium Exercise Total Contracts Traded (in ` cr) Settlement Settlement Settlement Settlement Settlement (in lakhs) (in ` cr) (in ` cr) (in ` cr) (in ` cr) (in ` cr) Apr-11 8,15,40,014 23,51, , , May-11 9,60,41,825 26,05, , , Jun-11 9,07,44,339 24,38, , , , Jul-11 9,13,77,746 25,64, , , Aug-11 11,68,85,761 29,63, , , , Sep-11 11,43,05,645 28,35, , , , Oct-11 8,91,40,784 22,33, , , Nov-11 11,03,62,429 27,16, , , , Dec-11 11,67,48,014 27,68, , , , Jan-12 9,13,96,342 22,51, , , Feb-12 9,59,39,660 26,41, , , , Mar-12 11,05,62,905 29,79, , , , As of March 31, 2012, the Settlement Guarantee Fund in F&O segment stood at ` 25, Crores. Particulars Interest Rate Futures* No of contracts Traded Turnover (` Cr.) MTM Settlement (` Cr.) Final Settlement (` Cr.) Apr May Jun Jul-11 1,97,217 3, Aug-11 16, Sep-11 1, Oct Nov Dec Jan Feb Mar * Includes futures on 10 Yr G Sec & 91 Day GOI T-Bill 4. Settlement Currency Derivatives segment The year witnessed an increase in the total settlement values from around ` 2, crores in to ` 7, crores. The highest monthly settlement value was ` crores in the month of September The highest trading volume in currency futures on NSE during this period was ` 33, crores, witnessed on August 09, 2011 with total of 72,31,120 contracts being traded & in currency options it was ` 17, crores, witnessed on August 18, 2011 with total of 37,92,800 contracts being traded. NSCCL also began clearing and settlement of Interest Rate Derivatives based on Government of India Treasury Bills in July 2011 as trading in futures on these instruments was launched on NSEIL. The details of turnover and month-wise settlement values during the period April 1, 2011 to March 31, 2012 are tabulated below: Particulars Currency Futures Currency Options No. of Turnover MTM Final No. of Turnover Final Total contracts (` Cr.) Settlement Settlement contracts (` Cr.) Settlement Settlement Traded (` Cr.) (` Cr.) Traded (` Cr.) (` Cr.) (in Lakhs) (in Lakhs) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar As on March 31, 2012, the corpus of the settlement fund for the Currency derivatives segment is ` 1, crores. 5. Risk Management (i) Capital Market & Securities Lending & Borrowing segments NSCCL has laid requisite focus towards risk management by putting in place an On-line Position monitoring system which has successfully and efficaciously addressed the market risks. Margins are computed on an on-line real time basis at client level. The Value at Risk (VaR) Margins are applied which is statistically arrived at covering 99% value at risk. With effect from April 21, 2008, margins in Capital market are being levied on institutional trades also. These margins are levied on T+1 day in the Capital Market segment. (ii) F&O & Currency Derivatives segments NSCCL has in place many risk management measures including monitoring of exposure on a real time basis through the system called PRISM (Parallel Risk Management System) and also end of day monitoring of client level exposures. The most critical component of PRISM is the online real time client level portfolio based margining and monitoring system. The robustness of the system is time tested and has proved its efficient handling of volatile situations effectively, on numerous occasions in the past and especially on highly volatile days in the year. The actual margining and position monitoring is done on-line, on an intra-day basis. NSCCL uses the SPAN (Standard Portfolio Analysis of Risk) system for the purpose of margining, which is a portfolio based system. SPAN is a registered trademark of the Chicago Mercantile Exchange, used herein under License. The objective of SPAN is to identify overall risk in a portfolio of futures and options contracts for each member. The system treats futures and options contracts uniformly, while at the same time recognising the unique exposures associated with options portfolios like extremely deep out-of-the-money short positions and inter-month risk. As SPAN is used to determine margin requirements, its overriding objective is to determine the largest loss that a portfolio might reasonably be expected to suffer from one day to the next day. The parameters used in the computation of margins are revised six times a day. There have been no defaults during the financial year. 6. Corporate Bond settlement The current financial year witnessed an increase in the number of trades settled. The total trades settled increased by 12.11% to 34,697. However, the average daily settlement value decreased by 6.15% to 1, crores as compared to The highest settlement value of ` 4, crores was recorded on February 28, In January 2011, FIMMDA came up with its own reporting platform FTRAC replacing its existing reporting platform. The deals reported in the new FIMMDA platform are sent to the Page 4 Page 5

65 National Securities Clearing Corporation Limited Seventeenth Annual Report FY respective clearing corporation through a STP mechanism for settlement. The month-wise settlement statistics are as under: Particulars No. of Trades Settled No. of Settlement Days Nominal Value of Average Daily Bonds Settled (` Cr.) Settlement Value (` Cr) Apr , , May , , Jun , , Jul , , Aug , , Sep , , Oct , , Nov , , Dec , , Jan , , Feb , , Mar , , Participants Registered RBI has permitted repo transactions in corporate bonds vide directions issued on January 8, During the financial year , NSCCL settled 23 repo trades valuing crores. SEBI and RBI vide their circulars dated March 05, 2012 permitted DVP-1 based settlement of OTC trades in Commercial Papers (CP) and Corporate Deposits (CD) through clearing corporations w.e.f. April 01, National Securities Clearing Corporation Limited (NSCCL) has put in place the infrastructure to provide settlement of OTC trades in CPs and CDs on DVP-1 basis w.e.f. April 01, The settlement mechanism will be in line with the existing process for settlement of Corporate Bonds. 7. Mutual Fund Service System (MFSS) As on March 31, 2012, 31 mutual fund houses with 1,991 schemes were enabled under the revised MFSS scheme. (i) Subscription The average daily value of funds settled for subscription of mutual fund units for the period April 1, 2011 to March 31, 2012 was ` 1.99 crores. The highest settlement value was ` crores and was observed on September 09, The average daily quantity of units allotted under subscription for the period April 1, 2011 to March 31, 2012 was lakhs. The highest quantity allotted was lakhs and was observed on September 09, (ii) Redemption The average daily value of funds settled for redemption of mutual fund units for the period April 1, 2011 to March 31, 2012 was ` 1.36 crores. The highest settlement value was ` crores and was observed on January 16, The average daily quantity of units redeemed for the period April 1, 2011 to March 31, 2012 was 6.04 lakhs. The highest quantity redeemed was lakh units and was observed on January 12, New Initiatives and Developments (i) Preferred depository for securities payout: An option has been provided to the members to give one time instruction to receive the securities payout in the depository of their choice. The payout shall go to the members preferred depository pool account (NSDL/CDSL). This has resulted in better time management at the members back office since client payout activities can be pre-planned and also convenient to the members for monitoring receipt of securities payout. (ii) Acceptance of Mutual Funds units in demat form as collaterals Open ended mutual units (gilt and non gilt) are now being accepted as collaterals. The valuation of units is done daily based on the computed VaR margin and NAV. It has enabled investors to provide an additional class of asset as collateral thus increasing alternatives and saving on cost of borrowing. (iii) Voluntary Close out Facility in F&O and CM segments A facility has been provided whereby members are allowed to define the margin utilisation limit (upper and lower limit) beyond which they shall move into/out of Voluntary Close out mode. Similarly members may also define separate limits for margins and positions (upper and lower limit) beyond which they shall move into/out of Voluntary Close out mode. (iv) Security Specific Disablement Members have been provided a facility enabling security specific disablement. This enables members to get disabled for trading only in the security where in the TM position limit has been violated. Earlier in such cases the members trading rights were completely withdrawn causing discomfort to the members and their clients. (v) Intraday provisional margin file generation In order to facilitate efficient risk management and margin collection at members end provisional margining reports are now downloaded to member on intra-day basis. The reports are generated 4 times during the day after application of SPAN parameters. The reports contain provisional margins based on the open positions of the clients at that point of time. (vi) Clearing and settlement of derivatives on global indices With the introduction of trading in derivatives on global indices by the National Stock Exchange, NSCCL successfully developed the systems and processes to clear and settle derivatives on products listed and traded abroad in time zones different from India. NSCCL successfully continued its track record of completing all settlements in a timely manner even in the case of global derivatives. With this experience, NSCCL has proved its ability to clear and settle global products irrespective of their home country time zones. (vii) Clearing and settlement of derivatives on 91 Day Treasury Bills With the introduction of trading in futures on 91 Day Treasury Bills by the National Stock Exchange, NSCCL successfully developed the systems and processes to clear and settle futures on the product. With this addition, NSCCL has now gained the ability and experience of clearing and settling two types of Interest Rate Futures viz. physically settled futures on Notional coupon bearing 10 year GOI securities and cash settled 91 Day Treasury Bills. 9. Other achievements CRISIL has continued its highest corporate credit rating of AAA' to the National Securities Clearing Corporation Limited (NSCCL). AAA' rating indicates highest degree of strength with regard to honouring debt obligations. NSCCL is the first Indian Clearing Corporation to get this rating. The rating reflects NSCCL's status as Clearing Corporation for NSE, India's largest stock exchange. The rating also factors in NSCCL's rigorous risk management controls and adequate settlement guarantee cover. NSCCL has been accorded this rating for the fourth consecutive year. 10. Opportunities and increased coverage (i) Clearing Members New Clearing Members have been added on both Capital Market and F&O segments thereby providing a wider choice to clients. Clearing membership was granted to 14 new members in the F&O segment and 33 new members in Capital Market segment. In Currency Derivatives segment, 10 Clearing Members have been enabled. (ii) Custodian Clearing Members & Professional Clearing Members (PCM) In the Capital Market segment, 16 Custodians and 4 Professional Page 6 Page 7

66 National Securities Clearing Corporation Limited Seventeenth Annual Report FY Clearing Members (PCM) are enabled through whom clients can settle their transactions. Of these, one PCM has been enabled during April 2011 to March (iii) Participants & custodians in SLBM 11 new participants and 1 participant-cum-custodian became active in SLBM segment in The total number of 85 participants, 3 participant-cum-custodian and 5 custodians are enabled in SLBM as on March 31, Multiple Depositories /Banks NSCCL is electronically connected to both the depositories National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for securities settlement and 13 clearing banks namely Axis Bank Ltd., Bank of India, Canara Bank, Citibank N.A, HDFC Bank Ltd., Hongkong & Shanghai Banking Corporation Ltd., ICICI Bank Ltd., IDBI Bank Ltd., IndusInd Bank Ltd., Kotak Mahindra Bank Ltd., Standard Chartered Bank, State Bank of India and Union Bank of India for funds settlement. II. Financial Results The working of NSCCL during the year has resulted in a net profit after tax of ` crores as per particulars given below: - Particulars (` in (` in crores) crores) Income III. Dividend In view of the above results, the Directors recommend payment of dividend of ` 45/- per share for the year IV. Directors The Board regrets to report the sad demise of Dr. R. H.Patil, a member of the Board and former Chairman of NSCCL on April 12, 2012 and his consequent cessation as a Director of the Company effective from that date. Mr. R.P. Chitale retires by rotation at the ensuing Annual General Meeting and is eligible for reappointment. However, he expressed his desire not to seek reelection at the forthcoming annual general meeting of members of NSCCL. It is therefore proposed not to fill the vacancy so caused. The Board wishes to place on record its sincere appreciation and gratitude for their valuable contribution made during their tenure as Directors. The Board of NSCCL in its meeting held on May 9, 2012, co-opted Mr. Anjan Barua and Mr. K. R. Ramamoorthy as Additional Directors. However, they are eligible for appointment as Director by members. The Company has received notice, under Section 257 of the Companies Act, 1956, in writing along with requisite deposit from a member proposing their candidatures for the office of the Directors at the forthcoming Annual General Meeting. The Board considers that, having regard to their wide sphere of knowledge and experience, it will be in the interest of the Company to appoint Mr. Anjan Barua and Mr. K.R. Ramamoorthy (iv) the Directors had prepared the annual accounts on a going concern basis. VI. Audit Committee The Audit Committee comprises of four Directors viz., Mr. Y. H. Malegam, Mr. R. P. Chitale, Dr. R. H. Patil and Mr. S. Venkiteswaran as its members. Mr. Y. H. Malegam is the Chairman of the Audit Committee. Dr. R.H.Patil ceased to be a member of the Audit Committee with effect from April 12, 2012 consequent upon his demise. Mr. K. R. Ramamoorthy has become a member of Audit Committee w.e.f. May 9, The Committee met four times during the year on April 28, 2011, August 2, 2011, November 14, 2011 and January 17, The details of the attendance of members of the Audit Committee at their meetings held on the above dates are given in the following table:- Name Number of meetings Number of held during meetings their tenure attended Mr. Y. H. Malegam, 4 4 Chairman Mr. R. P. Chitale 4 4 Dr. R. H. Patil 4 4 *Mr. K. R. Ramamoorthy - - Mr. S. Venkiteswaran 4 1 required to be disclosed with respect to conservation of energy and technology absorption in terms of Section 217(1)(e) of the Companies Act, 1956, read with the aforesaid Rules are not applicable to the Company. 2. Foreign Exchange earnings/outgo during the year under review There was no foreign exchange earning during the year. However, the foreign exchange outgo during the year was ` 0.09 crores. IX. Particulars of Employees All the persons who are working with NSCCL are on deputation from National Stock Exchange of India Limited and accordingly the remuneration paid in respect of them has been reimbursed to NSEIL by NSCCL. A statement under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 is enclosed. X. Acknowledgment Your Directors wish to place on record their gratitude for the cooperation and support extended by the Government of India, Securities and Exchange Board of India and Reserve Bank of India. The Board also wishes to place on record their sincere appreciation for the unstinted efforts of the employees at all levels towards the continued growth of NSCCL. For and on behalf of the Board of Directors Expenditure Profit before prior period adjustments Add/(Less): Prior Period Adjustment (0.03) - Profit before Tax Provision for tax as Directors of the Company. Therefore, the Board recommends their appointment as Directors on the Board of NSCCL by the members. V. Directors Responsibility Statement Your Directors confirm that - * Member w.e.f. May 9, 2012 VII. Auditors The Auditors, M/s. Haribhakti & Co., Chartered Accountants, will retire at the forthcoming Annual General Meeting of NSCCL and are eligible for re-appointment. NSCCL has received a certificate Place: Mumbai Date: May 9, 2012 Ravi Narain Chairman (including deferred tax) Profit after tax Surplus brought forward from (i) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any; from the Auditors to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224 (1B) of the Companies Act, previous year Amount available for appropriation Appropriations General Reserve Proposed Dividend Corporate Dividend Tax Balance carried to Balance Sheet (ii) the Directors had selected such 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 NSCCL at the end of the financial year i.e., 31st March 2012 and of the profits of NSCCL for that year; (iii) the Directors had 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 NSCCL and for preventing and detecting fraud and other VIII. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings / Outgo 1. Conservation of Energy, Technology Absorption As the Company does not fall under any of the industries listed out in the Schedule appended to Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988, particulars Total irregularities ; and Page 8 Page 9

67 National Securities Clearing Corporation Limited Seventeenth Annual Report FY ANNEXURE TO DIRECTORS' REPORT STATEMENT PURSUANT TO SECTION 217 (2A) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES (PARTICULARS OF EMPLOYEES) RULES, AUDITORS REPORT To, The Members of NATIONAL SECURITIES CLEARING CORPORATION LIMITED Sr. Name & Qualifications Age in Designation/ Remuneration Experience Date of Last Employment No. years Nature of Duties Received (No.of years) Commencement of Employment Gross Net 1 Mr. R. Sundararaman 49 Senior Vice March 13, Grade 'B' Officer, B. Sc., CAIIB, AICWA President 1995 Industrial Development Bank of India Notes: 1 Gross Remuneration includes Salary and other benefits, Company's contribution to Provident Fund, Superannuation Fund, taxable value of perquisites etc. Net remuneration represents gross remuneration less company's contribution to provident and superannuation funds, taxable value of perquisites, profession tax and income tax. Where applicable, the amounts also includes certain allowances accrued during previous year(s) but claimed in the current year. 2 The above mentioned employee is not a relative of any Director. 3 The above employee is on deputation basis from the Company's holding company i.e. National Stock Exchange of India Limited (NSEIL) and the remuneration mentioned above in respect of him has been reimbursed to NSEIL by the Company 4 None of the employees is holding equity shares in the Company within the meaning of sub-clause (iii) of clause (a) of sub-section (2A) of Section 217 of the Companies Act, The Company does not have any Employees Stock Option Plan (ESOP) Scheme for its employees. 1. We have audited the attached Balancesheet of National Securities Clearing Corporation Limited ( the Company ) as at March 31, 2012 and also the Profit and Loss statement 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. As required by the Companies (Auditor s Report) Order, 2003, (as amended), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956 of India (the Act ) and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information and explanations given to us, we give 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 paragraph 3 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; iii. The balance sheet, the profit and loss statement and the cash flow statement dealt with by this report are in agreement with the books of account; iv. In our opinion, the balance sheet, the profit and loss statement and the cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, v. On the basis of the written representations received from the directors as on March 31, 2012, except for Mr. R. H. Patil, 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, 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 Companies Act, 1956, 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 profit and loss statement, 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 Haribhakti & Co. Chartered Accountants FRN No W ii. 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; Sumant Sakhardande Place: Mumbai Partner Date: May 9, 2012 Membership No Page 10 Page 11

68 National Securities Clearing Corporation Limited Seventeenth Annual Report FY ANNEXURE TO AUDITORS REPORT Referred to in paragraph 3 of the Auditors Report of even date to the members of National Securities Clearing Corporation Limited on the financial statements for the year ended March 31, 2012 (c) According to the records of the Company, the dues outstanding in respect of income tax, service tax and cess as at March 31, 2012 which have not been deposited with respective authorities on account of disputes are as follows: Name of the Statute Nature of Amount(in `) Period to which Forum where dispute is Pending (i) (ii) (iii) (iv) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) The fixed assets of the company have been physically verified by the management during the year and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable. (c) There was no substantial disposal of fixed assets during the year. The Company does not hold any Inventory. Therefore, the provisions of clauses 4(ii)(a),(b)&(c) of the Companies (Auditor s Report) Order, 2003 (as amended) are not applicable to the Company. (a) As informed, the Company has not granted/accepted any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and hence clauses 4(iii)(b), 4(iii)(c), 4(iii)(d), 4(iii)(f) and 4(iii)(g) of the Companies (Auditor s Report) Order, 2003 (as amended) are not applicable to the company. 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 of fixed assets and sale of services. During the course of our audit, no major (v) According to the information and explanations given to us, there are no contracts or arrangements during the year that need to be entered into the register maintained under section 301 hence clause 4(v)(b) of the Companies (Auditor s Report) Order, 2003 (as amended) is not applicable to the company. (vi) The company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under. (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 of India has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act for any of the services of the company. (ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including investor education and protection fund, income-tax, service tax, cess and other material statutory dues applicable to it. We are informed that the provision of Provident Fund Act and Employee State Insurance Act are not applicable to the Company. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of investor education and protection fund, income-tax, service tax, cess and other undisputed statutory dues were the Dues the amount relates Income Tax Act, 1961 Income Tax 1,82,988 AY CIT(Appeals) Income Tax Act, 1961 Income Tax 36,26,169 AY ITAT Income Tax Act, 1961 Income Tax 41,70,131 AY CIT(Appeals) (x) The Company does not have any accumulated losses as on the balance sheet date. Further, the company has not Company, we report that no funds raised on short-term basis have been used for long-term investment. incurred cash losses during the financial year covered by our (xviii) According to the information and explanations given to us, audit and the immediately preceding financial year. the company has not made any preferential allotment of (xi) The Company does not have any dues to financial institution, bank or debenture holders. (xii) According to the information and explanations given to us, the Company has not granted any loans or advances on the shares to parties and companies covered in the register maintained under section 301 of the Act. (xix) The Company did not have any outstanding debentures during the year. basis of security by way of pledge of shares, debentures and (xx) The Company did not raise any money by way of public issue other securities. during the year. (xiii) In our opinion, the Company is not a chit fund or a nidhi / (xxi) During the course of our examination of the books and mutual benefit fund / society. Therefore, the provisions of records of the company, carried out in accordance with the clause 4(xiii) of the Companies (Auditor s Report) Order, 2003 generally accepted auditing practices in India, and according (as amended) are not applicable to the Company. to the information and explanations given to us, we have (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 neither come across any instance of fraud on or by the company, noticed or reported during the year, nor have we been informed of such case by the management. (Auditor s Report) Order, 2003 (as amended) are not applicable to the Company. For Haribhakti & Co. (xv) In our opinion and according to the information and explanations given to us, the company has not given any Chartered Accountants FRN No W guarantee for loans taken by others from banks or financial institutions during the year. weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct weakness in internal control system of the company. outstanding, at the year end, for a period of more than six months from the date they became payable. (xvi) The Company has not obtained any term loans. (xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Sumant Sakhardande Place: Mumbai Partner Date: May 9, 2012 Membership No Page 12 Page 13

69 National Securities Clearing Corporation Limited Seventeenth Annual Report FY BALANCE SHEET As at 31 March, 2012 I II Notes As at As at 31 March, March, 2011 EQUITY AND LIABILITIES 1 Shareholder's funds a Share Capital b Reserves and surplus Non-current Liabilities a Deposits (Unsecured) b Deferred tax liabilities (net) c Other long-term liabilities d Long-term provisions Current Liabilities a Deposits (Unsecured) b Trade payables c Other current liabilities 9 2, , d Short-term provisions , , Total 4, , ASSETS 1 Non-current Assets a Fixed assets 10 Tangible assets Intangible assets Capital work-in-progress Intangible assets under development b Non-current investments c Long-term loans and advances d Other non-current assets Current Assets a Current investments b Trade receivable c Cash and bank balances 16 3, , d Short-term loans and advances e Other Current assets , , Total 4, , Summary of significant accounting policies 2 The accompanying notes are an integral part of the financial statements. As per our report of even date attached For and on behalf of the Board of Directors STATEMENT OF PROFIT & LOSS For the year ended 31 March, 2012 INCOME Notes For the year ended For the year ended 31 March, March, 2011 Revenue from operations Other income Total Revenue (I) EXPENSES Employee benefits expenses Other expenses Depreciation and amortisation expenses Total Expenses (II) Profit before prior-period adjustments Add/(Less) : Prior-period adjustments (0.03) - Profit before tax Less : Provision for tax Current tax Deferred tax (0.08) 0.25 Total tax expenses Profit after tax Earning per Equity Share (FV ` 10) 27 ` ` Basic Diluted Summary of significant accounting policies 2 The accompanying notes are an integral part of the financial statements. As per our report of even date attached For and on behalf of the Board of Directors For HARIBHAKTI & CO. Chartered Accountants Firm Regn. No W Sumant Sakhardande Ravi Narain Chitra Ramkrishna Partner Chairman Managing Director Place : Mumbai Y. H. Malegam R. Jayakumar Date : May 9, 2012 Director Asst. Company Secretary For HARIBHAKTI & CO. Chartered Accountants Firm Regn. No W Sumant Sakhardande Ravi Narain Chitra Ramkrishna Partner Chairman Managing Director Place : Mumbai Y. H. Malegam R. Jayakumar Date : May 9, 2012 Director Asst. Company Secretary Page 14 Page 15

70 National Securities Clearing Corporation Limited Seventeenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 1 BASIS OF PREPARATION The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (India GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notifies under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, The financial statements have been prepared on an accrual basis and under the historical cost convention except in case of assets for which provision for impairment is made and revaluation is carried out. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management s best knowledge of current events and actions, actual results could differ from these estimates. b) 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. (i) Clearing and Settlement charges, IT & support charges are recognized on accrual basis as and when the services are rendered. (ii) In respect of Members who have been declared as defaulters by the company all amounts (dues) remaining to be recovered, net of available security and insurance cover available if any, till the date of being declared as defaulters are written off as bad debts. All subsequent recoveries are accounted when received. Shortages arising after the date of declaration of default are written off as bad debts in the year in which it arises, after exhausting all remedies including forfeiture of securities and insurance cover available if any. Other overdue amounts are provided for as doubtful debts or are written off as bad debts, if the same are considered doubtful/irrecoverable in the opinion of the management. (iii) Penal Charges, in the year of declaration of default, in respect of shortages due from the respective member, are booked to the extent such charges are recoverable. (iv) Other insurance claims are accounted on accrual basis when the claims become due and payable. (v) Dividend on investments is recognized when a right to receive the same is established. Income on investments is accounted for on accrual basis. (vi) Interest is recognized on time proportionate basis taking into consideration the amount outstanding and the rate applicable. c) Usage charges & Fixed Assets (i) For the assets commonly used by the Company and National Stock Exchange of India Ltd. (NSEIL) and which are owned by NSEIL, Usage charges are paid to NSEIL at 25 % per annum of the proportionate Capital Cost of such assets. (ii) Fixed assets are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. (iii) Depreciation is provided on the "Straight line method" based on estimated useful life of assets at the following rates which are higher than those prescribed in Schedule XIV (Inserted by the Companies (Amendment) Act, 1988 and Notification GSR No. 756E dated 16th December, 1993) to the Companies Act, 1956.Depreciation on additions / deletions is provided on pro-rata basis from the date of acquisition/ up to the date of deletion. Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Contd.) Assets Depreciation Rate Office Equipment 25.00% Furniture & Fixtures - Movable Furniture 20.00% - Non Movable Furniture 6.33%/10.00% Computer Systems 33.33% Clearing and Settlement Systems 25.00% Telecommunications Systems 25.00% Dial Based Telecom Network 25.00% (iv) Intangibles :- Intangibles comprising of software are recorded at acquisition cost and are amortized over the estimated useful life on straight line basis. Depreciation on additions is provided on pro-rata basis from the date of acquisition/ upto the date of deletion. Assets Depreciation Rate Computer Software 25.00% (v) Impairment of Assets :- 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 the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the 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 asset over its remaining useful life. d) Investments (i) Long term investments are considered as held till maturity and are valued at cost. Provision is made for diminution in the value of investment, if any, other than temporary in nature. (ii) Short term investments are valued at cost or fair value whichever is lower. (iii) Premium/ Discount at the time of acquisition of Government / Debt securities is amortised /recognised over the residual period of its maturity. (iv) The cost of investment includes acquisition charges such as brokerage, etc. Front-end discount / incentive earned in respect of direct subscription are adjusted towards the cost of investment. e) Income Tax Income tax expense for the year, comprising current tax and deferred tax is included in determining the net profit for the year. A provision is made for the current tax based on tax liability computed in accordance with relevant tax rates and tax laws. Deferred tax assets are recognised 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 realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. At each balance sheet date the Company re-assesses unrecognized deferred tax assets. It recognises unrecognised 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 realised. The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that Page 16 Page 17

71 National Securities Clearing Corporation Limited Seventeenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Contd.) Note 3 SHARE CAPITAL (Contd.) Page 18 sufficient future taxable income will be available against which deferred tax asset can be realised. 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. f) Provisions, contingent liabilities & contingent assets :- Provisions involving substantial degree of estimations in measurement are recognized when there is present obligation as result of past events and it is probable that there will be outflow of economic resources. Provisions are not discounted to its present value and are determined based on best estimates required to settle the obligations at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed while, contingent assets neither are recognized nor disclosed in financial statements. g) Earning Per Share:- Basic and diluted earning per share is computed by dividing the net profit attributable to equity shareholders for the year, by weighted average number of equity shares outstanding during the year. h) Cash and cash equivalents Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less. Note 3 SHARE CAPITAL As at As at Authorised 4,50,00,000 (Previous Year :4,50,00,000) Equity Shares of ` 10 each Issued, Subscribed and Paid-up 4,50,00,000 (Previous Year :4,50,00,000) Equity Shares of ` 10 each fully paid up. (all the above shares are held by the holding company- National Stock Exchange of India Limited and its nominees) Total Aggregrate number of bonus shares issued during the period of five years immediately preceeding the reporting date Particulars Aggregrate No. of Shares Equity Shares Fully paid up by way of Bonus Shares 22,500, There is no movement either in the number of shares or in amount between previous year and current year. The company has only one class of equity shares having a par value of ` 10/- per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board of directors, in their meeting on May 09, 2012, proposed a dividend of ` 45/- per equity share. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held on May 29, The total dividend appropriation for the year ended March 31, 2012 amounted to ` crore excluding Dividend Distribution Tax During the year ended March 31, 2011, the amount of per share dividend recognized as distribution to equity shareholders was ` 20/-. The dividend appropriation for the year ended March 31, 2011 amounted to ` crore excluding Dividend Distribution Tax. Details of shareholders holding more than 5% share in the company As at As at No. % holding No. % holding National Stock Exchange of India Limited and its nominees % % Note 4 RESERVE AND SURPLUS As at As at Capital Redemption Reserve As per last balance sheet Less: Expenses incurred Transferred from profit & loss account - - Add: Transferred from surplus balance in the statement of profit & loss account Special Contingency Reserve As per last balance sheet Less : Transferred to General Reserve account Add : Transferred from surplus balance in the statement of profit & loss account Technology upgradation reserve As per last balance sheet Less: Transferred to General Reserve account General reserve As per last balance sheet Add : Transferred from surplus balance in the statement of profit & loss account Add : Transferred from Special Contingency Reserve Add : Transferred from Technology Upgradation Reserve Surplus/(deficit) in the statement of profit and loss Balance as per last financial statements Profit for the year Less: Appropriations Transfer to general reserve Proposed dividend (refer note 3) Tax on proposed dividend Total reserves and surplus Note 5 DEPOSITS (UNSECURED) Non-current Current As at As at As at As at Security Deposit from Clearing Members Security Deposit in lieu of Bank Guarantee/securities Deposits from applicants for membership Deposits from Clearing Banks Total Page 19

72 National Securities Clearing Corporation Limited Seventeenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 6 DEFERRED TAX LIABILITIES (NET) As at As at Deferred Tax Liabilities Related to depreciation and other expenditure Related to other items - - Total (A) Less : Deferred Tax Assets Related to disallowance u/s 43B - - Related to other items - - Total (B) - - Net Deferred Tax liabilities (A-B) Note 7 OTHER LONG-TERM LIABILITIES As at As at Trade payables Others - - Total - - Note 8 PROVISION Long - term Short - term As at As at As at As at Other Provisions Proposed dividend Corporate dividend tax Total Note 9 OTHER CURRENT LIABILITIES As at As at Trade payables Subsidiary Companies - - Others Sundry creditors (Ref note no.21 ) (including amount due to holding company `7.14 crores (previous year ` 9.45 crores) Margins From Members , Settlement Obligations payable 2, , Amount payable to NSEIL IPFT Other liabilities , , Total 2, , NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 10 FIXED ASSETS as on 31 March, 2012 (Refer Note No. 2c) Description Gross Block Depreciation/Amortisations Net Block As on Additions Deletions As on Upto For the Deletions Total upto As on As on Year Tangible Assets Clearing And Settlement System Furniture And Fixtures Office Equipments Telecommunication Systems Computer Systems 1.04 Total A Intangible Assets Computer Software Total B Grand Total (A+B) Previous Year Page 20 Page 21

73 National Securities Clearing Corporation Limited Seventeenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 11 NON CURRENT INVESTMENTS (VALUED AT COST UNLESS STATED OTHERWISE) (REFER NOTE NO. 2D) Maturity Number of Face Value Face As at Number As at Date Units per Unit Value of Units (Figures in bracket indicates amount earmarked towards SGF) QUOTED GOI SECURITIES Taxable 11.50% Government Of India Security (Amount `.30000/-) 21-May , Sub-Total(I) BONDS Taxfree 5.25% Nuclear Power Corporation Of India Limited 23-Mar ,000, ,000, % Nuclear Power Corporation Of India Ltd. 14-Aug ,000 20,000, % Indian Railway Finance Corporation Limited - Series Dec ,000 50,000, % India Infrastructure Finance Company Limited - Series I - 22-Jan-14 6, , ,000, (10.24) 6, % India Infrastructure Finance Company Limited - Series II - 20-Mar-14 2, , ,500, , % Indian Railway Finance Corpn Ltd - Tranche 1 - Series 1 23-Feb-22 32,626 1,000 32,626, % - Power Finance Corporation - Series 80 A - 25-Nov ,000 50,000, % Rural Electrification Corpn Ltd - Tranche 1 - Series 1 27-Mar-22 61,238 1,000 61,238, % National Highways Authority Of India - Tranche 1 - Series 1-25-Jan-22 37,086 1,000 37,086, % Power Finance Corporation Limited - Tranche 1 - Series 1-01-Feb-22 42,718 1,000 42,718, (4.27) % Indian Railway Finance Corporation Limited - 28-Feb ,000,000 90,000, Sub-total (II) (14.51) Total (I+II) (14.51) Notes : As at As at ` in Crores ` in Crores Aggregate Book Value - Quoted Investments (Aggregate Market Value of the quoted investments is ` crores (Previous Year : ` crores) Aggregate Book Value - Unquoted Investments NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 12 CURRENT INVESTMENTS (valued at lower of cost or fair value)(refer Note No. 2d) Maturity Number of Face Value Face As at Number As at Date Units per Unit Value of Units (`. in Crores) (Figures in bracket indicates amount earmarked towards SGF) I CURRENT PORTION OF LONG TERM INVESTMENTS ( VALUED AT COST UNLESS STATED OTHERWISE ) TAXABLE BONDS A) UNQUOTED 5.50% Rural Electrification Corporation Limited - 54 EC - 31-Jul ,500,000-3, % Rural Electrification Corporation Limited - 54 EC - 31-Mar ,000, Sub-Total (i) B) Mutual Funds Quoted Fixed Maturity Plans DWS Fixed Term Fund - Series 80 - Growth Plan 2-May ,000, ,000, Kotak Fixed Maturity Plan - Series Days - Growth 25-Apr ,000, ,000, SBI Debt Fund Series Days Growth 29-May ,000, ,000, Birla Sun Life Fixed Term Plan Series CY Growth 28-Apr ,000, ,000, DWS Fixed Term Fund Series 67 - Growth Plan 25-Apr ,451,276-1,545, Birla Sun Life Fixed Term Plan - Series CI - Growth Option 28-Nov ,000, , Canara Robeco Fixed Maturity Plan - Series 6-13 Months - Plan A - Growth 25-Mar ,586,000-5,658, DWS Fixed Term Fund - Series 75 - Growth Plan 28-Sep ,000, , DSP Blackrock FMP - 12 Months - Series 9 - Growth 21-Nov ,000,000-5,000, ICICI Prudential FMP Series 55-1 Year - Plan B Cummulative 12-Feb ,000,000-5,000, ICICI Prudential FMP Series 56-1 Year - Plan D Cummulative 29-Mar ,000,000-5,000, Kotak FMP - 15 Months - Series 7 - Growth 23-Feb ,750, , Kotak FMP Days - Series 9 - Growth 25-Oct ,000,000-5,000, Religare Fixed Maturity Plan - Series VI - Plan D Days - Growth 26-Mar ,600,000-1,960, Sundaram Fixed Term Plan AP 367 Days Growth 4-Nov ,035, , Tata FMP - Series 29 - Plan A - Growth 7-Nov ,175,340-5,517, Sub-Total (ii) Total ( I ) Page 22 Page 23

74 National Securities Clearing Corporation Limited Seventeenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 12 CURRENT INVESTMENTS (valued at lower of cost or fair value)(refer Note No. 2d) (Contd.) Maturity Number of Face Value Face As at Number As at Date Units per Unit Value of Units (Figures in bracket indicates amount earmarked towards SGF) II CURRENT INVESTMENTS (VALUED AT LOWER OF COST OR FAIR VALUE) A) DEBENTURES QUOTED 8.25%Sundaram Finance Limited - NCD - 26-Jul ,000, ,000, Sub-Total (i) Unquoted 7.45% Tata Sons Limited - NCD - 15-Apr ,000,000 85,000, Sub-Total (ii) B) Taxable Bonds Quoted 7.75% Infrastructure Development Finance Company Limited - 15-Apr ,000,000 50,000, Sub-Total (iii) C) Mutual Funds Unquoted Axis Liquid Fund - Institutional - Daily Dividend 65,402 1,000 65,403, , Baroda Pioneer Treasury Advantage Fund - Institutional Daily Dividend Plan 102,206 1, ,298, (10.00) 261, Birla Sun Life Cash Plus - Instl Prem - Daily Dividend - Reinvestment 3, , , BNP Paribas Money Plus Institutional Plan - Daily Dividend ,449, Canara Robeco Treasury Advantage Super Instt Daily Div Reinv Fund ,285, DSP Blackrock Liquidity Fund - Institutional Plan - Daily Dividend , DWS Ultra Short Term Fund - Institutional Daily Dividend 116, ,164, ,237, HDFC Cash Management Fund -Treasury Advantage Plan - Wholesale - Daily Dividend ,855, ICICI Prudential Flexible Income Plan Premium - Daily Dividend 18, ,912, , ICICI Prudential Ultra Short Term Plan Super Premium Weekly Dividend 11,186, ,444, (10.25) 10,676, NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 12 CURRENT INVESTMENTS (valued at lower of cost or fair value)(refer Note No. 2d) (Contd.) Maturity Number of Face Value Face As at Number As at Date Units per Unit Value of Units (Figures in bracket indicates amount earmarked towards SGF) IDBI Liquid Fund - Daily Dividend - Reinvestment , IDFC Money Manager Fund - Tp - Super Inst Plan C - Daily Dividend 569, ,696, ,999, JM High Liquidity Fund - Super Institutional Plan - Daily Dividend 32,632, ,867, (32.56) 15,835, JM Money Manager Super Plus Plan - Daily Dividend ,535, JP Morgan India Liquid Fund - Super Inst Daily Dividend Plan - Reinvest 118, ,190, JP Morgan India Treasury Fund - Super Inst. Daily Div Plan - Reinvest ,500, Kotak Floater - Short Term - Daily Dividend 54,951, ,898, (55.00) 110,088, Kotak Floater Long Term - Daily Dividend 132, ,332, ,901, Reliance Liquidity Fund -Daily Dividend ,936, Reliance Liquid Fund - Treasury Plan-Institutional Option - Daily Dividend 13,874, ,107, (19.50) - - Reliance Medium Term Fund - Daily Dividend Plan 1,137, ,454, (0.15) 481, Religare Liquid Fund - Super Institutional Daily Dividend 24 1,001 23, Religare Ultra Short Term Fund - Institutional Daily Dividend , SBI - Magnum Insta Cash Fund - Daily Dividend Option ,665, SBI SHF - Ultra Short Term - Retail Plan - Daily Dividend , SBI-SHF - Ultra Short Term Fund - Institutional Plan - Daily Dividend , Sundaram Money Fund - Super Institutional - Dividend - Daily Reinvest ,782, Tata Floater Fund - Daily Dividend 263, ,641, ,695, Templeton Floating Rate Income Fund Super Inst Option - Daily Dividend Reinvest , Templeton India Treasury Mgmt Account Super Institutional Plan - Daily Dividend 142,364 1, ,460, (13.00) 637, Templeton India Ultra Short Bond Fund Super Inst Plan - Daily Dividend Reinvest 788, ,895, ,660, UTI Money Market Fund - Institutional Plan - Daily Dividend 51 1,003 50, , Page 24 Page 25

75 National Securities Clearing Corporation Limited Seventeenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 12 CURRENT INVESTMENTS (valued at lower of cost or fair value)(refer Note No. 2d) (Contd.) Maturity Number of Face Value Face As at Number As at Date Units per Unit Value of Units (Figures in bracket indicates amount earmarked towards SGF) UTI Treasury Advantage Fund - Institutional Plan - Daily Dividend - Re-Invest , Religare FMP - Series IV - Plan B - Dividend ,000, SBI Magnum DFS Days Dividend , ICICI Interval Plan III - Inst Cummulative 18-Oct ,999, Sub-Total (iv) (140.46) D) Commercial Paper Aditya Birla Finance Limited 12-Nov , ,000, IL&FS Financial Services Limited 16-Nov , ,000, Aditya Birla Finance Limited 12-Apr , ,000, Aditya Birla Finance Limited 23-Apr , ,000, Aditya Birla Finance Limited 14-May ,000 50,000, Tata Capital Limited 25-May , ,000, HCL Infosystems Limited 31-May , ,000, Aditya Birla Finance Limited 13-Sep , ,000, National Bank For Agriculture & Rural Development 22-Sep , ,000, Reliance Capital Limited 1-Jul , ,000, L&T Finance Company Limited 27-May , ,000, Tata Capital Limited 5-Oct , ,000, Blue Star Limited 22-Apr , ,000, Aditya Birla Finance Limited 6-Jan , ,000, Sub-total (v) Total ( ii ) (140.46) Grand Total ( i + ii) (140.46) Note : As at As at (` in crores) (` in crores) Aggregate Book Value - Quoted Investments (Aggregate Market Value of the quoted investments is ` crores [Previous Year : ` crores]) Aggregate Book Value - Unquoted Investments The provision for dimunition in value debenture is provided for ` 0.04 Crores Note 13 LOANS AND ADVANCES Non-current Current As at As at As at As at Capital advances Secured, considered good Unsecured, considered good (A) Security deposit (B) Loan and advances to related parties (C) Advances recoverable in cash or kind Secured, considered good Unsecured, considered good (D) Other loans and advances Income Tax paid including TDS (Net of Provisions) Other deposits (E) Total (A+B+C+D+E) Note 14 OTHER ASSETS Non-current Current As at As at As at As at Unsecured, considered good unless stated otherwise Non-current bank balances (note no.16) Others Interest accured on Investments Interest accured on certificate of deposits Interest accured on Bank deposits Total Note 15 TRADE RECEIVABLES Non-current Current As at As at As at As at Unsecured, considered good unless stated otherwise Outstanding for a period of over six months from the date they are due for payment Secured, considered good Unsecured, considered good Other debts Secured, considered good Unsecured, considered good Total Page 26 Page 27

76 National Securities Clearing Corporation Limited Seventeenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 16 CASH AND BANK BALANCES Non-current Current As at As at As at As at Cash and cash equivalents Balances with banks : On current accounts Deposits with original maturity of less than three months - - 2, , Earmarked Deposits with original maturity of less than three months Cash on hand , , Other bank balances Deposits with original maturity for more than 12 months Earmarked Deposits with original maturity for more than 12 months Deposits with original maturity for more than 3 months but less than 12 months Earmarked Deposits with original maturity for more than 3 months but less than 12 months Certificate of Deposits , Amount disclosed under non-current assets (note 14) Total - - 3, , Note 17 REVENUE FROM OPERATIONS Page 28 For the year ended For the year ended Sale of Services Clearing & Settlement Charges Other operating revenues IT & Process Support Charges Software Usage Charges Connect to NSE Services Interest on Bank Deposit Dividend received Processing Charges Fines & Penalties Total Note 18 OTHER INCOME Note 19 EMPLOYEE BENEFITS EXPENSES (REFER NOTE NO. 23) For the year ended For the year ended Interest Income on On Investment - Short Term Long Term On Bank Deposits On Certificate of Deposits On Income Tax Refund - On Others Dividend income Long Term Short Term Net gain / loss on sale of long term Investment Net gain / loss on sale of current Investment Profit on sale / discard of Fixed Assets (Net) Bad debts written back WAP Difference Miscellaneous Income Total For the year ended For the year ended Salaries, wages and bonus Contribution to provident and other fund Employees welfare expenses Total Note 20 OTHER EXPENSES For the year ended For the year ended Space & Infrastructure Usage Charges Common Usage Expenses (Refer Note No. 2 c (i)) Insurance Premium Printing, Stationery & Consumables Auditors' Remuneration (refer note below) Professional fees Repairs & Maintenance : - On Building On Computer systems Others IT Management & Consultancy Charges Software Expenses Directors' Sitting fees Electricity expenses Rates and Taxes Adjustments to the carrying amount of current investments Amortisation of Premium on Government / Debt Securities Other expenses Total Page 29

77 National Securities Clearing Corporation Limited Seventeenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 20 OTHER EXPENSES (Contd.) Note 21 Sundry creditors include overdue amounts of ` NIL (Previous Year: ` 2449/-) (including interest of ` Nil, (Previous Year ` Nil) payable to Micro, Small & Medium Enterprises. Total outstanding dues to Micro, Small & Medium Enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company. Note 22 EXPENDITURE IN FOREIGN CURRENCY : Travelling Expenses: ` 0.04 Crores (Previous Year :` 0.00 Crores) Others: ` 0.05 Crores (Previous Year: ` 0.02 Crs) Note 23 For the year ended For the year ended Note : Payment to auditor As auditor : Audit fees Tax audit fee - - Limited review - - In other capacity Taxation matters - - Certification matters - - Other services - - Total Payments to and provision for employees represents the amount reimbursed by the company to The National Stock Exchange of India Limited (NSEIL) in respect of employees made available to the company. Accordingly, necessary provisions as required for all retirement benefits and other long term employee benefits as per the requirements of Accounting Standard 15- Employee Benefits issued by the Institute of Chartered Accountants of India are carried out by NSEIL. Note 24 The Company has constituted separate Settlement Guarantee Funds (SGF) in respect of the Capital Market, Futures & Options Market, Retail Debt Market segments and Currency Derivatives Market. The Clearing members are required to contribute to the respective fund in the form of interest free security deposit and also make additional deposits in the form of cash, securities, fixed deposit receipts or bank guarantees. Besides the same, the Clearing members are also required to deposit margin money which, subject to hair cut, forms part of the SGF. While the interest free security deposit is not refundable during the tenure of a clearing membership, the margin money is refundable, subject to adjustments, if any. Note 24 (Contd.) Non Cash Component Sr. Segment Total SGF Cash Bank Securities Fixed Deposit No. Component Guarantees Receipts 1 Capital market * 4, , , Futures & Options 25, , , , Retail Debt Market Currency Derivatives 1, Total 31, , , , *after adjusting net shortages amounting to ` 0.14 Crore The breakup of Cash Component in each SGF is as follows: As at 31 March, 2012 Sr. Segment Interest Free Security Margins Total No. Security Deposit Deposit 1 Capital market Less : Net Shortages 0.14 Net Amount Futures & options Retail Debt Market Currency Derivatives Total Amount not forming part of SGF Total (Balance Sheet ref. no) Note 5 Note 5 Note 9 The above cash component of SGF has been earmarked as under: Sr. Particulars Amount Balance Sheet Earmarked No. Reference No. Amount 1 Non Current Investments Note Current Investments Note Balances with Banks in Current Account Note in Deposit Accounts 3, Note Total (1 to 3) 4, Of this, the interest free security deposit and security deposit in the form of cash collected from members amounting to ` 357 Crores are grouped under the head Unsecured Deposits whereas the cash margin amounting to ` Crores collected from members (` Crores after applying hair cut) has been grouped under the head Other Current Liabilities. The non cash portion of the SGF comprising of collaterals such as bank guarantees, securities and fixed deposit receipts received from the members amounting to ` 38, Crores (` 30, Crores after applying hair cut) does not form part of the Balance Sheet. Page 30 Page 31

78 National Securities Clearing Corporation Limited Seventeenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 24 (Contd.) A) Capital Market Segment: I. Cash component in form of Interest Free Security Deposit of ` Crores is earmarked as under: Note 24 (Contd.) B) Futures & Options Segment: I. Cash component in form of Interest Free Security Deposit of ` Crores earmarked as under: Particulars Amount (` In Crores) Particulars Amount (` In Crores) II. Mutual Funds Reliance Medium Term Fund - Daily Dividend Plan 0.15 JM High Liquidity Fund-Super Institutional Plan-Daily Dividend Plan 2.56 Total Mutual Funds 2.71 Flexi Fixed Deposits Flexi Fixed Deposits With HDFC Bank Flexi Fixed Deposits With ICICI Bank 2.34 Total Flexi Fixed Deposits Fixed Deposits Federal Bank Limited Yes Bank Limited Bank of India ICICI Bank Limited Total Fixed Deposits Tax Free Bonds 8.20% Power Finance Corporation Limited 4.27 Total Tax Free Bonds 4.27 Cash Component in form of Security Deposit of ` Crores is earmarked as under: Particulars Amount (` In Crores) Taxfree Bonds 6.85% India Infrastructure Finance Company Limited - Series I - 22 Jan Total Taxfree Bonds Fixed Deposits IDBI Bank Bank Of Baroda 5.27 ICICI Bank Canara Bank Corporation Bank Limited 5.00 Federal Bank Limited Total Fixed Deposits Mutual Funds ICICI Prudential Ultra Short Term Plan Super Premium Weekly Dividend 0.25 Total Mutual Funds 0.25 Flexi Fixed Deposits Flexi Fixed Deposit ICICI Bank Flexi Fixed Deposit Axis Bank 8.58 Flexi Fixed Deposit Bank Of India Total Flexi Fixed Deposits III. Flexi Fixed Deposits Flexi Fixed Deposits with HDFC Bank Total Flexi Fixed Deposits Cash component in form of Margins of ` Crores is earmarked as under: Particulars Amount (` In Crores) Mutual Funds Franklin Templeton India TMA-Super IP- Daily Div Kotak Floater Short Term - Daily Dividend Total Mutual Funds Flexi Fixed Deposits Flexi Fixed Deposits With HDFC Bank Flexi Fixed Deposits With Axis Bank 3.53 Flexi Fixed Deposits With ICICI Bank Flexi Fixed Deposits With Citibank Flexi Fixed Deposits With HSBC Bank Total Flexi Fixed Deposits Fixed Deposits State Bank Of Travancore Yes Bank Limited Total Fixed Deposits II. Cash component in form of Security Deposit of ` Crores earmarked as under: Particulars Amount (` In Crores) Flexi Fixed Deposits Flexi Fixed Deposit HDFC Bank Flexi Fixed Deposit ICICI Bank 5.23 Total Flexi Fixed Deposits Page 32 Page 33

79 National Securities Clearing Corporation Limited Seventeenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 24 (Contd.) Note 24 (Contd.) III. Cash component in form of Margins of ` Crores is earmarked as under II. Cash component in form of CDS Security Deposit of ` 6.97 Crores is earmarked as under: Particulars Amount (` In Crores) Particulars Amount (` In Crores) Mutual Funds Kotak Floater - Short Term - Daily Dividend Reliance Liquidity Fund Treasury Plan IP -Daily Dividend Reinvestment Total Mutual Funds Fixed Deposits ICICI Bank 9.65 State Bank Of Travancore 1.54 IDBI Bank Central Bank Of India Bank Of Baroda State Bank Of Patiala 0.55 Yes Bank Limited Axis Bank Limited Total Fixed Deposits Flexi Fixed Deposits Flexi Fixed Deposit HDFC Bank Total Flexi Fixed Deposits III. Flexi Fixed Deposits HDFC BANK LTD 2.95 Total Flexi Fixed Deposits 2.95 Bank Balances ICICI 4.02 Total SD 6.97 Cash component in form of CDS Margins of ` Crores is earmarked as under: Particulars Amount (` In Crores) JM High Liquidity Fund - Super Institutional Plan - Daily Dividend Total Mutual Funds Flexi Fixed Deposits AXIS BANK 3.12 Total Flexi Fixed Deposits 3.12 C) Retail Debt Market Segment : Cash component in form of Cash Deposit of ` 1.70 Crores is earmarked as under Particulars D) Currency Derivative Segment : I. Cash component in form of Interest Free Security Deposit of ` Crores is earmarked as under: Particulars Amount (` In Crores) Flexi Fixed Deposits Flexi Fixed Deposits With HDFC Bank 1.70 Total RDM Deposits 1.70 Amount (` In Crores) Baroda Pioneer Treasury Advantage Fund - Institutional Daily Dividend Plan ICICI Prudential Ultra Short Term Plan Super Premium Weekly Dividend Total Mutual Funds Fixed Deposit State Bank of Mysore 5.00 Total Fixed Deposit 5.00 Flexi Fixed Deposits HDFC Bank 4.75 Citi Bank 0.69 Bank of India 1.86 AXIS BANK 1.95 Total Flexi Fixed Deposits 9.25 Note 25 In the opinion of the management, as the Company s operations comprise of only facilitating Clearing & Settlement in securities and the activities incidental thereto within India, the disclosures required in terms of Accounting Standard 17 - Segment Reporting issued by the Institute of Chartered Accountants of India are not applicable. Note 26 In compliance with Accounting Standard 18 - Related Party Disclosures issued by the Institute of Chartered Accountants of India, the required disclosures are given in the table below: (a) Names of the related parties and related party relationship Sr. No. Related Party Nature of Relationship 1 National Stock Exchange of India Limited (NSE) Holding Company 2 NSE.IT Limited Fellow Subsidiary 3 DotEx International Limited Fellow Subsidiary 4 India Index Services & Products Limited Fellow Subsidiary 5 National Commodity Clearing Limited Fellow Subsidiary 6 NSE Infotech Services Limited Fellow Subsidiary 7 NSE.IT (UK) Limited Fellow Subsidiary 8 NSE.IT (US) Inc. Fellow Subsidiary 9 Power Exchange India Limited Fellow Subsidiary 10 (1) Mr. Ravi Narain Chairman Key Management Personnel (2) Ms.Chitra Ramkrishna Managing Director & CEO Key Management Personnel Page 34 Page 35

80 National Securities Clearing Corporation Limited Seventeenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 26 (Contd.) NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 28 CONTINGENT LIABILITIES AND COMMITMENTS (b) Details of transaction (including service tax wherever levied) with parties are as follows : (i) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for ` 1.63 Crores (Previous Year : 0.75 Crores) Name of the Related Party Nature of Transactions Year ended Year ended (ii) Claims against company not acknowledged as debts: ` 6.69 Crores (Previous Year : ` 6.69 Crores) (iii) On account of disputed demand of Income tax ` 7.69 Crores (Previous Year : `14.79 Crores) National Stock Exchange of India Ltd. Clearing and Settlement charges received Usage charges paid Reimbursement paid for expenses on staff on deputation Reimbursement paid for other expenses incurred Space & Infrastructure Usage Charges paid Dividend paid Reimbursement received for services Rendered - - Outstanding balance (Credit) / Debit (7.14) (9.45) NSE.IT Ltd. Repairs & Maintenance Clearing & Computer systems Outstanding balance (Credit) / Debit (0.25) (0.14) National Commodity Clearing Ltd. Software usage charges paid Outstanding Balance (Credit)/Debit - - NSE Infotech Services Limited Repairs & Maintenance Clearing & Computer systems Outstanding balance (Credit) / Debit (1.70) (1.74) Note 29 In the opinion of the Board, all assets other than fixed assets and non current investments have a value on realisation in the ordinary course of business at least equal to the amount stated. Note 30 Certain fixed assets have been retired from active use and held for disposal/scrap. The same have been valued at the lower of net book value and net realisable value. The net realisable value thereof has been considered as Nil in view of the technological obsolescence thereof. Note 31 PRESENTATION AND DISCLOSURE OF FINANCIAL STATEMENTS Note 27 In accordance with Accounting Standard 20 - Earning per Share issued by the Institute of Chartered Accountants of India, the required disclosure is given below. Earning per share Year ended Year ended Net Profit attributable to Shareholders (` In Crores) Weighted Average number of equity shares issued (No. in Crores) Basic earnings per share of ` 10/- each (in `) The Company does not have any outstanding dilutive potential equity shares. Consequently, the basic and diluted earning per share of the Company remain the same. During the year ended March 31, 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. As per our report of even date attached For HARIBHAKTI & CO. Chartered Accountants Firm Regn. No W For and on behalf of the Board of Directors Sumant Sakhardande Ravi Narain Chitra Ramkrishna Partner Chairman Managing Director Place : Mumbai Y. H. Malegam R. Jayakumar Date : May 9, 2012 Director Asst. Company Secretary Page 36 Page 37

81 National Securities Clearing Corporation Limited Seventeenth Annual Report FY CASH FLOW STATEMENTS For the year ended 31 March, 2012 CASH FLOW STATEMENTS (Contd.) For the year ended 31 March, A) CASH FLOW FROM OPERATING ACTIVITIES Net Profit before tax Add: Adjustments for : Depreciation for current year Amortisation of Premium on Govt/Debt Securities Adjustments to the carrying amount of current investments Less: Adjustments for : (Profit)/Loss on sale of fixed assets (0.02) 0.00 Interest Income on short term Investments (14.58) (10.03) Interest Income on long term Investments (8.96) (7.78) Interest income on Bank Deposit (49.92) (8.55) Profit on sale / redemption of Investments (3.83) (25.40) Dividend on Investment (20.03) (20.04) Operating Profit Before Working Capital Changes Adjustments for : Trade Receivables Loans & Advances (0.32) (0.36) Interest on operating Income (5.88) (5.69) Current Liabilities & Provisions (319.84) Cash Generated from Operations (75.11) Direct taxes paid (Net of Refunds) (99.29) (80.92) Net Cash from (used in) Operating Activities - Total (A) (174.40) B) CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets / Capital Work in progress (0.94) (4.02) Sale of Fixed Assets Interest Income received Dividend on Investment (Increase)/Decrease in Deposits with banks (154.78) (930.48) (Increase)/Decrease in Investment Net cash from (used in) Investing activities - Total (B) (207.14) C) CASH FLOW FROM FINANCING ACTIVITIES Proceed of deposit from Clearing members / Applicant Refund of deposit to Clearing members / Applicant (62.33) (51.11) Dividend Paid (incl. corporate dividend tax) (104.60) (99.70) Net cash from (used in) financing activities - Total (C ) (104.66) (79.50) Net Increase/(Decrease) in Cash & Cash equivalents (A+B+C) (6.58) Cash and Cash Equivalents : Opening Balance 2, , (includes fixed deposit with banks of ` Crores (Previous Year : ` Crores) Cash and Cash Equivalents : Closing Balance 2, , (includes fixed deposit with banks of ` Crores (Previous Year : ` Crores) Net Increase/(Decrease) in Cash and Cash Equivalent (6.58) Notes to Cash Flow Statement : 1 Cash and Cash equivalent represent bank balances and balances in fixed deposit accounts. 2 The above Cash Flow Statement has been prepared under the " Indirect Method" as set out in Accounting Standard-3 on Cash Flow Statements issued by the Institute of Chartered Accountants of India. As per our report of even date attached For HARIBHAKTI & CO. Chartered Accountants Firm Regn. No W For and on behalf of the Board of Directors Sumant Sakhardande Ravi Narain Chitra Ramkrishna Partner Chairman Managing Director Place : Mumbai Y. H. Malegam R. Jayakumar Date : May 9, 2012 Director Asst. Company Secretary Page 38 Page 39

82 NSE.IT Limited (A wholly owned subsidiary of National Stock Exchange of India Limited) Thirteenth Annual Report

83 NSE.IT LIMITED Thirteenth Annual Report FY CORPORATE INFORMATION Board of Directors Mr. Ravi Narain : Chairman Mr. Ramesh Padmanabhan : Managing Director & Chief Executive Officer Mr. Bharat Doshi Ms. Chitra Ramkrishna Mr. Dileep Chokshi Mr. J. Ravichandran Dr. R. H. Patil (up to ) Mr. V. Babuji Management Team Mr. Anand Pachchhapur : Vice President Mr. V. Rajaraman : Vice President Mr. Shailesh Chitre : Vice President Dr. Pareshnath Paul : Vice President Mr. V. S. Kumar : President Mr. Kankesh Kamath : Chief Financial Officer Ms. Anupama Pillai : Head Human Resources CONTENT Corporate Information Executive Summary Directors Report Independent Auditor s Report Balance Sheet Statement of Profit and Loss Mr. Chirag Shah : Company Secretary Auditors : Gokhale & Sathe Chartered Accountants 302/303, Udyog Mandir No. 1 7-C, Bhagoji Keer Marg, Mahim, Mumbai Registered Office : Trade Globe, Ground Floor, Andheri-Kurla Road Andheri (East), Mumbai Cash Flow Statement Notes to Financial Statements Statement pursuant to Section Page 1

84 NSE.IT LIMITED Thirteenth Annual Report FY EXECUTIVE SUMMARY Continuing its foray in the growth areas, the Company has been successful in achieving a robust growth on account of favourable economic conditions and other market factors, coupled with the growth in US business, due to which the Company was able to achieve a turnover of ` 11,989 lakhs which was 15% higher than the previous corresponding year. Continuing with its foray in online examinations, the Company started its online examination centers all across the country including in the far flung areas such as Imphal and Aizawal in the North-East regions. The total number of online centers gone live for the year went up to 222, covering 26 states and 3 Union Territories. The assessments are conducted pan India for the insurance companies and the Company executes the end-to-end process from registration to examination certificates. During the year the Company worked on adding new customers and bid for various tenders and requirements. Apart from IRDA, the Company continued to service its existing clients such as NCFM, ITB, CCIL, IBPS etc taking the number of assessments to 4.43 million. The assessments are conducted pan India for the insurance companies and the Company executes the end-to-end process from registration to examination certificates. The high end technology framework along with the robust monitoring system provided by the Company facilitates the conduct of the examinations in a transparent and efficient manner. The Company intends to leverage the same along with state-of-the-art facility by engaging with similar other organizations/ institutions in the current year. During the year, the Company was successful in conducting IBPS exams of Canara Bank across 26 cities and 36 venues in India on a single day aggregating to 5800 exams. The Company obtained ISO 9001:2008 certification by Bureau Veritas Certification Institute (BVCI) for its online centers NSE.IT took all the steps of ISO such as gap analysis, documentation, implementation of documented processes, internal auditing, training and awareness. The certification for 105 centers was achieved in March 2011 and for the balance 115 centers the same was achieved in September The Surveillance Audit for all the 220 centers was completed in February During the year, Company has tied up with a software partner for developing a joint solution for the Indian Capital Markets under the name TradeGenie and key low latency technology implementation using In-memory database and Complex Event Processing (CEP) engine for a new Algorithmic Trading solution named AlgoNomics. The product provides various standard algorithmic trading strategies (viz. Cash-Futures arbitrage, Futures-Futures arbitrage, Cash-Cash arbitrage,) as well as custom strategies, taken up as be-spoke development. The Company was successful in forging a technology partnership with Microsoft, Informatica, Nastel and McObject, all based out of USA. The Company has achieved continuous growth of US operations, and won several contracts from US clients through the US subsidiary of the Company such as S&P, Select Transport Resources, SSI Healthcare, AQS, Object+ / ABN AMRO and Wirevive. During the year the Company assisted in rolling out two significant initiatives of NCDEX in the area of Prasar Bharati DTH auction and e-mandi SPOT solution for automation of various mandi operations in the country. Further Company went live with Reliance SPOT Exchange successfully, coupled with continuous engagement with Regional Stock Exchange to provide exchange solution for Cash Market. The most important achievement for the Tea Board e-auction project this year, was that 1 billion kg of tea was sold through e-auctions across 6 auction centers. The e-auction program went 100% live in Siliguri this year. This marked 100% sale of tea through e-auction route across all the six auction centres. In the Product space, the Company has partnered with a niche technology provider called M/s. Reliable Software Private Limited for developing high end algorithmic trading solutions for the Indian capital market that will replace the traditional methods of trading and provide brokers and financial intermediaries to trade in real time without human intervention. The Company will launch various algorithmic trading products for the capital market in the ensuing year to cater to the needs of the financial intermediaries. On the talent front, the number of employees as on the year end went up to was 767 The Company took various initiatives towards grooming of the employees by rolling out various training programs in the previous year. The Company continues to focus on building a pool of talented resources who can deliver world class solutions to the customers depending upon their specific requirements. With a strong existing clientele and new customers with high potential, the Company plans to take innovative steps in the products and services arena to cater to the technology requirements of its customers and take the Company to greater heights. Sd/- Ramesh Padmanabhan MD & CEO Page 2 Page 3

85 NSE.IT LIMITED Thirteenth Annual Report FY DIRECTORS REPORT Your Directors have great pleasure in presenting the Thirteenth Annual Report and the Audited Accounts of NSE.IT Limited for the Financial Year ended March 31, I. FINANCIAL RESULTS The working of the Company during the period has resulted in a profit after tax of ` lacs as per particulars given below: Particulars (` In Lacs) (` In Lacs) Income , Expenditure , Profit before tax, amortization and prior period adjustments , Amortization Prior period adjustments (0.01) Extra-Ordinary Items 6.74 Profit before tax , Provision for taxation Deferred Tax Liability/ (adjustments) Profit after tax Balance brought forward from previous year Amount available for appropriation , Appropriations General Reserve Proposed Dividend Corporate Dividend Tax Balance carried to Balance Sheet II. OPERATIONS AND MAJOR EVENTS DURING THE YEAR For the year ended March 31, 2012, the Company earned a total income of ` lacs an increase of 15 % over previous year s total income of ` 10, lacs. The net profit before tax of the Company for the year increased to ` Lacs (20% of the total income) as compared to ` 1, lacs (19.26% of total income) in the previous year. The profit after tax of the Company for year rose to ` lacs (12% of total income) as compared to ` 1, lacs (13.23% of total income) of the previous year. Major Milestones The following milestones were achieved during the year: Launch of a new chart-based automated trading solution named TradeGenie; key low latency technology implementation using In-memory database and Complex Event Processing (CEP) engine for a new Algorithmic Trading solution named AlgoNomics. Ramp-up and implementation of various new technologies in the area of low latency (Ultra Low latency messaging bus, inmemory database), Complex Event Processing (CEP) and Rich Internet applications (RIA) like ExtJS 4, Silverlight for building in-house products and delivering projects for various clients in India and the US. Forging of technology partnership with Microsoft, Informatica, Nastel and McObject Launch of Algorithmic Trading solution in the market; key technology implementation for latency improvement Continuous growth of US operations, and won several contracts from US clients through the US subsidiary of the Company such as S&P, Select Transport Resources, SSI Healthcare, AQS, Object+ / ABN AMRO and Wirevive.. Assisting to roll out two significant initiatives of NCDEX in the area of Prasar Bharati DTH auction and e-mandi SPOT solution for automation of various mandi operations in the country. Helped to revamp and go live with the new NCDEX website Going live with Reliance SPOT Exchange successfully, and continuous engagement with Regional Stock Exchange to provide exchange solution for Cash Market Enhancing of our testing engagement with NSDL for multiple systems completing a business critical project Inspection Automation Rolling out Web-based NDS Auction system for RBI s Fixed Income instruments for Clearing Corporation of India Ltd Stabilization and performance improvement of IRDA Agency licensing portal with helpdesk for nationwide users rolling out Health Insurance portability solution and completing a business process POC for re-insurance and co-insurance platform for ETASS IRDA Benchmarking and Performance Testing of Stratus V-series server for Trading application Completion of 100% online examination Project for IRDA. Achieved ISO 9001:2008 certification for Online Examination Services business Added new clients in Online Examination Services business. Launch of Bulk-tea auction, roll out of e-settlement application, conducting auction of Specialty Tea e-auction, and completion of a major milestone for e-auction of 1 billion KG tea Delivery and going live at NSE for Membership at the revamped NSE Website, Arbitration and SCORES projects, and assisting to deliver Risk management system for CSE Going live with the REC Trading and new matching engine for Power Exchange India Limited, and adding solutions for various trading segments in power trading Providing Co location services to NSE members. Number of employees increased to 767 during the year. ISO re-certification for system compliance. The Company was awarded a pilot project by NSDL to support their SEZ application software at 8 remote SEZ locations. The project was rolled out in 15 days. Highlights of various activities during the year Services 1. Algorithmic Trading During the year, Company has added to its product portfolio with the introduction of an Algorithmic Trading solution, called AlgoNomics. The product provides various standard algorithmic trading strategies (viz. Cash-Futures arbitrage, Futures-Futures arbitrage, Cash-Cash arbitrage,) as well as custom strategies, taken up as be-spoke development. During the year, the Company has also undertaken a technical enhancement project to further improve the latency and throughput. The upgraded solution utilizes an in-memory database for computation of all Risk Management. The Company expects to implement more custom strategies, and upgrade the product with technical enhancements. The company has also rolled out a chart-based automated trading solution named TradeGenie based on Reliable Software s market-leading Chart-based technical analysis product Falcon. Page 4 Page 5

86 NSE.IT LIMITED Thirteenth Annual Report FY IRDA Agency Licensing Portal NSE.IT implemented a solution, IRDA Agency Licensing Portal, web application, which is provided by IRDA to the Insurance Companies to license Insurance Agents. The IRDA Agency Licensing portal implements all IRDA regulations that govern the process for recruitment of Agents. The IRDA Agency Licensing portal also includes providing a dedicated Help Desk for all users of the IRDA Agency Licensing Portal. The objective of the system is: - To provide a software application that would automate the entire recruitment cycle for Insurance Agents - To provide a software application that implements all IRDA regulations at each step of the recruitment cycle - To widen the scope of the application by including all entities involved in the recruitment cycle The portal is live since Jan 2010 and has already processed more than Lakh fresh applications. In the process, the portal has issued Lakh new licenses, and renewed Lakh licenses. The portal also interfaces with our Online Exam Scheduling and Examination portal, thus supporting an end to end business process flow. The portal has further added newer de-duplication methods to ensure uniqueness of applicants. The Company also provides technical support for the application and provides maintenance and system administration support for the server systems in Mumbai and Bangalore. 3. MSE - Stock Exchange Solution This year, company has delivered a stock exchange solution for one of the leading Regional Stock Exchange in southern India. It is setup with the objective of having an online, transparent, with anywhere access trading platform for members of the exchange through a single electronic screen. The scope of the project was to build a trading solution for Equities Market which includes Front Office, Exchange Order management System. With the successful completion of software delivery by us and UAT completion by the client, the system is expected to go live soon on receiving the regulators approval. There are some enhancements, defects and SEBI specific observations raised by MSE which are getting handled by our team and under closing stages of completion. 4. Power Exchange of India (PXIL) The Company continues to provide support services to Power Exchange of India since the exchange has gone live in October The services encompasses application development, testing and support areas along with technical support for various applications and provide maintenance and system administration support for server systems in Mumbai. The past financial year was phenomenal as we had some key landmarks achieved in taking the PXIL trading system to the next level. These are stated below Min DAS Trading System went live at the end of Mar This new 15 minute time slot DAS trading system allows orders in 15 minute time slots rather than the traditional 1 hour slot system. - DAS Matching Engine with a highly complex algorithm went live in Feb REC has gone live in Apr 2011 followed by enhanced trading system in June Provided dedicated and extensive support on the live environment for DAS, DAC, Weekly, REC and C&S systems. - Anyday and Intraday product has been delivered. This is scheduled to go live within coming quarter. - Billing rates were revised for all the resources. Even the Project Manager has been made billable. - PXIL is now clearing the past pending payments. - The release frequency has been reduced by almost 23 % by carrying out process improvements. The overall product quality has also improved. The Company continued to provide 24 X 7 operations support in running the Power Auction. A DR site was commissioned and supported during the year. It is proposed to shift operations of PXIL corporate office from Exchange Plaza, Mumbai to Equinox, Mumbai is in progress. 5. Citi group Our Software operation in Citigroup has grown from EnSettle implementation/maintenance to setting up a dedicated onsite team for business analysis, development and maintenance of Treasury and Citi Market applications. Citigroup is a Trading Member cum Clearing Member on the National Stock Exchange of India s (NSE), Futures and Options segment. Citigroup does trading and clearing on behalf of their clients(participants). Currently 3 Ensettle instances running at Citigroup CCSIL, Treasury and CGM for different exchange and segments. EnSettle has been configured as a comprehensive modular application platform for Exchange Intermediaries (Brokers, Clearing Members and Custodians) Support for different market segments - Equity, Equity Derivatives, Forex and SLBS Benefits seen by Citi High ROI. Comprehensive Risk Management. Risk simulation: Allows What-if analysis on portfolio. Increased focus on the core business instead of spending time on the repetitive data collection / processing tasks. Regulatory Compliance. In the previous year the following was achieved: - Support for extensive client reporting, MIS and regulatory reporting. - Seamless Integration with various existing legacy systems at client s end. - Support for audit trail for all the activities. - Setup a support team onsite for business analysis and maintenance of Treasury applications 6. CCIL During the year, the following projects have been undertaken by NSE.IT at CCIL (Clearing Corporation of India Ltd.) Internet and Intranet Portals NSE.IT created Internet Portal, web application, which is Internet web site/portal for CCIL (Clearing Corporation of India Ltd.) which is live. The objective of the application is: To facilitate market information dissemination for various business. Allow market information to be displayed / downloaded by specific registered members (registered through portal). Provide user authentication (external user, member user, employee). User authentication should adhere to Client s password policy. Have search facilities at the web content and document level Support tagging and labeling for all documents / information Functionality for uploading statistical data (form of files such as (pdf, xls, doc, zip) so that it is available in a queryable format by end users based on their access level Able to setup / alter different business workflows as and when desired. The Intranet Portal was also developed by NSE.IT and CCIL has carried out the soft launch on Mar 29, Negotiated Dealing System (NDS) for Order Matching (OM) and Auction NSE.IT got this opportunity through the medium of CCIL for providing trading front end solution for Debt market (government securities). The project is directly under the supervision of RESERVE BANK OF INDIA giving it the national importance. The NDS Auction system went live in Feb Currently, the development is in progress for NDS OM and also there would be further extensions as part of phase 2 with both NDS Auction & OM. 7. Tea Board The most important achievement for the Tea Board project this year, was the sale of 1 billion kg of tea through the e- auction platform. The company continued to provide end to end support for running the Tea e-auctions at all 6 centres. Tea Board extended the support agreement for a further period of 3 years. The following were also achieved during the year: Conducted Nilgiris Planters Association Specialty Tea Auction. This specialty auction saw specialty teas from South India with participation of buyers from all the six auction centers. This auction fetched a highest price of ` 9,010 per Kilogram of tea. Built the following new e-auction modules and applications: Tea Waste Auction Bulk Tea Sale Page 6 Page 7

87 NSE.IT LIMITED Thirteenth Annual Report FY Packaged Tea Sale Post-auction e-settlement Warehouse Inventory Management System Tea Board Reports Stakeholder Reports Periodical inclusion of enhancements in existing e-auction system. Presented a 3-year roadmap to Tea Board Chairman. Over the next year, we plan to achieve the following: Go- live for following new e-auction modules & applications: Tea Waste Auction Bulk Tea Sale Packaged Tea Sale Post-auction e-settlement Warehouse Inventory Management System Conduct The Golden Leaf India Awards Southern Tea Competition again this year, after successfully conducting it last year. Potential opportunity with EATTA (East African Tea Traders Association) New product readied for roll outs E settlement and post auction processes E auction of tea waste New product under testing Sales of Packaged tea through non-auction route Sales of tea in bulk packages through non-auction route Warehouse Inventory Management 8. Electronic Transactions Administration and Settlement System (ETASS) POC: NSE.IT was awarded the contract to build a proof of concept (POC) for ETASS by IRDA, against stiff competition. The objectives of the Electronic Transaction Administration and Settlement System (ETASS) are: To provide seamless business integration amongst insurers / co-insurers / reinsurers / brokers via an electronic system aligned with ACORD standards To facilitate placement management, claims management, accounting and settlement of premiums, brokerage and claims To bring about efficiency and accuracy in the reinsurance / co-insurance space The specific objectives of the POC were: To build and demonstrate sample workflows in the coinsurance / reinsurance cycle Generation of sample ACORD messages Delivery of the following artifacts for the envisaged ETASS system: Functional Requirements Specification Solution Architecture Draft Project Implementation Plan There were 6 industry participants identified by IRDA for the project involving 3 insurers (ICICI Lombard, United India, L&T), 2 brokers (Howden, Aditya Birla) and 1 reinsurer (GIC). The project was successfully developed and delivered within the timelines and appreciated by both IRDA as well as the industry participants. 9. NSE I Development Projects During the year, NSE.IT partnered with NSE to deliver new projects / re-engineer existing solutions to suit NSE s growing business needs. Given below are the projects executed during the year. A. NSE WEBSITE: NSE Website is one of the most important and visible project of NSE. The website shows its members and all others the live traded Stock, Derivatives, Currency, Bonds, Securities and various other Securities which are traded on the Stock Exchange. Key challenge is to effectively serve around 1200 hits per second, keeping the site s availability 24*7*365. The existing NSE India website ( was revamped to give a new look & feel. GI Virtual Game: Developed a Virtual Game for site users which provides simulation of trading on Global Indices. Volume Spurts: Strengthening its analytic information, developed Volume Spurts information to be computed Implied Volatility In Derivatives Computing of IV value in derivatives 52 Week Hi-Low Adjustment- Computing the 52 week Hi/Low values of security and also adjusting it according to any corporate action such as Bonuses, Splits Or Rights. Also displaying the particular information in the quote. A module was developed to display the Corporate Homepage ReCaptcha implementation on the Website forms An enhanced SPAM PROTECTION was implemented for entire Website.(*In Development) EMERGE (SME Website) Website for helping SME listings on the exchange & showing SME related information. (*In Development) Statistics for WEBSITE. Peak time hits: 1200 Hits per second. Trade & analytical information for Over 1500 Equity Securities, 1000 Derivatives securities, CBM Securities, RDM Securities, WDM Securities& Global Indices. NCFM-NSE Certification in Financial Markets: This is an Examination portal which facilities NCFM, NISM exams, spread across different centers in INDIA. Stress Test Tool: Developed a Stress Test Tool to test scalability of the system for multiple simultaneous tests in Tamil Nadu. Increasing performance of the Test Portal: Configuring NCFM exam portal to increase performance of the system. B. IISL: This is a managed project handled by NSE.IT with the complete responsibility of delivery including process compliance. MICE - This system is developed for creating and maintaining indices. It is used to compute daily value of various indices. Regular activities carried out include Adding stocks to an exchange Inclusion/exclusion in an index Rebalancing an index Effect of corporate actions Apart from these activities, various reports can be generated within the system. Data requested by clients is provided by various modes of dissemination, viz. , zip, and ftp. IISL/DotEx Billing This system is used to generate invoices for clients of IISL and DotEx. Clients subscribe to data in the form of products and are billed accordingly. Credit notes can be raised through the system. Various reports can also be generated. DotEx Historical Data Online This system has been developed for DotEx users and clients to access historical data online. The first phase includes creation of clients, granting & revoking access to files and clients being able to download the data via the internet. Key achievements in IISL: Team size has grown from 3 to 7 resources on T&M basis in the last eight months. New project DotEx Historical has been taken up since February Phase I will be released to UAT in April. IISL Billing will be used for live data this financial year, i.e C. SCORES: SEBI Complaint Redress System (SCORES) is a web based system which enables SEBI to forward investor complaints to the Exchange. The system also allows for NSE to respond to these complaints. The initial development of the system involved manually capturing complaints from SEBI and responding to these complaints with specific actions taken by the Exchange. Key achievements in SCORES: Initial development was done as a fixed price product and subsequent changes were taken up as CMR s. Further to the initial development, this year the process of capturing complaints and responding to the same has been automated. A new user interface has been built, which enables the users of the system to garner more information about complaints, action taken and reminder/clarifications. Future development will cover manual updating of a status of a complaint, MIS reporting, system configuration. Page 8 Page 9

88 NSE.IT LIMITED Thirteenth Annual Report FY D. IGC (Investor Grievance Cell) system is the group of Arbitration, NICE & DCS systems: A. Project ARBITRATION: NSE.IT did a successful delivery of the Arbitration project. Arbitration is a process of dispute resolution which is legal technique for resolution of disputes outside the court. In this process the parties to a dispute refer it to one or more person (Applicant, Respondent & Arbitrator). This application is developed to automise the arbitration process The application processes covers end to end arbitration work flow with multiple stages for different centers. The application not only captures arbitration but also caters to the appellate system which is the next level in the hierarchy of arbitration process. This application is a fully automated system in which users need not select any stage manually. So it helps avoid manual work and hence better performance from users perspective. The database for this application has been designed keeping performance requirements in mind. This application also generates different MIS & MBR reports which are sent SEBI. Such reports need to be generated in with cases related to both Defaulters as well as Expelled members. DCS system caters to two main functions of defaulters committee, namely Assets management and Claims management. NSEiT team is involved in Speedier Recovery of Claims This enables the users to assess the claims in a simplified manner through which the claims can be recovered in less time by the Claimants. The internal modules are linked to reduce data redundancy. Schedule and Letter Generation Schedule (details of the claims for a particular claimant) and Letters are generated with ease at one go. Generation of Financial Summary of Defaulters/Expelled Members. C. NICE: NSEiT with NSETECH handles NICE which is the Investor Grievance Centre performing operation on complaints filed by Investors against the trading member. This system is integrated with SEBI (Scores) Automation of adding new and existing complaints in bulk with Registration number. Automated of the critical monthly, weekly reports (1A, 2A Report & F&O and SEBI Observation report). NSE.IT s testing team has been consistent in providing testing support to NSE s business and has worked on various key projects during the year. Future Roadmap Investment Module E-Filing NSE.IT s testing team has been consistent in providing testing support to NSE s business and has worked on various key projects during the year: - Pre-open in Cash market machine split in Cash market - F&O re-tooling, 2-3 machine split, User-ID increase, NeatPro, SMFS, Bulk Order and Option Chain - Utility testing for backend - Capital Market Segment release testing of TWAP, VWAP, SME and Limit Order Change - SLBM revamp project, token increase and net position - MF trading system SIP system testing, Allotment date change testing, NFO change testing - IPO - Reverse book building & Follow-on Public Offer, release testing of ASBA, Offer of Sale, Client Code and EoD report change - CDS Support Automation Testing III NOW During the year the company continued to provide services to Dotex International Ltd. The engagement with Dotex International was an innovative one with services being offered across India covering help desk, customer care and sales. This unique engagement has helped our client Dotex International Ltd., register sizable presence in the Indian securities space and establish NOW as India s largest ASP service. IV Co location Support The company continued to provide 24 X 7 support to NSEIL COLO Operations in Mumbai. Members have consistently praised the professionalism exhibited in the processes followed. Highlights: ISO Certification for Co location Services Network Audit successfully completed Risk assessment certificate received International Service Providers went live NSE Members were allowed get the connectivity to third party datacenters. 10. NSDL- SEZ OPERATIONS The Company continued to provide SEZ application support fraction of seconds which was major problem of users which is now overcome. Arbitration Integration with NFA & NICE : NFA Integration - Integrated Arbitration system with NFA (Finance & Accounting system) for automation of financial transactions. Automated collection & Payments Allows automated collection/release of payments of Arbitration award & Arbitrator fees. Roadmap: Merge with NICE System - Import various entities like (Member, Authorize Person, Investor) from NICE database to Arbitration. Plan to move NICE system data to Arbitration system to process arbitration legal operations. B. Defaulters Committee Section (DCS) : DCS a statutory Committee of the Exchange set up to deal Roadmap: Plan to automation of daily PDR s and PDC s. Unique Features: Integration with SCORES system NSE is first exchange which generated ATR s (Action Taken Report) with respective document and sends it to SEBI. This is key achievement of NICE system of automation of ATR s. E. NEAT Plus: NSEiT team with NSETECH is involved in the project to deliver on NEATPlus TWS which is trading workstation for CM &FO markets, NEAT-CDS TWS which is trading work station for currency markets and for Security Land-Borrow and Mutual Funds (SLBM and MFSS). NSEiT team is also involved in several Key initiatives like IVB with our BAT and UXD team working together for a successful rollout, continuous support for Talisma for CRM team and CSE OPMS implementation. - Dotex Support Automation Testing - ENIT and NOTIS Testing - Trading and Clearing system Functional and user acceptance testing II NSE STRATUS SUPPORT The company continues to provide 24 X 7 hardware and administration support for all Stratus servers in Mumbai and Chennai. Quite a few Stratus servers were shifted to Kohinoor office, at Mumbai Highlights: Installation of latest high-end FT 6310 Servers and Scalable SANs along with Red HAT Linux OS. Successfully migrated F&O market Servers from VOS to Linux Successful testing of BCP external mock at 5 remote locations across India. 11. NCDEX The company continued to provide 24 X 7 support services to the exchange and ensures minimal disruption in the exchange operations. Stratus hardware support, Systems Administration and CTCL operations continued as usual at both Mumbai and Chennai. Major Activities 1. Trading Application successfully moved to Stratus V Series servers from old Continuum servers. 2.DR in Chennai was moved from 3i Infotech site to Sify site. 12. IRDA PORTAL HOSTING SUPPORT The Company continued to support the infrastructure of IRDA portal at IDC and at DR site and ensured high availability. Page 10 Page 11

89 NSE.IT LIMITED Thirteenth Annual Report FY Managed Services The Company continued to support the infrastructure at Trade Globe office of its customers like CCIL, STCIL, DAIWA, SBI and successfully completed all their DR drills. The Company conducted an ISMS audit for both TG and ECO offices and was recertified for ISO / IEC 27001:2005. All the in-house IT infrastructure was handled by an internal team and ensured a high availability of over 99.9 %. 13. emandi: This system is developed for Primary market of agricultural produce markets in collaboration with various Agricultural Produce Marketing Committees/Boards governing the notified markets with active involvement of respective State Governments The applications will be centrally deployed and hosted by NSPOT and all participants would connect to it through internet in the normal course. There will be 3 types of interfaces A browser based interface, Mobile application and a SMS based interface. SMS based interface is used for bidding in auctions, e- Tender Results, Permit and various APMC activities. The application can be deployed for a specific language based on the requirement of the particular APMC. This system supports multiple trading models including auctions, quote based trading, Over The Counter trades and order based trading. Each APMC market will be treated as an independent market with its own rules. Access to the market will be as per the rules of the concerned APMC. This application has been rolled out successfully for Karnataka Circle (starting with Gulbarga APMC). Plan is to make this application live for 45 Mandis (Maharashtra, Karnataka and Rajasthan circles) in FY There is a business potential for 3000 Mandis in India. Statistics for Gulbarga APMC. Daily Arrivals: Quintal (TUR,CHANA..) with 2000 Lots. Daily Trades : Quintal ( Bids) Unique Features: Assayed Commodities Provides for assayed commodity sales and assaying of commodities. This allows non site seen auctions. Warehouse based sales Allows warehouse based sales of commodities by farmers. Aggregation of farmer lots combined with assaying for better price realization for the farmers. Permit Verification through SMS A fool proof methodology to prevent spurious or duplicate permits. Purchase planning for traders helps to reduce defaults. Dutch and Yankee format auctions for large lots. 14. Prasar Bharti DTH Auction: In order to optimally utilize available slots on DD Direct Plus platform and maximize its revenue, Prasar Bharti conducted an e-auction for the available slots on its DTH platform. The purpose of the e-auction was to select the channels on DD Direct Plus Platform in a transparent and objective manner. This auction was conducted through e-tender process. Through this auction, 21 successful bids were received ranging from ` 2.17 crore to ` 2.25 crore. Unique Features: Implemented India s first Digital Certified bids for Spot Exchange. Gives the best output for a web based auctioning system which needs spontaneous communication with the server to get latest data. 15. NCDEX Web site: A new web site was developed for NCDEX exchanges with following new features and support. Investors Module -includes Investor Grievances, Awareness, Trade verification Facility for Members. N-Chart Gives real time Technical analysis chart for NCDEX commodities. Light weight application which works on all browsers and mobile web interface. 16. NCDEX Settlement: This application is developed for future commodity settlement and has been integrated with NSDL and CDSL system. This system includes membership and broker management for NCDEX clients. Unique Features: Interactive settlement dashboard - a calendar facility providing trades with information on their trade settlements. Two-way user authentication. Testing Projects: Clearing and Settlement of futures and Options for Commodities Exchange Order Management and Trade Management for Commodities Exchange Real Time risk management for the exchange Comtrack (Depository for Commodities) Other Application Testing like Polling, Extranet, Billing for the exchange E-Mandi 17. NSDL NSE.IT has been supporting NSDL in testing their business critical applications (details provided below) and also involved in development of NSDL's Inspection BackOffice (IBO) application. Development Project: IBO provides automation of the inspection process right from scheduling till post inspection reporting and subsequent reporting. Earlier most of these processes were either done manually or were partially available on disparate systems. This resulted in higher effort per inspection. IBO developed by NSE.IT combined all such features under single system, leading to an overall effort and cost saving for NSDL. Testing Projects: NSE.IT is providing large-scale testing support on the following applications - 1) SEZ Online Brief description of the project: As a part of the e-governance initiative, Ministry of Commerce (MOC) intends to automate SEZ transactions.ministry of Commerce has entered into a formal agreement with NSDL Database Management Limited (NDML) for establishing and managing a nationwide integrated solution for administration of Special Economic Zones (SEZ) of India. Testing Activities: a) NSE.IT has been involved in this project for more than 2 years b) The testing activities mainly involve functional manual end to end web based testing (UAT). The tasks cover most of the phases of STLC right from Requirements analysis phase till defect tracking and closure. 2) TIN Brief Description on the project: Tax Information Network (TIN) is an initiative by Income Tax Department of India (ITD) for the modernization of the current system for collection, processing, monitoring and accounting of direct taxes using information technology. Testing Activities: a) NSE.IT has been involved in testing activities for this project for around 2 years. b) The testing activities mainly involve functional manual end to end web based testing (UAT), database level testing, data posting and extraction. c) Recently in this financial year, we got an opportunity for Performance testing in this project. 3) PAN Brief Description on the project: Tax Information Network (TIN) is a repository of nationwide Tax related information, and has been established by National Securities Depository Limited on behalf of Income Tax Department of India (ITD). Some of the services offered by TIN are Facility to apply for PAN, TAN & AIR online & offline via TIN-FC s, Reprint of PAN card & TAN with existing/revised details, Status enquiry of the applications etc. Testing Activities: a) NSE.IT is involved in this project for around 2 years. b) Testing activities mainly include testing of modules PAN, TAN and AIR process flows. c) Participation in each phase of the STLC d) Involvement in the reviews & walkthrough of the QC process. 4) Speed-e Brief Description on the project: Any Participant of NSDL can subscribe to SPEED-e, the Page 12 Page 13

90 NSE.IT LIMITED Thirteenth Annual Report FY common infrastructure of NSDL. SPEED-e enables demat sales group within S&P to manage license and license went live covering 26 states and 3 Union Territories. 100% IBPS account holders (including Clearing Members) to submit delivery instructions directly on the Internet through SPEED-e. Testing Activities a) NSE.IT is involved in this project for more than 2 years. b) The testing activities mainly involve functional manual end to end web based testing (UAT), database level testing, volume testing (bulk instruction posting and analysing the response time and memory utilization). 5) KRA Brief Description on the project: With a view to bring uniformity in the KYC requirements for the securities markets, SEBI has initiated usage of uniform KYC by all SEBI registered intermediaries. In this regard SEBI has issued the SEBI {KYC (Know Your Client) Registration Agency (KRA)}, Regulations, Testing Activities: a) NSE.IT received testing opportunities in this project in this financial year products for their customers. The legacy system was developed using PowerBuilder and Oracle, 10 years ago. Due to an organizational switch-over to Windows 7 OS, which does not support the old PowerBuilder based application, there arose a need to re-develop the new ILS application using a new technology stack and value added features. The application was successfully built by NSE.IT team using a RIA framework ExtJS in conjunction with the J2EE stack. The application underwent multiple rounds of demos and UAT sessions with the S&P technical and business team, and user suggestions were incorporated in an agile manner. The new ILS application has been well received by the S&P business users. This project has been able to successfully turnaround our past bitter relationship with S&P. S&P today is a satisfied customer. C. Nastel This is an outsourcing engagement for Nastel successfully running for over a year now. Over this period, NSE.IT has managed to successfully transition from the offshore online exam centers objective achieved since April Conducting 4.43 million assessments upto Feb 2012 with approximately 1,50,000 assessments per month More language modules were added - 11 Languages in Life insurance & 12 Languages in Non-Life insurance Practice test CDs/ solutions were made available in multiple languages to the insurance companies for prospective agents appearing for the examination. Regular customer surveys were conducted with very encouraging feedback (average rating between 4 to 5 on a scale of 5) on all parameters such as center setup, Test administrator behavior, quality of services offered etc. New IRDA syllabus changes effected from October 17th 2011 with 11 languages made live in the new syllabus. A new segment was added to ITB viz. Corporate Exams with Capgemini being the client, in March 2012 The company took various initiatives during the year which are highlighted below: IIBF ICAI CRPF NISM UIDAI BIFM ASRB Quality Initiative During the year the Company embarked on quality journey to certify its online examination centers for ISO 9001:2008 certification through Bureau Veritas Certification Institute (BVCI) with 105 centers covered in March 2011 and the balance 115 centers in September 2011.A surveillance audit was also conducted in all the 220 centers which was successfully completed in February NSE.IT went through all the steps of ISO such as gap analysis, documentation, implementation of documented processes, internal auditing, training and awareness. b) The testing activities mainly involve functional manual development team in China for Nastel s flagship product During the year the OES team continued to add value to its After extensive rounds of internal and external quality end to end web based testing and file upload [specific format] based testing. c) We have also managed to get a performance testing opportunity in this project. OVERSEAS PROJECTS A. Wirevibe: This is an outsourcing engagement for Wirevibe. The first assignment is on the JIMS DC-Crim project which deals with the Judicial Information Management System (JIMS) for the state of Hawaii to support the processing of criminal cases and procedures for the District Court. It also includes the ability for electronic filing (e-filing) of associated documents. The specific tasks assigned so far range from writing JUnit test cases to re-factoring of reports. The project has been running successfully since inception and there is a lot of trust and partnership between the client team and the offshore team. B. S&P NSE.IT bagged a contract from S&P for the technology migration of the Index Licensing System (ILS) for S&P Indices. This is an internal application widely used by the finance and TWorks Explorer. As a result of this, the initial development and test contract has been converted into a long term opportunity. Additionally, the development stream has now been extended with an opportunity on the APOD (AutoPilot on Demand) product line. Likewise, the testing stream has been extended with opportunities on.net/j2ee probe testing & Database testing. NSE.IT was also able to successfully initiate two value-added opportunities on the UXD and BigData front. Apart from this, NSE.IT built a demo for a unified view of 3 Nastel products which was successfully presented at the Gartner road-show. Over the next year, we plan to mine this account further in the following areas: MQ Testing Probe Development RIA Development 18. Online Examinations During the year, the Company continued its foray in the online examination space and set up 222 examination centers which existing customers such as NCFM, ITB, CCIL, IBPS etc and bidded for various tenders and requirements. NCFM more than 1,20, 000 exams were conducted in 96 locations where in 11 locations NCFM exams were being conducted simultaneously with IRDA exams ITB - more than 6500 exams were conducted in 19 locations with Corporate Exams being conducted for CapGemini at three locations viz. Pune, Chennai and Mumbai. IBPS - 11,804 exams were conducted covering 7 banks covering 186 venues, chiefly among them being successfully conducting 5800 exams on a single day covering 14 cities and 35 locations IRDA internal promotion exams were also conducted during the year. Some of the opportunities explored by the Company during the year were as under- FPSB FLIP IMS PreSchool implementation efforts in past one year and audits conducted across country by Bureau Veritas Certification India (BVCI) auditors till September 2011, NSE.IT has been certified for ISO 9001:2008 by BVCI for its Online Examination Services for all its 220 centers pan India. It is noteworthy that NSE.IT achieved the ISO 9001:2008 compliance certification for the above mentioned scope with ZERO NCs (Non-conformities) for all its centers. The Company proposes to expand ISO Scope by undertaking the following initiatives in the coming year: Software design and development activities, New customer on boarding - Transition, HR Processes for OES Implementation of ISO 9004:2009: An Improvement Standard based on ISO 9001:2008 Implementation of ITIL Foundation for IT Service Delivery & IT Service Support ISO 27001:2005 for Information Security Management System at center level Six Sigma initiatives for further process improvements Page 14 Page 15

91 NSE.IT LIMITED Thirteenth Annual Report FY Project 2x/ Gateway In order to cater to new customers across major cities, the Company continued its foray in Project 2X adding capacities and rooms in top cities in existing centers. The Company is also planning to add more centers with additional rooms in cities such as Pune, Cochin, Lucknow, Hyderabad, Ahmedabad and many more. Also to cater to large volumes and one time exams on a pan India basis, the Company continued its foray with Project gateway wherein it tied up with colleges, institutes, infrastructure companies with installed PC base of 50 to 400 numbers. Project Gateway provided end to end services including Online Registration Portal, Exam software/ hosting, providing centre infrastructure and invigilation. During the year 10 exams covering seven banks were conducted, amongst which the Company successfully conducted Canara Bank exams aggregating to 5800 on a single day on 14 cities and 35 venues across the country. Project ½ X and Project RX With an objective of optimizing the seat utilization and achieving economies of scale, the Company undertook initiatives to reduce the seat capacity for various centers such as Bellary, Nellore, Shriganganagar, Siuri, Kurnool, Raichur and Gandhinagar. Further, the Company also relocated to certain other centers away from its existing centers with the said objective in cities such as Solapur, Hosangabad and Jalpaiguri. The savings on account of this initiative aggregated to approximately ` lakhs. It is estimated that through this initiative, an amount of ` 30 lakhs approximately will be saved in the coming year. OES Software management Online Result & Online Payment Portal Disaster Recovery Setup for AIMS System IRDA Examination Syllabus Change Examination Application Migrated to Open Source Platform & Decentralized architecture Many Security functions and features VAPT for production systems ICAI POC IT Infrastructure Spare stocking of critical components (Firewall, Switch, CCTV) Web cameras Deployed at critical locations to use real time manual face recognition & Authentication process Secure File transfer and Survey Management systems deployed Vigilance/ Security check Deployment of 595+ sophisticated CCTV cameras at the centers Video recordings at the centers Online continuous monitoring of center activity from central CCTV monitoring cell at Mumbai Background screening of exam delivery resources Dedicated vigilance department headed by highly experienced professional Handling tricky situations and escalations to IRDA Surprise visits/ Audits at all centers by vigilance staff Future Road Map - To add more locations across the country and enhance capacity in the big cities - Project 2X and Gateway - To implement Six Sigma/ Quality Certification of all 220 centers and adding more processes in ISO certification - Work on cost management across centers Project 1/2X and Rx - Corporate Assessments Freshers - Campus Recruitments Employee Assessments Lateral Recruitment Assessments - Government and PSU s Recruitments Employee Assessments - Education Entrance Exams Semester Exams Distance Education - IT - Setup network monitoring solution for all 300+ ISP connections across country with tools like Whats-up - Visitor Management System - Managed Switch & MacAfee Endpoint Solution for all/select Centers - Operations management software - Scheduling Engine to manage multiple client/ Multi center scenarios - Examination through Secure Browser application - Easy deployment of decentralization application using Image copy technology - Offering/ Moving the examination/registration portal to cloud platform for new clients - New Registration Portal & Examination Portal with next gen features - Vigilance Create IT rooms at each center with access control End Point Security rollout for all locations Access control at Centers Visitor management system Biometrics implementation for additional security. 19. Software Products Software Products 1. AlgoNomics & TradeGenie During the year, Company has added to its product portfolio with the introduction of an Algorithmic Trading solution, called AlgoNomics and a Chart-based Automated Trading solution named TradeGenie. AlgoNomics: These products uses cutting edge technology stacks using low latency technology like In-memory Database XtremeDB, Complex Event Processing (CEP) Engine Espertech and Syncfusion s dyanamic Grid for a robust market-watch. The product provides various standard algorithmic trading strategies (viz. Cash-Futures arbitrage, Futures-Futures arbitrage, Cash-Cash arbitrage,) as well as custom strategies, taken up as be-spoke development. During the year, the Company has also undertaken a technical enhancement project to further improve the latency and throughput. The upgraded solution utilizes an in-memory database for computation of all Risk Management. The Company expects to implement more custom strategies, and upgrade the product with technical enhancements. The product is under user tests and user mocks and will be rolled out in FY TradeGenie: TradeGenie is a unique solution that integrates one of the best state-of-the-art Charting Tools in India with an established Order Routing and Risk Management engine. TradeGenie is a solution that allows users to create Technical Indicator based strategies for almost all possible market situations for all the Market Segments in the country viz., Equities, Equity Derivatives and Currency Derivatives across the NSE & BSE. The Automated Order Routing capabilities puts it ahead of all the other Programmed Trading Solutions available currently by providing more than 300 Indicators which can be used in custom made strategies that can be developed at run time and executed real time. Product Summary Professional Charting Tool with Real Time and historical charts Hundreds of ready to use automated strategies User Defined Entry and Exit conditions for Long and Short positions High-speed execution using Low Latency Order Routing System Back testing and Live testing tools to ensure good historical and current performance Fine tune your strategies with Simulator before executing in Live market Customizable daily profit and loss limits and position size limits Incorporate advanced risk control concepts Exchange Simulator During the year, as initiative has been taken to revamp the Simulator system using Ultra Low messaging system. The earlier version of the Simulator had limitation of handling messages/second. The revamped Simulator will handle more than 1250 messages/sec and is scalable. This has been achieved adopting a distributed architecture using 29West UME bus with multiple matching engines. The system has completed all testing work. Commercial roll-out will be done in the next financial year based on available opportunities. Page 16 Page 17

92 NSE.IT LIMITED Thirteenth Annual Report FY Back office Ensettle Ensettle is a product for post trade settlement for Trading and Clearing Member back office operations. The product has capabilities to address Risk Management and Reconciliation for Equity F&O, and currency derivatives market. During the year, company has supported several key installations like Citi, SBI, Kotak, IndusInd, Deutsche bank and IDBI. XpressSTP It is a messaging Hub, facilitating brokerage firms, investors, & custodians, to exchange post trade transactions based messages. This is used for Institutional Trades. XpressSTP eases the work of user by combining all the process of conversion, signing and uploading of ISO file in one process. This saves time of the user. It also includes several audit reports that can give an overview of the activities performed by the user. During the year continuous support was provided to approx. 180 clients. 20. HUMAN RESOURCE DEVELOPMENT The Company saw a net nominal growth of around 7% in the number of employees and the total count at the end of the year was 767 as compared to 714 in the previous year. The Company conducted various training programs both externally and internally for the skill enhancement of the employees during the year which included Java, QTP, SQL CMMI version 1.3, ExtJS 4.0 Red hat Linux 6,.Net, SSAS, VMWARE and SAN Storage, etc. on the technical side and effective communication, Time management, cross cultural efficacy and soft skills on the non-technical front. In the ensuing year the Company will roll out more such programs for its employees. 21. Directors Retirement by rotation In accordance with the provisions of the Companies Act, 1956 and the Company s Articles of Association, Mr. V Babuji and Ms. Chitra Ramkrishna are liable to retire by rotation and are eligible for re-appointment. 22. Dividend Based on the Company s performance, the Directors are pleased to recommend, for approval of the Members a Final Dividend of ` 3.70/- per share on Equity Shares of ` 10/- each of the Company for the financial year The Final Dividend on the Equity Shares, if declared as above, would involve an outflow of ` 3,70,00,037/- towards dividend. Transfer to Reserves The Company proposes to transfer ` 9,00,00,000/- to the General Reserve out of the amount available for appropriations. 23. DIRECTORS RESPONSIBILITY STATEMENT The Directors report; i. that in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; ii. that the directors had selected such 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 company at the end of the financial year and of the profit and loss account of the company for that period; iii. that the directors had taken proper and sufficient care for the maintenance of adequate accounting standards in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; iv. that the directors had prepared the annual accounts on a going concern basis. 24. AUDIT COMMITTEE The Audit Committee appointed by the Board currently comprises of the following members: 1. Mr. Dileep Choksi, Chairman of the Committee and an Independent Director 2. Mr. V.Babuji, an Independent Director and 3. Mr. J. Ravichandran, Non-Executive Director. During the course of the financial year , the Audit Committee met on 26th April 2011, 17th August 2011, 13th December 2011 and 24th February The Board of Directors deeply regrets the sad demise of Dr. R H Patil, an Independent Director and offers its deepest condolences to his friends, family and well-wishers. The composition of the current Audit Committee is in compliance with Section 292A of the Companies Act, EMPLOYEES STOCK OPTION The Company has not offered any shares under the Stock Option Plans to any of its employees. 26. AUDITORS M/s Gokhale & Sathe, Chartered Accountants, Auditors of the Company, retire at the forthcoming Annual General Meeting of the Company and are eligible for re-appointment. The Company has received a certificate from the Auditors to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, DEPOSITS During the period the Company has not accepted any deposits from the public. 28. BUY BACK OF SHARES The Company has not offered for buy back any its shares from the shareholders. As such the reasons for failure to complete the buy back within the time specified as is required to be disclosed in terms of the requirements under Sub-section (4) of Section 77A of the Companies Act, 1956 is not applicable to the Company. 29. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING/OUTGO 1. Conservation of energy, technology absorption: As the Company does not have any manufacturing activities, particulars required to be disclosed with respect to conservation of energy and technology absorption in terms of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988, are not applicable. 2. Foreign Exchange earnings/outgo during the year under review: During the period foreign exchange earnings were ` 2,66,31,434/- lacs and outgo was ` 16,50,51,733/- lacs. 30. PARTICULARS OF EMPLOYEES Pursuant to the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, a statement relating to particulars of employees forming part of this report has been given in the annexure attached herewith. 31. NOTE ON SUBSIDIARY USA SUBSIDIARY During the year, the Company s wholly owned subsidiary in USA won several contracts from US clients such as Nastel, S & P, AQS, STR and have tied up with several US companies for alliance/reselling such as Informatica, Atlantic Crossing LLC and is planning many new initiatives in the current year. The US subsidiary also won a contract at Amsterdam with a company called Object + and is hopeful of achieving some more contracts in the coming year. UK SUBSIDIARY The Company has a wholly owned subsidiary at UK, namely, NSE.IT (UK) Limited incorporated under the the Companies Act of England & Wales on 9th November 2006 with an intention to tap business opportunities in the European markets. However, due to unfavorable economic conditions and political uncertainties prevailing in the European continent, the Company was unable to tap any viable business opportunities which could have helped the Company at UK, grow in size and profits. The administrative costs for running the said subsidiary were substantial compared to its revenues. Hence, the Board of Directors at its meeting held on 24th February 2012 have to wind up the said wholly owned subsidiary at UK namely, NSE.IT (UK) Limited. The necessary forms with respect to winding up are being filed with the Companies House and the process is expected to be completed soon. 32. APPRECIATION Your Directors would like to place on record their sincere appreciation for the confidence support and co-operation received from the holding company, its employees, Banks, Reserve Bank of India, Registrar of Companies (ROC), Government Authorities, suppliers, customers, shareholders and all other stakeholders For and on behalf of the Board of Directors Sd/- Place: Mumbai RAVI NARAIN Date: 24th April 2012 CHAIRMAN Page 18 Page 19

93 NSE.IT LIMITED ANNEXURE TO DIRECTORS' REPORT STATEMENT PURSUANT TO SECTION 217(2A) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES (PARTICULARS OF EMPLOYEES) RULES 1975, AS AMENDED NOTES: Sr. Name & Qualifications Age in Designation/ Remuneration Experience Date of Last Employment No. years Nature of Duties Received (No.of years) Commencement of Employment Gross Net 1. Mr. Ramesh 50 Managing Director 13,805,832 82,74, May 15,2008 Chief Delivery Officer Padmanabhan and Chief of Mphasis Ltd B.Sc and Post Graduate Executive Office in Software Technology 2. Mr. Shailesh Chitre, 47 Vice President 61,19,452 41,54, November 17, 2008 Head Sales- Asian B.Sc and DCST CERC Information Technology Limited Gross remuneration includes Salary and other allowances, Company s contribution to Provident Fund, Superannuation Fund, Gratuity Fund and taxable value of perquisites etc. Net remuneration has been arrived at by deducting from gross remuneration, Company s contribution to provident fund, superannuation fund, taxable value of perquisite, amount deducted as profession tax and income tax. The nature of employment is contractual in all above cases. None of the employees mentioned above is a relative of any Director. None of the employees owns more than 2% of the outstanding shares of the Company as on 31st March Page 20 INDEPENDENT AUDITOR S REPORT To the members of NSE.IT LIMITED, Report on the financial statements We have audited the accompanying financial statements of NSE.IT LIMITED (the company), which comprise the balance sheet as at 31 March 2012, and the statement of profit and loss and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Management s responsibility for the financial statements Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the company in accordance with the accounting principles generally accepted in India, including accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us, the financial statements 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: Thirteenth Annual Report FY a. In the case of the balance sheet, of the state of affairs of the company as at 31 March 2012 b. In the case of the statement of profit and loss, of the profit/loss for the year ended on that date, and c. In the case of the cash flow statement, of the cash flows for the year ended on that date. Report on other legal and regulatory requirements 1. As required by the Companies (Auditor s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. 2. As required by section 227(3) of the Act, 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 purpose of our audit. b. 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. 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 comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, e. On the basis of written representations received from the directors as on 31 March 2012, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2012, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company. For Gokhale & Sathe Firm Reg. No.: W Chartered Accountants Kedar A Mehendale Place Partner Date: 24th April 2012 Membership No Page 21

94 NSE.IT LIMITED Thirteenth Annual Report FY FINANCIAL YEAR ENDED 31ST MARCH 2012 ANNEXURE TO THE AUDITOR S REPORT AS REQUIRED BY THE COMPANIES (AUDITOR S REPORT) ORDER, 2003 (Referred to in Paragraph 1 of the section Other legal & regulatory requirements of our Report of even date on accounts of NSE.IT Ltd. as at 31st March 2012.) As required by the Companies (Auditors Report) Order 2003 issued by the Central Government in terms of Section 227(4A) of the Companies Act 1956, on the basis of the checks, as we considered appropriate, we report on the matters specified in paragraph 4 and 5 of the said order to the extent applicable to the company. (i) a) The Company has maintained proper records, showing full particulars including quantitative details and situation of fixed assets. (ii) b) We have been informed that the physical verification of fixed assets was carried out by the management during the year, which in our opinion is reasonable having regard to the size of the company and nature of the assets. We have been informed that no material discrepancy was noted on such verification. c) The Company has not disposed off substantial part of the Fixed Assets during the year. Considering the nature of the business and services rendered by the company, clause 4 (ii) is not applicable. (iii) (a) The Company has not granted any loans, secured or unsecured to companies, firms, or other parties covered in register maintained u/s 301 of the Companies Act, 1956 and accordingly provision of clause 4 (iii) (b), (c), (d) are not applicable. e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained u/s 301 of the Companies Act, Therefore, the provisions of clause 4 (iii) (f) and (g) are not applicable. (iv) On the basis of selective checks carried out during the course of audit and according to the information and explanation given to us, in our opinion there is an adequate internal control system commensurate with the size of the Company and the nature of business with regard to the purchase of fixed assets and with regard to the service rendered. During the course of our audit we have not observed any continuing failure to correct major weakness in internal controls system. (v) (a) In our opinion and according to the information and explanations given to us, there are no contracts or arrangements that need to be entered into a register in pursuance of section 301 of the Companies Act Therefore, clause 4 (v) (b) is not applicable. (vi) The Company has not accepted any deposits from public and accordingly the provisions of section 58A, 58AA of the Act, and Rules framed there under and any directive issued by the Reserve Bank of India are not applicable. (vii)in our opinion, the company has an internal audit system commensurate with the size and nature of its business. (viii) As informed to us, maintenance of Cost Records by the Company has not been prescribed by the Central Government u/s 209 (1) (d) of the Companies Act. (ix) a) (x) The company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty and other material statutory dues as applicable to it. According to the information and explanations given to us, no undisputed amounts payables in respect of income tax, sales tax, wealth tax, service tax, customs duty and excise duty were in arrears, as at 31st March 2012 for a period of more than six months from the date they became payable. b) According to the information and explanations given to us, there are no dues of income tax, sales tax, service tax, customs duty and excise duty which have not been deposited on account of any dispute. There are no accumulated losses. Further the Company has not incurred cash losses during the year covered by our audit report and the immediately preceding financial year. (xi) In our opinion and according to the information and explanations given to us, the Company has not taken any loan and no amounts were due towards principal or interest to any financial institution, bank, or debenture holders during the year covered by our audit report. (xii) As per information given 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) are not applicable. (xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures, and other investments. (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) According to the information and explanations given to us, the company has not taken any term loan. (xvii) According to the information and explanations given to us, the company has not raised any funds. (xviii)according to the information and explanations given to us, the Company has not made any preferential allotment of shares. (xix) According to the information and explanation given to us, the company has not issued any debentures during the year covered by our audit report. (xx) During the year covered by our audit report, the Company has not raised any money by public issues. (xxi) According to the information and explanations given to us no fraud on or by the Company has been noticed or reported during the course of our audit. For Gokhale & Sathe Firm Reg. No.: W Chartered Accountants Kedar A Mehendale Place Partner Date: 24th April 2012 Membership No Page 22 Page 23

95 NSE.IT LIMITED Thirteenth Annual Report FY BALANCE SHEET As at 31 March, 2012 Note As at As at Particulars 31 March, March, 2011 I. EQUITY AND LIABILITIES 1) Shareholder's funds (a) Share Capital 2 100,000, ,000,100 (b) Reserves and surplus 3 392,068, ,982,850 2) Share application money pending allotment - - 3) Non-current liabilities (a) Deferred tax liabilities (Net) 4 13,105,809 3,521,995 (b) Long-term provisions 5 4,767,148 1,114,491 4) Current liabilities (a) Trade payables 6 9,704,776 11,641,668 (b) Other current liabilities 6 42,515,936 93,120,265 (c) Short-term provisions 5 99,143,560 98,922,259 Total 661,305, ,303,628 II. Assets 1) Non-current assets (a) Fixed assets (i) Tangible assets 7 135,589, ,980,648 (ii) Intangible assets 7 8,725,669 13,821,757 (iii) Capital work-in-progress ,659 22,863 (b) Non-current investments 8 45,334,933 22,792,478 (c) Long-term loans and advances 9 46,057,345 42,281,790 (d) Other non-current assets 12-3,465,741 2) Current Assets (a) Inventories , ,189 (b) Trade receivables ,429, ,248,304 (c) Cash and bank balances ,858, ,007,427 (d) Short-term loans and advances 9 62,168,293 54,630,820 (e) Other current assets 12 18,245,464 8,872,611 Total 661,305, ,303,628 Significant Accounting Policies 1 The accompanying notes are an integral part of the financial statements. As per our report of even date attached For Gokhale & Sathe. Chartered Accountants (Reg No : W) For and on behalf of Board of Directors Kedar Mehendale Ravi Narain Ramesh Padmanabhan Dileep Choksi Partner Chairman Managing Director & CEO Director Membership No STATEMENT OF PROFIT & LOSS For the year ended 31 March, 2012 Sr. Note Year ended Year ended No. Particulars 31 March, March, 2011 I. Revenue from operations 14 1,166,243,121 1,012,031,707 II. Other income 15 32,697,179 18,390,896 III. Total Revenue ( I+ II) 1,198,940,300 1,030,422,603 IV. Expenses: Purchases of Stock-in-Trade 16 4,410,103 2,836,603 Changes in inventories of Stock-in-Trade 17 (74,389) 51,210 Employee benefits expense ,144, ,969,720 Depreciation and amortisation expense 7 30,185,054 22,414,815 Other expenses ,273, ,719,719 Prior Period Expenses 1,384,987 1,308 Total expenses 986,323, ,993,375 V. Profit before exceptional and extraordinary items and tax ( III-IV ) 212,616, ,429,228 VI. Exceptional items - - VII. Profit before extraordinary items and tax ( V - VI ) 212,616, ,429,228 VIII. Extraordinary Items ,810 - IX. Profit before tax (VII - VIII) 211,943, ,429,228 X. Tax expenses: 20 (1) Current tax 59,271,307 58,981,913 (2) Deferred tax 9,583,814 3,085,452 XI. Profit/(Loss) for the period from continuing operations (IX - X ) 143,087, ,361,863 XII. Profit/(Loss) from discontinuing operations - - XIII. Profit/(Loss) for the year ( XI + XII ) 143,087, ,361,863 XIV. Earnings per equity share: (1) Basic (2) Diluted Significant Accounting Policies 1 The accompanying notes are an integral part of the financial statements. As per our report of even date attached For Gokhale & Sathe. Chartered Accountants (Reg No : W) For and on behalf of Board of Directors Kedar Mehendale Ravi Narain Ramesh Padmanabhan Dileep Choksi Partner Chairman Managing Director & CEO Director Membership No Place : Mumbai J. Ravichandran Kankesh Kamath Chirag Shah Date : 24th April 2012 Director Chief Financial Officer Company Secretary Place : Mumbai J. Ravichandran Kankesh Kamath Chirag Shah Date : 24th April 2012 Director Chief Financial Officer Company Secretary Page 24 Page 25

96 NSE.IT LIMITED Thirteenth Annual Report FY CASH FLOW STATEMENT For the year ended 31 March, 2012 Page 26 Year ended Year ended 31 March, March, 2011 A) CASHFLOW FROM OPERATING ACTIVITIES Net Profit before tax, & Prior Period Adjustments 214,001, ,430,536 Add : Adjustments for Depreciation 30,185,054 22,414,815 Loss on Disposal / Sale of Fixed Assets (76,066) - Less : Adjustments for Interest from Fixed Deposits (13,502,342) (9,917,853) Operating profit before working Capital Change 230,608, ,927,498 Change in Working Capital Decrease / (Increase) in Sundry Debtors (80,180,779) (13,524,923) Decrease / (Increase) in Inventory (74,389) 51,210 Decrease / (Increase) in Loans & Advances (8,797,504) (12,166,200) Decrease / (Increase) in Interest accrued (2,272,435) 78,950 (Decrease) / Increase in Long Term Provisions 3,652,657 - (Decrease) / Increase in Current Liabilities & Prov (48,885,579) 24,284,188 Cash Generated from Operations 94,050, ,650,723 Direct Taxes Paid (Net of Refunds) (66,042,979) (92,269,459) Interest on Income Tax/Wealth tax Refund Prior period adjustment (1,384,987) (1,308) Net Cash from Operating Activities- Total (A) 26,622, ,379,956 B CASH FLOW FROM INVESTING ACTIVITIES Interest from Fixed Deposits 13,502,342 9,917,853 Addition to Investments (22,542,455) - Addition to fixed assets (net) (39,621,813) (70,007,969) Addition to CWIP (620,796) 113,900 Cash flow from investing activity - Total (B) (49,282,722) (59,976,216) C CASH FROM FINANCING ACTIVITY Dividend Paid (40,000,040) (30,000,030) Dividend distribution tax (6,489,007) (4,982,630) (46,489,047) (34,982,660) NET INCREASE/ (DECREASE) IN CASH & CASH EQUIVALENT (69,149,286) 22,421,080 Opening balance of Cash & Cash Equivalent 201,007, ,586,349 Closing balances of Cash & Cash Equivalent 131,858, ,007,427 NET INCREASE/ (DECREASE) IN CASH & CASH EQUIVALENT (69,149,286) 22,421,078 Notes to Cash Flow Statement : Cash and cash equivalent represent cash, bank balances and balances in fixed deposits The above cash flow has been prepared under the "Indirect method" as set out in the Accounting Standard -3 As per our report of even date attached For Gokhale & Sathe. Chartered Accountants (Reg No : W) For and on behalf of Board of Directors Kedar Mehendale Ravi Narain Ramesh Padmanabhan Dileep Choksi Partner Chairman Managing Director & CEO Director Membership No Place : Mumbai J. Ravichandran Kankesh Kamath Chirag Shah Date : 24th April 2012 Director Chief Financial Officer Company Secretary NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 1 SIGNIFICANT ACCOUNTING POLICIES a. Basis of Accounting The financial statements have been prepared under the historical cost convention on accrual system and in accordance with the generally accepted accounting principles. b. Revenue recognition Revenue from sale of software product licenses and sale of digital certificates is recognised on dispatch. Revenue from resale of hardware and software is recognised on dispatch. Revenue from fixed price contracts is recognised on the basis of the deliverables provided. Revenues from maintenance contracts and technical support agreements are recognised on a pro-rata basis over the period in which such services are rendered under the terms of the contracts and agreements. Revenues from software development and maintenance on time and material basis and consultancy charges are recognised based on the terms agreed with the customers. Revenue from e-learning activity is recognised on the basis of enrollment. Revenue from online examination services are recognized on the basis of exams conducted. Interest on deployment of funds is recognised using the time proportion method, based on interest rates implicit in the transaction. Income excludes applicable taxes and other levies c. Expenditure Expenses are accounted on accrual basis and provisions are made for all known losses and liabilities. Since the company does not visualise any major expenditure on account of warranty given for maintaining the software product licenses sold, no provisions are made on this account. Any expenditure that may have to be incurred towards honouring the warranty shall be accounted for in the year in which it is incurred. d. Fixed Assets Fixed Assets are stated at cost of acquisition less accumulated depreciation and impairments, if any. Cost of acquisition is inclusive of freight, duties, taxes and other incidental expenses. Individual low cost assets (acquired for less than ` 5000/-) are depreciated at the rate of 100% in the year of acquisition. Fixed Furniture and fixtures, electrical installation and office equipment including civil improvements at lease hold premises are depreciated over the lease period. Expenditure incurred during the year for acquiring software copyright, source code and other deliverables along with the in-house development cost is capitalised and 33 1/3 % on Straight Line Method, which is higher than the rates prescribed in the aforesaid schedule. Software products/ licenses purchased/ acquired for internal use of the Company which have expected longer life are capitalised and 33 1/3 % on Straight Line Method, which is higher than the rates prescribed in the aforesaid schedule. Depreciation on fixed assets other than above is provided using straight line method at the rates specified in schedule XIV to Companies Act, e. Inventory The Inventory is valued at cost or net realizable value whichever is lower. f. Forward Exchange Contract Forward exchange contracts entered into to hedge foreign currency risk of an existing asset/liability. The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expense/income over the life of the contract. Exchange differences on such contracts, are recognized in the statement of profit and loss in the period in which the exchange rates Page 27

97 NSE.IT LIMITED Thirteenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 1 SIGNIFICANT ACCOUNTING POLICIES change. Any profit or loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or as expense for the period. g. Foreign currency transactions Transactions in foreign exchange are accounted at the exchange rates prevailing on the date on which transactions have taken place. Outstanding if any, at the end of the year are converted at the year end rates. h. Employee Retirement Benefits Gratuity The Company has maintained a Group Gratuity Assurance Scheme with the Life Insurance Corporation of India towards which it annually contributes a sum determined by Life Insurance Corporation of India. The Company has made provision for gratuity liability estimated as per actuarial report as on the balance sheet date to comply with the Accounting Standard 15 for employee benefits. Superannuation Superannuation benefit for employees designated as managers and above is covered by Group Superannuation Scheme with the Life Insurance Corporation of India towards which it annually contributes a sum based on a specified percentage of each covered employees salary. The contribution paid for the year on the Group Superannuation Scheme is charged to revenue. Provident Fund W.e.f. 1st August the company had transferred the corpus balance of the NSE.IT Ltd. Employees Provident Fund Trust to the Regional Provident Fund Office, Kandivali, Mumbai. As per the applicable rule the company contributes 12% of the employee s basic salary to the said recognized provident fund and the same is charged to revenue. Leave Encashment Leave encashment paid to the employees while in service is charged to revenue as the same is considered as a short term benefit. Provision for leave encashment on retirement is made on the basis of actuarial valuation at the end of the year. i. Investments Long-term investments are carried at cost. Provision for diminution is made to recognize a decline, other than temporary, in their value. j. Income Tax Provision for Income Tax is made on the basis of the prevailing rates under the Income Tax Act, Company has accounted deferred tax liability/asset in accordance with the Accounting Standard 22 Accounting for Taxes on Income. Note 2 SHARE CAPITAL As at 31 March, 2012 As at 31 March, 2011 Authorised 15,000,000 (15,000,000) Equity Shares of ` 10/- each 150,000, ,000,000 Issued, Subscribed and Paid-up 10,000,010 (10,000,010) Equity shares of ` 10/- each fully paid up 100,000, ,000,100 Total 100,000, ,000,100 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 2 SHARE CAPITAL (Contd...) a. Reconciliation of the shares outstanding at the beginning and at the end of the reporting period. c. Shares held by holding/ultimate holding company and/or their subsidiaries/associates. As at 31 March, 2012 As at 31 March, 2011 Nos. ` Nos. ` At the beginning of the period 10,000, ,000,100 10,000, ,000,100 Issued during the period Outstanding at the end of the period 10,000, ,000,100 10,000, ,000,100 b. Terms / rights attached to equity shares The Comany has only one class of equity shares having a par value of ` 10 /- per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends 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 31st March 2012, the amount of per share dividend recognized as distributions to equity shareholders is ` 3.70 ( 31st March 2011 : ` 4/-). 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 the shareholders. As at 31 March, 2012 As at31 March, 2011 National Stock Exchange of India Ltd, the holding company (31 March 2011 : ` ) equity shares of ` 10/- each fully paid 100,000, ,000,100 d. Details of shareholders holding more than 5% in the Company As at 31 March, 2012 As at 31 March, 2011 Nos. % Nos. % Equity shares of ` 10/- each fully paid National Stock Exchange of India Ltd. 10,000, % 10,000, % (the holding company) 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 ownership of shares. e. Shares reserved for issue under options In terms of the authority granted by the General Meeting held on September 25th, 2006, the Company has formulated an Employee Stock Option Plan 2006 (ESOP). Under the said ESOP, 3,47,350 Options for equivalent number of Equity Shares of the company have been granted as an incentive scheme to the employees covered under the scheme. The Scheme provides that the Options shall vest in a graded manner over a period of 4 years in the ratio of 25%, 30%, 35% and 10% respectively. The exercise period shall be three years from the vesting of each tranche of the aforesaid options. Each option entitles the holder of the option to 1 Equity Share of the Company at an exercise price of ` 53/- per share, which is also the Fair Market Value (FMV) of the share on the date of the grant as determined by a valuation report obtained from an independent valuer. The Guidance Note issued by the Institute of Chartered Accountants of India on Accounting for Employee Share Based Payments requires accounting of the expense in regard to the ESOPs. The Company has adopted the Intrinsic Value Method as given in the said Guidance for accounting for the same. The Company has obtained expert opinion that since the Exercise Price is equal to the Page 28 Page 29

98 NSE.IT LIMITED Thirteenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 2 SHARE CAPITAL (Contd...) FMV of the shares on the grant date; it would not be required to recognize any compensation expense since the intrinsic value of the options is NIL. F.Y F.Y Particulars Qty. (Nos.) Qty. (Nos.) Options at the beginning of the year 144, ,780 Options granted during the year Nil Nil Options lapsed during the year 82, Options Exercised during the year Nil Nil Options expired during the year Nil Nil Balance Options in force 62, ,840 Note 3 RESERVE AND SURPLUS As at 31 March, 2012 As at 31 March, 2011 General Reserve Balance as per the last financial statements 238,506, ,506,069 Add : amount transferred from the surplus balance in the statement of profit & loss 90,000,000 80,000,000 Closing Balance 328,506, ,506,069 Surplus / (deficit ) in the statement of profit & Loss Balance as per the last financial statements 53,476,781 43,603,965 Add : Profit / (Loss) for the year 143,087, ,361,863 Less : Transfer to General Reserve 90,000,000 80,000,000 Less : Proposed Equity Dividend (per share ` 3.70 (31 March 2011: ` 4/-) 37,000,037 40,000,040 Less : Tax on proposed equity dividend 6,002,331 6,489,007 Net Surplus in the statement of profit and loss. 63,562,327 53,476,781 Total 392,068, ,982,850 Note 5 PROVISIONS Note 6 TRADE PAYABLE AND OTHER CURRENT LIABILITIES Long - term Short - term Provision for Employee benefits Provision for Gratuity (Funded Assets/ Non Funded Obligation) 1,428, ,142 1,511,250 Provision for Leave Benefits 3,338,599 1,114, ,866 2,568,042 Provision for other Employee Benefits ,241,414 33,132,236 4,767,148 1,114,491 36,354,422 37,211,528 Other Provisions Provision for outstanding expenses ,734,432 15,221,684 Provision for loss of subsidiary (net) ,338 - Provision for Proposed Dividend ,000,037 40,000,040 Provision for Dividend Distribution Tax - - 6,002,331 6,489, ,789,138 61,710,731 4,767,148 1,114,491 99,143,560 98,922,259 As at 31 March, 2012 As at 31 March, 2011 Trade payables (refer note 33 for details of dues to micro and small enterprises ) 9,704,776 11,641,668 9,704,776 11,641,668 Other Current Liabilities (a) Income received in advance (deferred revenue) 3,007,348 5,434,760 (b) Advance received from customers 26,905,648 36,165,079 (c) Other Payables Liability for Expenses 8,227,440 46,019,836 Government Dues (Sales Tax, Service Tax, TDS etc.) 4,275,500 5,400,590 Security Deposit Recd 100, ,000 42,515,936 93,120,265 Note 4 DEFERRED TAX LIABILITIES (NET) As at 31 March, 2012 As at 31 March, 2011 Deferred tax liability Fixed assets: Impact of difference between depreciation / amortization charged for the financial reporting and tax depreciation 13,129,360 8,965,487 Impact of expenditure charged to the statement of profit and loss but adjusted for tax purpose u/s 40 (a)(ia) 1,967,020 - Gross Deferred Tax Liability 15,096,380 8,965,487 Deferred tax Asset Fixed Assets : Impact of difference arising on account of impairment of intangible asset and tax depreciation 1,990,571 2,855,611 Impact of expenditure charged to the statement of profit and loss but adjusted for tax purpose u/s 40 (a)(ia) - 2,587,881 Gross Deferred Tax Asset 1,990,571 5,443,492 Net Deferred Tax Liability 13,105,809 3,521,995 Page 30 Page 31

99 NSE.IT LIMITED Thirteenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 7 FIXED ASSETS GROSS BLOCK DEPRECIATION / AMORTISATION NET BLOCK Sl. As on As on As on For the As on As on As on No. Category Additions Deductions Year Deductions A. Tangible Assets 1 Computer Hardware & Server 113,852,694 16,755, ,608,134 59,400,748 14,187,037-73,587,785 57,020,349 54,451,946 2 Office Equipment 49,134,280 8,819,900-57,954,180 8,219,708 3,772,572-11,992,280 45,961,900 40,914,572 3 Furniture & Fixtures 26,356,990 9,627,377-35,984,367 5,951,299 3,668,389-9,619,688 26,364,679 20,405,691 4 Building - Civil Work 5,967,622 1,853,452-7,821, , ,258-1,578,442 6,242,632 5,208, ,311,586 37,056, ,367,755 74,330,939 22,447,256-96,778, ,589, ,980,647 B Intangible Assets 1 Computer Software 43,715,519 2,641,710-46,357,229 29,893,763 7,737,798-37,631,561 8,725,668 13,821,756 2 Software copyrights 25,906, ,906,099 25,906, ,906, ,621,618 2,641,710-72,263,328 55,799,861 7,737,798-63,537,659 8,725,669 13,821,757 Grand Total 264,933,204 39,697, ,631, ,130,800 30,185, ,315, ,315, ,802,404 Previous Year 194,925,235 70,007, ,933, ,715,984 22,414, ,130, ,802,405 87,209,251 Note 8 NON CURRENT INVESTMENTS As at 31 March, 2012 As at 31 March, 2011 Trade Investments (Valued at cost) Unquoted Equity Instruments Investments in wholly owned subsidiaries NSE.IT(US) Inc. [ (1) Equity share of $ 1 each fully paid] 22,542, NSE.IT(UK) Ltd. [1 Equity share of 1 each fully paid] Non-trade Investments (Valued at cost) Quoted Mutual Funds (at cost) 22,792,359 22,792,359 [Market Value as on 31-Mar-12 ` (` /-)] 45,334,933 22,792,478 Note 9 LOANS AND ADVANCES Non - current Current a. Security Deposits 46,057,345 42,281, (Unsecured, considered good) b. Loans and advances to related parties Unsecured, considered doubtful NSE.IT (UK) Ltd 621, ,909 Less Provision for loss of subsidiary 621, ,909 c. Other loans and advances (unsecured, considered good) Income Tax Refund (Net of Provision) 55,812,807 49,041,135 Sales Tax Refund 1,102,354 2,043,287 Advance for Expenses (Staff) 3,936,515 1,141,985 Advance to creditors 862,448 1,510,077 Salary Advance 18,160 10,000 Other Advances 436, , ,168,293 54,203,911 ( a + b + c ) 46,057,345 42,281,790 62,168,293 54,630,820 Note 10 INVENTORIES As at 31 March, 2012 As at 31 March, 2011 Traded goods Stock of Digital Certificates 253, ,189 (Valued at lower of cost and net realizable value) 253, ,189 Page 32 Page 33

100 NSE.IT LIMITED Thirteenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 11 TRADE RECEIVABLES Current Trade receivables Unsecured, Considered good Outstanding for a period exceeding six months from the date they are due for payment 34,870,846 29,192,156 Other receivables 177,558, ,056, ,429, ,248,304 Note 12 OTHER ASSETS Note 13 CASH AND BANK BALANCES Non - current Current Funded Assets/ Non Funded Obligation (Gratuity) - 3,465,741 - Interest Accrued but not due - - 2,278,297 5,862 Service Tax Input Credit - - 2,710, ,240 Prepaid Expenses - - 8,456,262 8,582,509 Unbilled Revenue - - 4,800,000 14,000-3,465,741 18,245,464 8,872,611 Current Cash and Cash Equivalent Cheques/Drafts in hand 101,252 - Balances with banks in current Accounts including auto FD 130,222, ,537, ,324, ,537,973 Other Bank Balances Term Deposits having remaining maturity of 12 months or less 1,533,953 1,469, ,858, ,007,427 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 14 REVENUE FROM OPERATIONS Year ended 31 March, 2012 Year ended 31 March, 2011 Sale of Products Software Products 3,592,194 6,859,232 Traded Goods 8,928,151 6,304,285 (A) 12,520,345 13,163,517 Sale of Services Software Product Revenues 12,569,454 14,792,986 Application Development & Maintenance Services 230,227, ,704,855 Infrastructure Management Services 273,311, ,109,125 E-Learning Solutions 598,302, ,399,867 Customer Care Services 39,310,974 40,861,357 (B) 1,153,722, ,868,190 (A + B) 1,166,243,121 1,012,031,707 Note 15 OTHER INCOME Year ended 31 March, 2012 Year ended 31 March, 2011 Interest income Interest on Short Term Deposits & Auto Fixed Deposits with Bank 13,502,342 9,917,853 Other non-operating income Excess Provision Written Back 11,190,238 4,847,559 Gain from Foreign Exchange Fluctuations (Net) 3,382,194 1,119,585 Profit on sale of assets 76,066 - Miscellaneous Income 4,546,339 2,505,899 32,697,179 18,390,896 Note 16 PURCHASES OF STOCK-IN-TRADE Year ended 31 March, 2012 Year ended 31 March, 2011 Purchase of Digital Certificates 700,647 1,002,843 Purchase of Licenses (Algo Products) 3,709,456 1,833,760 4,410,103 2,836,603 Note 17 CHANGES IN INVENTORIES OF STOCK-IN-TRADE Year ended 31 March, 2012 Year ended 31 March, 2011 Opening Inventories of Digital Certificates 179, ,399 Closing Inventories of Digital Certificates 253, ,189 (74,389) 51,210 Page 34 Page 35

101 NSE.IT LIMITED Thirteenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 18 EMPLOYEE BENEFITS EXPENSES Year ended 31 March, 2012 Year ended 31 March, 2011 Salaries & Allowances 392,490, ,614,736 Contribution to Provident Fund 11,690,570 9,517,252 Contribution to Group Gratutity Scheme 4,820, ,305 Contribution to Superannuation Scheme 1,162, ,742 Staff Welfare Expenses 7,979,650 7,178, ,144, ,969,720 Note 19 OTHER EXPENSES Note 20 TAX EXPENSE Year ended 31 March, 2012 Year ended 31 March, 2011 Power and fuel 25,295,696 21,298,035 Rent 119,972, ,945,909 Repairs to machinery 6,607,696 6,160,173 Insurance 8,742,584 5,322,911 Rates and taxes, excluding taxes on income 1,286, ,712 Travelling expenses 24,671,424 17,032,613 Telephone & Internet Expenses 24,711,972 16,801,416 Security Services Charges 17,034,636 12,031,591 Fess & Subscription 78,131,728 94,399,413 Technical & Sub Contract Charges 179,152, ,106,573 Auditors Remunerations --- Audit fees 224, , Other Matter 33,708 49,635 Miscellaneous expenses 46,408,142 44,166, ,273, ,719,719 Year ended 31 March, 2012 Year ended 31 March, 2011 (a) Current Tax 61,000,000 51,000,000 Short / Excess Provision for taxes (net) (1,728,693) 7,981,913 59,271,307 58,981,913 (b) Deferred tax 9,583,814 3,085,452 68,855,121 62,067,365 Note 21 CONTINGENT LIABILITIES: (i) Estimated amount of contracts remaining to be executed on capital account and not provided for is 41,03,461/- (Previous Year: 1,41,00,311). (ii) On account of bank guarantees: ` Nil (Previous Year: ` Nil ). (iii) On account of corporate guarantee: ` Nil (Previous Year: ` Nil ) (iv) On account of disputed demand of income tax Nil (Previous Year: ` Nil ) (v) On account of disputed demand of sales tax: ` Nil (Previous year ` 1,79,169 /-) Note 22 CAPITAL WORK IN PROGRESS INCLUDES FOLLOWING ASSETS PURCHASED DURING THE YEAR BUT NOT INSTALLED : Year ended Year ended Particulars HRMS Software - Claim Management Module 620,796 - HRMS Software - Shift Management Module 22,863 22,863 Total 643,659 22,863 Note 23 EXPENDITURE IN FOREIGN EXCHANGE: Year ended Year ended Particulars Travelling 1,066,934 47,141 Direct Fees & Subscription 477,245 - Subcontract/ Technical Fees 163,376, ,098,955 Software Licenses 131, ,110 Total 165,051, ,269,206 C.I.F. Value of imports in respect of Capital goods : Nil (Previous Year : Nil) Note 24 EARNINGS IN FOREIGN EXCHANGE: Year ended Year ended Particulars Application Development and Maintenance Services 26,631, ,601 Total 26,631, ,601 Note 25 DETAILS OF EXCHANGE FLUCTUATION: Year ended Year ended Particulars (Loss) on Foreign Exchange transactions (1,042,742) (3,75,913) Gain on Foreign Exchange Transactions 4,424,936 1,495,498 Net Gain / (Loss) 3,382,194 1,119,585 Note 26 SEGMENT REPORTING In the opinion of the management, the company has two reportable business segment viz. offering End to End solutions which includes revenues from sale and maintenance of software products, software consultancy services, custom software development, information technology infrastructure services provided predominantly to market participants in the securities and commodity markets and E-learning Solutions which includes sale and maintenance of e-learning software products, online education and examination services and other incidental services as its primary segments. This takes into consideration the commonality in the risks and rewards of Page 36 Page 37

102 NSE.IT LIMITED Thirteenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 26 SEGMENT REPORTING (Contd...) the products/ solutions and related services offered nature of services, type / class of customers for the products / services, management structure and system of financial reporting. Accordingly, the results of the said segments have been disclosed hereunder. Further, the company has no reportable geographical segments and on that basis, no secondary segment information is furnished. Primary Business Segments Year ended March 31, 2012 End to End E-learning Particulars Solutions Solutions Total Revenues 567,940, ,302,922 1,166,243, ,631, ,399,867 1,012,031,707 Identifiable operating expenses 192,824, ,460, ,284, ,367, ,838, ,206,551 Allocated expenses 392,432, ,895, ,327, ,871, ,913, ,785,518 Segmental operating income / (loss) -17,316, ,947, ,630,844 12,392, ,647, ,039,638 Other income 32,697,179 18,390,896 Prior period adjustment 1,384,987 1,308 Net profit before taxes 211,943, ,429,226 Income taxes 68,855,121 62,067,365 Net profit after taxes 143,087, ,361,861 (Figures in Italics are for Previous Year) Fixed assets used in the Company s business or liabilities contracted have not been indentified to any of the reportable segments, as the fixed assets and services are used interchangeably between segments. Accordingly no disclosure relating to total segment assets and liabilities are made. Note 27 RELATED PARTY DISCLOSURE In compliance with Accounting Standard 18 Related Party Disclosures, the required disclosures are given in the table below: A) Names of the related parties and relationship: Sr. Related Party Nature of No. Relationship 1 National Stock Exchange of India Limited Holding Company 2 National Securities Clearing Corporation Limited Fellow Subsidiary 3 DotEx International Limited Fellow Subsidiary 4 NSE Infotech Services Limited Fellow Subsidiary 5 NSE.IT (UK) Limited Wholly owned Subsidiary Company 6 NSE.IT (US) Inc. Wholly owned Subsidiary Company 7 India Index Services & Products Limited Joint Venture of Holding Company 8 Power Exchange India Limited Joint Venture of Holding Company 9 Mr. Ramesh Padmanabhan Managing Director & CEO Key Management Personnel Note 27 RELATED PARTY DISCLOSURE (Contd...) B) Details of transactions with related parties as follows: Name of the Related Party Nature of Transaction Year ended Year ended National Stock Exchange Infrastructure Management Services 199,460, ,297,916 of India Limited Application Development and Maintenance Services 47,431,800 51,830,653 Software Product Revenues 15,750 67,000 E- Learning 54,692,020 15,242,330 Applicable taxes recovered 35,513,320 31,115,203 Reimbursement of expenses received 90,074 45,710 CTCL empanelment fee paid 386, ,900 Rent Paid 2,004,762 2,106,732 Usage Charges paid STP Central HUB & other 45,757 48,519 Reimbursement paid for other expenses incurred 270, ,208 Purchase of fixed assets Nil Nil Dividend paid 40,000,040 30,000,030 Loan Taken during the Year Nil Nil Loan Repaid during the Year Nil Nil Interest on Loan paid during the Year Nil Nil Closing Balance - Dr./ (Cr.) 53,447,992 18,285,196 National Securities Clearing Application Development and Maintenance Services 8,464,415 10,601,873 Corporation Limited Applicable taxes recovered 871,835 1,091,993 Closing Balance - Dr./ (Cr.) 2,677,100 1,369,693 NSE Infotech Services Limited Reimbursement of expenses received Nil Nil Reimbursement paid for expenses incurred Nil Nil Closing Balance - Dr./ (Cr.) Nil Nil DotEx International Limited Reimbursement of Expenses received 372, ,473 Reimbursement for Expenses recoverable Nil Nil Application Development and Maintenance Services 786,990 1,024,910 Customer Care Services 31,630,974 39,181,357 Infrastructure Management Services 4,052,637 3,878,458 Applicable taxes recovered 3,770,792 4,550,907 Closing Balance - Dr./ (Cr.) 6,060,285 6,149,395 Power Exchange India Limited Application Development and Maintenance Services 32,253,519 23,229,662 Software Product Revenues Nil Nil Reimbursement of expenses received 5,135 34,638 Infrastructure Management Services 7,499,658 5,276,623 Applicable taxes recovered 4,094,577 2,936,148 Closing Balance - Dr./ (Cr.) 41,590,368 29,856,488 NSE.IT US Inc Software Product Revenues 24,407, ,601 Closing Balance - Dr./ (Cr.) 37,893,419 10,790,840 NSE.IT (UK) Ltd Expenses incurred on behalf of Co. 128, ,204 Closing Balance - Dr./ (Cr.) 621, ,909 Page 38 Page 39

103 NSE.IT LIMITED Thirteenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 27 RELATED PARTY DISCLOSURE (Contd...) B) Details of transactions with related parties as follows: (Contd...) Name of the Related Party Nature of Transaction Year ended Year ended Key Management Personnel - Gross remuneration including allowances, Ramesh Padmanabhan MD &CEO perquisites and contribution to Provident Fund and Superannuation Fund etc. 13,805,832 13,173,687 The income figures are excluding applicable taxes recovered. Note 28 FUTURE LEASE RENT OBLIGATIONS The Company has taken following assets on non-cancelable renewable operating lease basis: Office Premises : Leave & License Agreement for maximum of 108 months The maximum future rent obligations as per the respective agreements are as follows:- Particulars Year ended Year ended Future Lease Rent obligations Office & Residential Premises not later than 1 year 92,415, ,919,632 later than 1 year not later than 5 years 238,104, ,920,960 later than 5 years 80,935, ,859,745 Total 411,456, ,700,337 Note 29 EARNINGS PER SHARE In accordance with Accounting Standard 20 Earning per Share, the required disclosure is given below : Year ended Year ended Future Lease Rent obligations Net Profit attributable to Shareholders 143,087, ,361,863 Weighted Average number of equity shares issues (in Nos). 10,000,010 10,000,010 Basic/diluted earnings per share of ` 10 each The dilutive impact of ESOPs granted as mentioned in Note 2 e on the EPS mentioned below is considered nominal and not material and therefore, no separate diluted EPS has been computed. Note 30 PROVISION FOR EMPLOYEES BENEFITS In accordance with Accounting Standard 29 Provisions, Contingent Liabilities and Contingent Assets, the company has made provision for Performance Pay payable to the employees and Leave Encashment. The particulars of these provisions are as under: F.Y F.Y Performance Leave Performance Leave Particulars Pay Encashment Pay Encashment Carrying amount at the beginning of the year 29,141,135 3,682,533 28,162,752 38,45,187 Amounts used during the year 36,408,613 2,568,042 24,947,597 33,19,440 Amounts unused reversed during the year 5,073,081-1,067,137 - Provisions made during the year 44,623,078 2,824,974 2,69,93,117 31,56,786 Carrying amount at the end of the year 32,282,519 3,939,465 29,141,135 36,82,533 Note 31 GRATUITY EXPENSES Effective April 1, 2007 the company adopted the Accounting Standard 15 Employee Benefits. Company has charged the gratuity expenses to revenue based on gratuity liability estimated as per actuarial report furnished by independent actuarial valuer. The report which uses projected unit credit method shows the position as at March 31, 2012 as under. Particulars FY FY Obligation at period beginning 7,491,774 6,093,592 Service Cost 2,221,907 1,601,906 Interest Cost 618, ,721 Actuarial (gain)/loss 2,791,649 (561,445) (Benefits paid) (1,511,250) (145,000) Obligation at period end 11,612,151 7,491,774 Change in plan assets Plan assets at period beginning, at fair value 9,446,265 7,027,937 Expected return on plan assets 755, ,235 Acturial gain / (Loss) 54, ,642 Contributions 925,815 1,771,451 (Benefits paid) (1,511,250) (145,000) Plan assets at period end, at fair value 9,671,460 9,446,265 Reconciliation of present value of the obligation and the fair value of the plan assets: Particulars FY FY Fair value of the plan assets at the end of the period 9,671,460 9,446,265 Present Value of the defined obligations at the end of the period 11,612,151 7,491,774 Funded Status (1,940,691) 1,954,491 Asset / (liability) recognised in Balance Sheet (1,940,691) 1,954,491 Assumptions Interest Rate 8.50% 8% Gratuity Cost for the period Service Cost 2,221,907 1,601,906 Interest Cost 618, ,721 Expected return on plan assets (755,701) (562,235) Net Actuarial (gain) / loss recognised in the year 2,736,720 (791,087) Expenses recognised in statement of Profit & loss 4,820, ,305 The estimate of future salary increases, considered in actuarial valuation, take account of inflation, promotion and other relevant factors such as supply and demand factors in the employment market. Note 32 EXTRA ORDINARY ITEM The company has filed for winding of its subsidiary NSE.IT (UK) Limited, as of 31st March 2012 and consequently, as a financial prudence measure, the accumulated loss of ` 6,73,810/- of the said subsidiary has been provided for in the current financial year. In case of provision for performance pay, it is expected that these obligation will be met in the next financial year Page 40 Page 41

104 NSE.IT LIMITED Thirteenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 33 DETAILS OF DUES TO MICRO AND SMALL ENTERPRISES AS DEFINED UNDER THE MSMED ACT, 2006 Year ended Year ended The principal amount and the interest due thereon remaining unpaid to any supplier as at the end of each accounting year -- Principal amount due to micro and small enterprises 30, Interest due on above ,060 - The amount of interest u/s 16 of the MSED Act Interest paid along with payments made beyond the appointed day Interest due and payable for payments made beyond the appointed day Interest accrued and unpaid at the end of each accounting year Interest due and payable 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 deductible u/s 23 of the MSMED Act Note 34 REGROUPING The previous year figures are regrouped, reclassified and rearranged, wherever necessary. As per our report of even date attached For Gokhale & Sathe. Chartered Accountants (Reg No : W) For and on behalf of Board of Directors Kedar Mehendale Ravi Narain Ramesh Padmanabhan Dileep Choksi Partner Chairman Managing Director & CEO Director Membership No Place : Mumbai J. Ravichandran Kankesh Kamath Chirag Shah Date : 24th April 2012 Director Chief Financial Officer Company Secretary ENCLOSURE FORMING PART OF ACCOUNTS Balance Sheet Abstract and Company's General Business Profile (information pursuant to Notification No. GSR No. 388(E) [F No.3/24/94-CLV] dated , issued by the Department of Company Affairs, Ministry of Law, Justice and Company Affairs) (Part IV of Schedule VI to the Companies Act, 1956) I Registration Details Registration No State Code 11 Balance Sheet Date 31-Mar-2012 II Capital Raised during the Year Public Issue NIL Rights Issue NIL Bonus Issue NIL Private Placements NIL III Position of Mobilisation and Deployment of Funds ` In Thousands Total Liabilities 661,306 Total Assets 661,306 Sources of Funds Paid-up Capital 100,000 Reserves & Surplus 392,068 Secured Loans NIL Unsecured Loans NIL Deferred Tax Liability 13,106 Non Current Liability 4,767 Current Liabilities 151,364 Application of Funds Net Fixed Assets 144,959 Investments 45,335 Non-Current Assets 46,057 Current Assets 424,955 Misc. Expenditure NIL Accumulated Losses NIL IV Performance of Company ` In Thousands Turnover 1,198,940 Total Expenditure 986,323 Profit Before Tax 212,617 Profit After Tax 143,088 Earning Per Share, on par value of ` 10 per share Dividend Rate 40% VI Generic Names of Three Principal products / Services of Company (as per monetary terms) Item Code No. (ITC Code) N.A. Product Description Software Products and Services For and on behalf of Board of Directors Ravi Narain Ramesh Padmanabhan Dileep Choksi Chairman Managing Director & CEO Director Place : Mumbai J. Ravichandran Kankesh Kamath Chirag Shah Date : 24th April 2012 Director Chief Financial Officer Company Secretary Page 42 Page 43

105 NSE.IT LIMITED STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956, RELATING TO SUBSIDIARY COMPANIES Sl. Name of the Subsidiary No. Particulars NSE.IT (UK) NSE.IT (US) Limited Inc. 1 Financial Period ended 31-Mar Mar-12 2 Holding Company's interest 100% 100% 3 Shares held by the Holding Company in the Subsidiary 1 Equity Equity Share Shares 4 Aggregate of profits or losses of the subsidiary for the current period so far as it concerns the Members of the holding company (a) dealt with or provided for in the accounts of the holding company (106,266) NIL (b) not dealt with or provided for in the accounts of the holding company NIL (28,239,705) 5 The net aggregate of profits or losses of previous financial years of the subsidiary so far it concerns the members of the holding Company (a) dealt with or provided for in the accounts of the holding company (567,544) NIL (b) not dealt with or provided for in the accounts of the holding company NIL (2,466,503) Issued, Subscribed & Paid-up Share Capital 83 25,325,000 Reserves (673,810) (30,706,208) Loans - - Total Assets - 36,268,287 Total Liabilities - 36,268,287 Investments - - Turnover - 31,681,612 Profit (106,266) (28,239,705) Note : Figures are valued at Exchange rates prevailing as on 31st March NSE.IT (UK) Limited (A wholly owned subsidiary of NSE.IT Limited) For and on behalf of Board of Directors Ravi Narain Ramesh Padmanabhan Dileep Choksi Chairman Managing Director & CEO Director Place : Mumbai J. Ravichandran Kankesh Kamath Chirag Shah Date : 24th April 2012 Director Chief Financial Officer Company Secretary Fifth Annual Report Page 44

106 NSE.IT (UK) LIMITED Fifth Annual Report FY CORPORATE INFORMATION Board of Directors Mr. J. Ravichandran : Director Mr. Ramesh Padmanabhan : Director Secretary Mr. Ramesh Padmanabhan : Director Registered Office : C/O Butler & Co. LLP 3rd Floor Baker Street London W1U 6UE Registered Number : (England and Wales) CONTENT Auditors : Butler & Co LLP Chartered Accountants & Statutory Auditor Third Floor Baker Street W1U 6UE Corporate Information Report of the Directors Independent Auditor s Report Balance Sheet Statement of Profit and Loss Cash Flow Statement Notes to Financial Statements Page 1

107 NSE.IT (UK) LIMITED Fifth Annual Report FY REPORT OF THE DIRECTORS INDEPENDENT AUDITORS REPORT REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF NSE IT (UK) LIMITED The directors present their report with the financial statements of the company for the year ended 31 March Principal Activity The principal activity of the company in the year under review was that of software consultancy. Review of Business The results for the period and financial position of the company are as shown in the annexed financial statements. As explained in Note 1 of the financial statements, the directors intend to commence winding up procedures for the company. Dividends No dividends will be distributed for the year ended 31 March Directors The directors shown below have held office during the whole of the period from 1 April 2011 to the date of this report. J Ravichandran R Padmanabhan Statement of Directors' Responsibilities The directors are responsible for preparing the Report of the Directors and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: - select suitable accounting policies and then apply them consistently; - make judgments' and accounting estimates that are reasonable and prudent; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Statement as to Disclosure of Information to Auditors So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information. On behalf of the Board: Date: 17 April 2012 R Padmanabhan - Director We have audited the financial statements of NSE IT (UK) Limited for the year ended 31 March 2012 on pages five to eight. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the Statement of Directors' Responsibilities set out on page two, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Report of the Directors to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the financial statements: give a true and fair view of the state of the company's affairs as at 31 March 2012 and of its loss for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been prepared in accordance with the requirements of the Companies Act Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: - adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or - the financial statements are not in agreement with the accounting records and returns; or - certain disclosures of directors' remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit. Sanjeev Phadke (Senior Statutory Auditor) for and on behalf of Butler & Co LLP Chartered Accountants & Statutory Auditor Third Floor Baker Street London W1U 6UE Page 2 Page 3

108 NSE.IT (UK) LIMITED Fifth Annual Report FY BALANCE SHEET As at 31 March, 2012 ( ) Note As at As at 31 March, March, 2011 STATEMENT OF PROFIT & LOSS For the year ended 31 March, 2012 Note Year ended Year ended 31 March, March, 2011 ( ) I. EQUITY AND LIABILITIES 1) Shareholder's funds (a) Share Capital (b) Reserves and surplus 6 (8,129) (6,842) 2) Share application money pending allotment - - 3) Non-current liabilities (a) Deferred tax liabilities (Net) - - (b) Long-term provisions - - 4) Current liabilities (a) Trade payables - - (b) Other current liabilities 8 7,498 6,211 (c) Short-term provisions Total - - II. Assets 1) Non-current assets (a) Fixed assets (i) Tangible assets - - (ii) Intangible assets - - (iii) Capital work-in-progress - - (b) Non-current investments - - (c) Long-term loans and advances - - (d) Other non-current assets - - 2) Current Assets (a) Inventories (b) Trade receivables (c) Cash and bank balances (d) Short-term loans and advances (e) Other current assets Total - - Significant Accounting Policies 1 The accompanying notes are an integral part of the financial statements. I. Revenue from operations - - II. Other income - - III. Total Revenue ( I + II ) - - IV. Expenses: Purchases of Stock-in-Trade - - Changes in inventories of Stock-in-Trade - - Employee benefits expense Depreciation and amortisation expense - - Other expenses 9 1, , Total expenses 1, , V. Profit before exceptional and extraordinary items and tax ( III-IV ) (1,286.58) (2,171.00) VI. Exceptional items - - VII. Profit before extraordinary items and tax ( V - VI ) (1,286.58) (2,171.00) VIII. Extraordinary Items - - IX. Profit before tax (VII - VIII) (1,286.58) (2,171.00) X. Tax expenses: (1) Current tax - - (2) Deferred tax - - XI. Profit/(Loss) for the period from continuing operations (IX - X ) (1,286.58) (2,171.00) XII. Profit/(Loss) from discontinuing operations - - XIII. Profit/(Loss) for the year ( XI + XII ) (1,286.58) (2,171.00) XIV. Earnings per equity share: (1) Basic (1,286.58) (2,171.00) (2) Diluted (1,286.58) (2,171.00) Significant Accounting Policies 1 The accompanying notes are an integral part of the financial statements. J. Ravichandran Ramesh Padmanabhan Date : 17th April 2012 Director Director J. Ravichandran Ramesh Padmanabhan Date : 17th April 2012 Director Director Page 4 Page 5

109 NSE.IT (UK) LIMITED Fifth Annual Report FY CASH FLOW STATEMENT For the year ended 31 March, 2012 A) CASHFLOW FROM OPERATING ACTIVITIES B C ( ) Year ended Year ended 31 March, March, 2011 Net Profit before tax (1,287) (2,171) Add : Adjustments for Depreciation - - Operating profit before working Capital Change (1,287) (2,171) Change in Working Capital (Decrease) / Increase in Current Liabilities & Prov 1,287 2,171 Cash Generated from Operations - - Direct Taxes Paid - - Net Cash from Operating Activities- Total (A) - - CASH FLOW FROM INVESTING ACTIVITIES Interest from Fixed Deposits - - Addition to fixed assets - - Cash flow from investing activity - Total (B) - - CASH FROM FINANCING ACTIVITY Dividend Paid NET INCREASE/ (DECREASE) IN CASH & CASH EQUIVALENT - - Opening balance of Cash & Cash Equivalent - - Closing balances of Cash & Cash Equivalent - - NET INCREASE/ (DECREASE) IN CASH & CASH EQUIVALENT - - Notes to Cash Flow Statement : The above cash flow has been prepared under the "Indirect method" as set out in the Accounting Standard -3 J. Ravichandran Ramesh Padmanabhan Date : 17th April 2012 Director Director NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 1 ACCOUNTING POLICIES The financial statements have been prepared under the historical cost convention. Note 2 STAFF COSTS There were no staff costs for the year ended 31st March 2012 nor for the year ended 31st March The average monthly number of employees during the year were as follows: ( ) Management 2 2 Note 3 OPERATING LOSS The operating loss is stated after charging: Note 4 TAXATION ( ) Auditors' remuneration Directors' remuneration NIL NIL Analysis of the tax charge No liability to UK corporation tax arose on ordinary activities for the year ended 31st March 2012 nor for the year ended 31st March Note 5 SHARE CAPITAL ( ) March 31, 2012 March 31, 2011 Authorised 1( 1 ) Equity shares of 1/- each fully paid up 1 1 Issued, Subscribed and Paid-up 1( 1 ) Equity shares of 1/- each fully paid up 1 1 Total 1 1 a. Reconciliation of the shares outstanding at the beginning and at the end of the reporting period. As at 31 March, 2012 As at 31 March, 2011 Nos. Nos. At the beginning of the period Issued during the period Outstanding at the end of the period b. Shares held by holding/ultimate holding company and/or their subsidiaries/associates. ( ) March 31, 2012 March 31, 2011 NSE.IT Limited, the holding company 1 (31 March 2011 : 1) equity shares of 1/- each fully paid 1 1 c. Details of shareholders holding more than 5% in the Company As at 31 March, 2012 As at 31 March, 2011 Nos. % Nos. % Equity shares of 1/- each fully paid NSE.IT Limited 1 100% 1 100% (the holding company) As per records of the company, the above shareholding represents both legal and beneficial ownership of shares. Page 6 Page 7

110 NSE.IT (UK) LIMITED NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 6 RESERVES & SURPLUS March 31, 2012 March 31, 2011 Profit & Loss A/c Balance as per last financial statement (6,842.00) (4,671.00) Add : amount transferred from the surplus balance in the statement of profit & loss (1,286.58) (2,171.00) Total (8,128.58) (6,842.00) ( ) NSE.IT (U.S.) INC. (A wholly owned subsidiary of NSE.IT Limited) Note 7 PROVISIONS March 31, 2012 March 31, 2011 Other Provisions Provision for outstanding expenses ( ) Note 8 OTHER CURRENT LIABILITIES ( ) March 31, 2012 March 31, 2011 Advance received from NSE.IT Limited 7, , Other Payables , , Note 9 OTHER EXPENSES ( ) March 31, 2012 March 31, 2011 Professional Fees 1, , Bank Charges , , J. Ravichandran Ramesh Padmanabhan Date : 17th April 2012 Director Director Fifth Annual Report Page 8

111 NSE.IT (US) INC. Fifth Annual Report FY BALANCE SHEET As at 31 March, 2012 (USD) Note As at As at No. 31 March, March, 2011 STATEMENT OF PROFIT & LOSS For the year ended 31 March, 2012 (USD) Note Year ended Year ended 31 March, March, 2011 I. EQUITY AND LIABILITIES 1) Shareholder's funds (a) Share Capital 5 500, (b) Reserves and surplus 6 (606,242.80) (48,696.76) 2) Share application money pending allotment - - 3) Non-current liabilities (a) Long-term provisions - - 4) Current liabilities (a) Trade payables 8 733, , (b) Other current liabilities 8 20, , (c) Short-term provisions 7 68, , Total 716, , II. Assets 1) Non-current assets (a) Fixed assets (i) Tangible assets (ii) Intangible assets - - (b) Long-term loans and advances 9 3, (c) Other non-current assets - - 2) Current Assets (a) Trade receivables , , (b) Cash and bank balances , , (c) Short-term loans and advances 9 8, , (d) Other current assets - - Total 716, , Significant Accounting Policies 1 The accompanying notes are an integral part of the financial statements. I. Revenue from operations , II. Other income 14 9, III. Total Revenue ( I + II ) 625, IV. Expenses: Employee benefits expense , , Depreciation and amortisation expense 12 4, , Other expenses , , Total expenses 1,178, , V. Profit before exceptional and extraordinary items and tax ( III-IV ) (552,662.29) (57,043.03) VI. Exceptional items - - VII. Profit before extraordinary items and tax ( V - VI ) (552,662.29) (57,043.03) VIII. Extraordinary Items - - IX. Profit before tax (VII - VIII) (552,662.29) (57,043.03) X. Tax expenses: 17 (1) Current tax 4, (2) Deferred tax - - XI. Profit/(Loss) for the period from continuing operations (IX - X ) (557,546.04) (57,941.76) XII. Profit/(Loss) from discontinuing operations - - XIII. Profit/(Loss) for the year ( XI + XII ) (557,546.04) (57,941.76) XIV. Earnings per equity share: (1) Basic (1.12) (57,941.76) (2) Diluted (1.12) (57,941.76) Significant Accounting Policies 1 The accompanying notes are an integral part of the financial statements. For NSE.IT (US) Inc. Date : 17th April 2012 For NSE.IT (US) Inc. Ramesh Padmanabhan Director Date : 17th April 2012 Ramesh Padmanabhan Director Page 2 Page 3

112 NSE.IT (US) INC. Fifth Annual Report FY CASH FLOW STATEMENT For the year ended 31 March, 2012 A) CASHFLOW FROM OPERATING ACTIVITIES B C (USD) Year ended Year ended 31 March, Dec., 2010 Net Profit before tax (552,662.29) (57,043.03) Add : Adjustments for Depreciation 4, , Operating profit before working Capital Change (548,426.56) (55,698.05) Change in Working Capital Decrease / (Increase) in Sundry Debtors (145,340.03) - Decrease / (Increase) in Loans & Advances (9,350.00) - (Decrease) / Increase in Current Liabilities & Prov 557, , Cash Generated from Operations (145,319.67) (26,409.32) Direct Taxes Paid (Net of Refunds) (2,023.75) (898.73) Net Cash from Operating Activities- Total (A) (147,343.42) (27,308.05) CASH FLOW FROM INVESTING ACTIVITIES Addition to Equity Share Capital 499, Addition to fixed assets (net) (4,235.73) (1,344.98) Cash flow from investing activity - Total (B) 495, (1,344.98) CASH FROM FINANCING ACTIVITY Dividend Paid NET INCREASE/ (DECREASE) IN CASH & CASH EQUIVALENT 348, (28,653.03) Opening balance of Cash & Cash Equivalent 196, , Closing balances of Cash & Cash Equivalent 545, , NET INCREASE/ (DECREASE) IN CASH & CASH EQUIVALENT 348, (28,653.03) Notes to Cash Flow Statement : Cash and cash equivalent represent bank balances. The above cash flow has been prepared under the "Indirect method" as set out in the Accounting Standard -3 Date : 17th April 2012 For NSE.IT (US) Inc. Ramesh Padmanabhan Director NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 1 COMPANY PROFILE The following is a brief profile of the business: A: The business is a corporation. B: The business's main source of revenue is from software development and maintenance services. C: The business's year end has been changed from 31st December to 31st March. The current period's account has been prepared for 15 months. Note 2 ACCOUNTING POLICY The corporation uses the accrual method of accounting, which is the method of recording transactions, by which revenue and expenses are reflected in the accounts in the period which they are considered to be earned and incurred, respectively,whether or not such transactions have been finally settled by receipt or payment of cash or its equivalent. Also, depreciation expense is computed and recorded in the business's financial statements in accordance with the Internal Revenue Code, which may result in material differences from depreciation computed using useful lives. Note 3 METHOD OF DEPRECIATION The business uses the methods prescribed by the Internal Revenue Code to calculate the current year's depreciation expense. Note 4 FEDERAL INCOME TAX No provision for Federal income taxes has been made in business's financial statement on account of the net loss incurred during the year. Note 5 SHARE CAPITAL (USD) March 31, 2012 Dec. 31, 2011 Authorised ( 1 ) Equity shares of $ 1/- each fully paid up 500, Issued, Subscribed and Paid-up ( 1 ) Equity shares of $ 1/- each fully paid up 500, Total 500, a. Reconciliation of the shares outstanding at the beginning and at the end of the reporting period. As at 31 March, 2012 As at 31 December, 2011 Nos. $ Nos. $ At the beginning of the period Issued during the period 499, , Outstanding at the end of the period 500, , b. Terms / rights attached to equity shares The Company has only one class of equity shares having a par value of $ 1/- per share. Each holder of equity shares is entitled to one vote per share. During the period ended 31st March 2012, the amount of per share dividend recognized as distributions to equity shareholders is $ NIL ( 31st December 2010 : $ NIL ) 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 the shareholders. Page 4 Page 5

113 NSE.IT (US) INC. Fifth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 5 SHARE CAPITAL (Contd...) Note 9 LOANS AND ADVANCES (USD) c. Shares held by holding/ultimate holding company and/or their subsidiaries/associates. (USD) Non - current Current March 31, 2012 Dec. 31, NSE.IT Limited, the holding company (31 March 2012 : ) equity shares of $ 1/- each fully paid 500, d. Details of shareholders holding more than 5% in the Company As at 31 March, 2012 As at 31 December, 2011 Nos. % Nos. % Equity shares of $ 1/- each fully paid NSE.IT Limited 500, % 1 100% (the holding company ) As per records of the company, the above shareholding represents both legal and beneficial ownership of shares. Note 6 RESERVES & SURPLUS March 31, 2012 Dec. 31, 2011 General Reserve Balance as per last financial statement (48,696.76) 9, Add : amount transferred from the surplus balance in the statement of profit & loss (557,546.04) (57,941.76) Total (606,242.80) (48,696.76) Note 7 PROVISIONS (USD) March 31, 2012 Dec. 31, 2011 Provision for Employee benefits 4, , , , Other Provisions Provision for outstanding expenses 60, , Provision for taxes 3, , , , , Note 8 TRADE PAYABLE AND OTHER CURRENT LIABILITIES (USD) March 31, 2012 Dec. 31, 2011 Trade payables 733, , , , Other Current Liabilities Liability for Expenses 20, , , , (USD) a. Security Deposits 3, , (Unsecured, considered good) b. Loans and advances to related parties c. Other loans and advances (unsecured, considered good) Advance Income Tax Advance to creditors 8, , ( a + b + c ) 3, , , Note 10 TRADE RECEIVABLES (USD) Current Trade receivables Unsecured, Considered good Outstanding for a period exceeding six months from the date they are due for payment - - Other receivables 158, , , , Note 11 CASH AND BANK BALANCES (USD) Current Cash and Cash Equivalent Balances with banks 545, , , , Note 12 FIXED ASSETS (USD) GROSS BLOCK DEPRECIATION / AMORTISATION NET BLOCK Sl. As on As on As on For the As on As on As on No. Category 1-Jan-11 Additions Deductions Jan-11 Year Deductions Tangible Assets 1 Computer Hardware 1, , , , , Office Equipment Furniture & Fixtures Grand Total 1, , , , , Previous Year - 1, , , Page 6 Page 7

114 NSE.IT (US) INC. NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 13 REVENUE FROM OPERATIONS March 31, 2012 Dec. 31, 2011 Software Application Development 615, , (USD) DotEx International Limited Note 14 OTHER INCOME (USD) March 31, 2012 Dec. 31, 2011 (A wholly owned subsidiary of National Stock Exchange of India Limited) Other non-operating income Miscellaneous Income 9, , Note 15 EMPLOYEE BENEFITS EXPENSES (USD) March 31, 2012 Dec. 31, 2011 Salaries & Allowances 473, , Company's contribution to Employee's retirement plan 11, Company's Contribution to Payroll Tax 26, , Staff Welfare Expenses , , Note 16 OTHER EXPENSES (USD) March 31, 2012 Dec. 31, 2011 Technical & Sub Contract Charges 522, Professional Fees 28, , Insurance 18, Travelling expenses 16, , Bad Debts Written Off 15, Rent 14, Miscellaneous expenses 11, , Conveyance 10, Fess & Subscription 7, Entertainment Expenses 7, Telephone & Internet Expenses 7, Power and fuel , , Note 17 TAX EXPENSE (USD) March 31, 2012 Dec. 31, 2011 (a) Current Tax 3, Short / Excess Provision for taxes (net) 1, , For NSE.IT (US) Inc. Twelfth Annual Report Date : 17th April 2012 Ramesh Padmanabhan Director Page 8

115 DotEx International Limited Twelfth Annual Report FY CORPORATE INFORMATION Board of Directors* Mr. Ravi Narain : Chairman Ms. Chitra Ramkrishna Mr. J. Ravichandran Mr. R. Sundararaman : Director in-charge Secretary* Ms. Moushumi Barve : Asst. Company Secretary Auditors : M/s. K. S. Aiyar & Co. Chartered Accountants F 7, Laxmi Mills, Shakti Mills Lane, (Off. Dr. E. Moses Road) Mahalaxmi Mumbai CONTENT Registered Office : Exchange Plaza Plot No. C-1, Block G Bandra Kurla Complex, Bandra (East) Mumbai * As on August 8, 2012 Corporate Information Report of the Directors Independent Auditor s Report Balance Sheet Statement of Profit and Loss Cash Flow Statement Notes to Financial Statements Page 1

116 DotEx International Limited Twelfth Annual Report FY Your Directors have pleasure in presenting the Twelfth Annual Report and the Audited Accounts of DotEx International Limited for the financial year ended March 31, I. Operations and Major Events during the Year A. Datafeed business DotEx manages the data feed of NSEIL and supplies the same to its clients. Currently, the following products are offered by DotEx:- 1) Real Time Data 2) Snapshot Data 3) End of Day Data 4) Historical Data 5) Corporate Data The products related to real time data, snapshot data, end of day data and historical data are further segregated into the following segments: (i) (ii) (iii) (iv) (v) DIRECTORS REPORT Capital Market [CM] segment Futures and Options Market [F&O] segment Wholesale Debt Market [WDM] segment Securities Lending & Borrowing Market [SLBM] segment Currency & Interest Rate Futures Market segment Currently, real time feed is being subscribed by 35 clients, snapshot feed by 36 clients, end of day feed by 24 clients and corporate data by 2 clients. B. NOW (NEAT on Web) Platform DotEx also provides a shared platform called NEAT on Web (NOW) which is a shared CTCL and risk management tool for the trading members. During the year, DotEx started providing the following additional facilities through NOW platform viz., access to BSE Cash and Derivatives markets, NCDEX market and value added services like advanced charting, technical analysis, third party news, etc. provided by Nest Plus platform of Omnesys. The mobile application was also made available to cater to ipad and other Android based tablet versions. The above initiatives have resulted in a significant increase in the number of users (+35%) and trading turnover through NOW platform during the financial year C. Know Your Client (KYC) Registration Agency [KRA] As an initiative to serve investors, SEBI has simplified client registration process and introduced uniform KYC in securities market. Further, SEBI introduced mechanism for centralisation of the KYC records in order to serve investors better and to avoid duplication of KYC process with every intermediary. Accordingly, SEBI formulated the KYC Registration Authority (KRA) Regulations and notified the same on December 02, As per the above Regulations, a wholly owned subsidiary of Stock Exchange is permitted to apply for getting certificate from SEBI to provide KRA services as an intermediary. In view of the above, DotEx, with a view to boost SEBI initiative and serve investor community, applied for the same and got SEBI registration certificate on February 28, 2012 to act as a KRA intermediary. DotEx started its operations as KRA with effect from March 06, As on April 23, 2012, 407 intermediaries are recognised by DotEx and 4,150 KYC forms are uploaded on the KRA system called Vishwas. DotEx also launched its website and its KRA operations are fully functional. II. Financial Results During the year , DotEx earned a profit after tax of ` lakhs as compared to a profit of ` lakhs during The financial results for the financial years and are summarised hereunder. (` in Lacs) Particulars Income 5, , Expenditure (other than depreciation) 2, , Profit before depreciation and tax 2, , Depreciation Profit before tax 2, , Provision for taxation Profit after tax 1, , Profit / Loss bought forward from previous year Excess corporate dividend tax for last year transferred back Profit available for appropriation 1, , General Reserve 1, , Proposed Dividend Corporate Dividend Tax Balance carried to Balance Sheet III. Dividend In view of the above results, your Directors recommend payment of dividend of ` 2/- per share for the year IV. Directors In accordance with the provisions of the Companies Act, 1956 and the Company s Articles of Association, Ms. Chitra Ramkrishna retires by rotation at the ensuing Annual General Meeting and being eligible offers herself for re-appointment. The Board recommends the appointment of Ms. Chitra Ramkrishna as a Director on the Board of DotEx by the shareholders. V. Directors Responsibility Statement ii. the Directors had selected such 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 Company at the end of the financial year i.e., 31st March 2012 and of the profit of the company for that year; iii. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and iv. the Directors had prepared the annual accounts on a going concern basis. VI. Audit Committee Your Directors confirm 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; The Audit Committee comprises of three Directors viz., Mr. Ravi Narain, Ms. Chitra Ramkrishna and Mr. J. Ravichandran as its members. During the year under review, the Committee met four times i.e., on April 26, 2011, August 10, 2011, November 30, 2011 and February 6, The details of the attendance of the members of Audit Committee are presented in the following table:- Names Number of Number of meetings held meetings attended during the year during the year Mr. Ravi Narain 4 3 Ms. Chitra Ramkrishna 4 4 Mr. J. Ravichandran 4 4 VII Auditors M/s. K. S. Aiyar and Co., Chartered Accountants, Auditors of the Company, retire at the forthcoming Annual General Meeting of the Company and are eligible for re-appointment. The Company has received a certificate from the Auditors to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, VIII Conservation of Energy, Technology Absorption and Foreign Exchange Earnings/Outgo a) Conservation of Energy, Technology Absorption: As the Company does not fall under any of the industries listed out in the Schedule appended to Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988, particulars required to be disclosed with respect to conservation of energy and technology absorption in terms of Section 217 (1) (e) of the Companies Act, 1956 read with the aforesaid Rules are not applicable to the Company. Page 2 Page 3

117 DotEx International Limited Twelfth Annual Report FY b) Foreign Exchange earnings/outgo during the year under review: During the year, the foreign exchange earnings were ` 1, lakhs and the foreign exchange outgo was ` 0.73 lakhs. extended by NSEIL and NSE Infotech Services Limited and the valued clients and looks forward to their continued support and co-operation. Your Directors would like to place on record their deep appreciation of the contribution made by the employees at all levels to the continued growth of the Company. AUDITORS' REPORT IX. Particulars of Employees A statement prepared pursuant to requirements of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is attached herewith. X. Appreciation Your Directors are grateful for the support and co-operation Place : Mumbai Date : April 25, 2012 For and on behalf of the Board of Directors Ravi Narain Chairman ANNEXURE TO DIRECTORS' REPORT STATEMENT PURSUANT TO SECTION 217 (2A) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES (PARTICULARS OF EMPLOYEES) RULES, Sr. Name & Qualifications Age in Designation/ Remuneration Experience Date of Last Employment No. years Nature of Duties Received (No.of years) Commencement of Employment Gross Net 1 Mr. Suresh Narayan 42 Director in-charge January 24, 2005 Manager, B.Com, Grad. CWA National Securities Depository Limited Notes: 1 Gross Remuneration includes Salary and other benefits, Company's contribution to Provident Fund, Superannuation Fund, taxable value of perquisites, etc. Net remuneration represents gross remuneration less Company's contribution to provident and superannuation funds, taxable value of perquisites, profession tax and income tax. Where applicable, the amounts also include certain allowances accrued during previous year(s) but claimed in the current year. 2 The above employee is not a relative of any Director. 3 The above employee is on deputation basis from the Company's holding company i.e. National Stock Exchange of India Limited (NSEIL) and the proportionate remuneration mentioned above in respect of him has been reimbursed to NSEIL by the Company 4 None of the employees is holding equity shares in the Company within the meaning of sub-clause (iii) of clause (a) of sub-section (2A) of Section 217 of the Companies Act, The Company does not have any Employees Stock Option Plan (ESOP) Scheme for its employees. To the Members of DOTEX INTERNATIONAL LIMITED, 1. We have audited the attached Balance Sheet of DOTEX INTERNATIONAL LIMITED, as at March 31, 2012, the Statement of Profit and Loss and Cash Flow 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 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 required by the Companies (Auditor's Report)(Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, 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: (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) 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; (iii) 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; (iv) 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 subsection (3C) of section 211 of the Companies Act, 1956; (v) On the basis of 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 of the Company 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 Companies Act, 1956; (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 Companies Act, 1956, 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 K. S. Aiyar & Co, Chartered Accountants Registration No: W Raghuvir M. Aiyar Place: Mumbai Partner Date: April 25, 2012 Membership No.: Page 4 Page 5

118 DotEx International Limited Twelfth Annual Report FY ANNEXURE TO THE AUDITOR S REPORT (Referred to in paragraph 3 of our report of even date on the Accounts for the year ended March 31, 2012 of DOTEX INTERNATIONAL LIMITED.) In our opinion, and on the basis of such checks of the books and records as we considered appropriate and according to the information and explanations given to us during the normal course of audit, which were necessary to the best of our knowledge and belief, we report that: (i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) A substantial portion of the fixed assets have been physically verified by the management during the year. In our opinion the frequency of verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification. (c) The fixed assets disposed off during the year were not substantial. According to the information and explanation given to us; we are of the opinion that the disposal of the fixed assets has not affected the going concern status of the Company. (ii) The Company is a service Company and therefore does not maintain any inventory; the directions in this regard are therefore not applicable. (iii) (a) The Company has not granted any loans, secured or unsecured, to the companies, firms and other parties covered in the Register maintained under Section 301 of the Companies Act, Accordingly sub clause (b), (c) and (d) of clause (iii) are not applicable. (e) As informed, the Company has not taken any loans, secured or unsecured from the companies, firms and other parties covered in the Register maintained under Section 301 of the Companies Act, Accordingly sub clause (f) and (g) of clause (iii) are not applicable. (iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of fixed assets and with regard to the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls. (v) (a) In our opinion and according to the information and explanations given to us, there are no transactions or arrangements as referred to in section 301 of the Companies Act, 1956 that have to be required to be maintained under that section. Sub clause (b) of clause (v) is not applicable. (vi) The Company has not accepted any deposit from the public and consequently the directives issued by the Reserve Bank of India, provisions of section 58A and 58AA of the Companies Act, 1956, and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public are not applicable to the Company. No order has been passed by the Company Law Board, National Law Tribunal or Reserve Bank of India or any other court or any other tribunal. (vii)in our opinion, the Company has an internal audit system commensurate with the size and nature of its business. (viii)according to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of services carried out by the Company. (ix) (a) During the year there were no employees in the employment of the Company. Accordingly the directions relating to Provident Fund and Employee s State Insurance are not applicable to the Company. Further, based on our examination of the records maintained during the year, the Company is not liable to make any payments towards Investor Education Protection Fund, Wealth Tax, Customs Duty, Excise Duty and Cess. The Company has been regular in depositing Income Tax, Sales Tax/VAT Service Tax dues along with cess thereon with the appropriate authority. (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) (xvii) (b) According to the records of the Company, Sales tax, Income-tax, Customs duty, Wealth tax, Service tax, Excise duty and Cess which have not been deposited on account of any dispute, are as follows: Name of Statute Year to which the Forum where the Amount (Nature of dues) amount relates dispute is pending Income Tax (Tax/ Interest) CIT (Appeals) 5,22, Assessing Officer 22,52,586 The Company does not have any accumulated losses at the end of the financial year and has not incurred any cash losses during the financial year covered by our audit and in the immediately preceding financial year. The Company has neither taken any loans from any bank or financial institution nor issued any debentures. The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. The Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4 (xiii) of the Order are not applicable to the Company. In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. The Company has not given any guarantee for loans taken by others from bank or financial institutions. The Company has not raised any term loans. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that the 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 and companies covered in the register maintained under section 301 of the Companies Act (xix) (xx) (xxi) The Company has not issued any debentures during the year. The Company has not raised any money by way of public issue during the period. Therefore, the provision of clause (xx) of the order is not applicable to the Company. According to the information and explanations furnished by the management, which have been relied upon by us, there were no frauds on or by the Company noticed or reported during the course of our audit. For K. S. Aiyar & Co, Chartered Accountants Registration No: W Raghuvir M. Aiyar Place: Mumbai Partner Date: April 25, 2012 Membership No.: Page 6 Page 7

119 DotEx International Limited Twelfth Annual Report FY BALANCE SHEET As at 31 March, 2012 Note As at As at 31 March, March, 2011 STATEMENT OF PROFIT & LOSS For the year ended 31 March, 2012 Note For the year ended For the year ended Particulars 31 March, March, 2011 I. EQUITY AND LIABILITIES 1) Shareholder's funds a Share Capital 2 120,000, ,000, b Reserves and surplus 3 466,101, ,325, ,101, ,325, Current liabilities a Trade payables 4 20,475, ,838, b Other liabilities 5 9,332, ,975, c Short-term provisions 6 28,477, ,850, ,285, ,664, Total 644,387, ,989, II. ASSETS 1 Non-current assets a Fixed assets 7 Tangible assets 46,939, ,393, Intangible assets 2,709, , ,649, ,591, b Non-current investments 8 154,899, ,974, c Deferred tax Assets (net) 10 7,165, ,475, d Long term loans & advances 11 88, , e Other non-current assets 13 38,590, ,393, ,099, Current assets a Current investments 9 20,000, ,930, b Short-term loans and advances 11 2,879, , c Trade receivable ,951, ,322, d Cash and bank balances ,382, ,451, e Other current assets 13 59,780, ,007, ,994, ,889, Total 644,387, ,989, Summary of significant accounting policies (Note 1) The accompanying notes are an integral part of the financial statements. As per our report of even date attached For and on behalf of the Board of Directors For K. S. Aiyar & Co. Ravi Narain Chitra Ramkrishna Chartered Accountants Chairman Director Raghuvir M. Aiyar J Ravichandran Suresh Narayan Partner Director Director-in-charge Membership Number: INCOME Revenue from operations ,554, ,206, Other income 16 21,889, ,316, Total Revenue (I) 547,443, ,523, EXPENSES Deputed Personnel Cost 23,121, ,283, Other expenses ,390, ,506, Revenue Sharing 71,739, ,997, Depreciation 7 37,854, ,654, Total Expenses (II) 335,105, ,443, Profit before tax 212,338, ,079, Less :Provision for tax Current tax 72,000, ,000, Deferred tax (5,689,793.00) (2,844,210.00) Short Provision for tax 357, , Total tax expenses 66,668, ,412, Profit after tax 145,670, ,667, Basic Diluted Summary of significant accounting policies (Note 1) The accompanying notes are an integral part of the financial statements. As per our report of even date attached For and on behalf of the Board of Directors For K. S. Aiyar & Co. Ravi Narain Chitra Ramkrishna Chartered Accountants Chairman Director Raghuvir M. Aiyar J Ravichandran Suresh Narayan Partner Director Director-in-charge Membership Number: Place : Mumbai Ved Malla Date : April 25, 2012 Asst. Company Secretary Place : Mumbai Ved Malla Date : April 25, 2012 Asst. Company Secretary Page 8 Page 9

120 DotEx International Limited Twelfth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 1 SIGNIFICANT ACCOUNTING POLICIES : A. Basis of Accounting The accounts are maintained on a mercantile basis in accordance with generally accepted accounting principles. The financial statements comply in all material respect with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, B. Revenue Recognition Revenue from subscription received for dissemination of data (data feed) is recognised on time proportion method. C. Expenditure Expenses are accounted on accrual basis and provisions are made for all known losses and liabilities. D. Fixed Assets Fixed Assets are stated at cost of acquisition / development less accumulated depreciation. Cost of acquisition is inclusive of freight, duties, taxes and other incidental expenses. Depreciation is provided on prorata basis for the period of use. Depreciation on Office Equipment is provided using Straight Line Method at the rates specified in Schedule XIV of the Companies Act, 1956, Depreciation on Computer Software is provided at the rate of 33 1/3 % on Straight Line Method, which is higher than the rate prescribed in the aforesaid schedule Depreciation on Computer Hardware and Servers is provided at the rate of 25% on Straight Line Method, which is higher than the rate prescribed in the aforesaid schedule. Depreciation on Telecom Installations is provided at the rate of 25% on Straight Line Method, which is higher than the rate prescribed in the aforesaid schedule. E. Investments (i) Long term investments are considered as held till maturity and are valued at cost. (ii) Current investments are valued at cost or fair value whichever is lower. (iii) Premium paid/discount received at the time of acquisition of Government / Debt securities is amortised over the residual period of its maturity. F. Taxation Tax expense for the year, comprising current tax and deferred tax is included in determining the net profit / (loss) for the year. A provision is made for the current tax based on tax liability computed in accordance with prevailing tax rates and tax laws. A provision / accrual is made for deferred tax for all timing differences arising between taxable income and accounting income at the Balance Sheet Date based on prevailing enacted or substantively enacted tax rates. Deferred tax assets are recognised only if there is a reasonable certainty that they will be realised and are reviewed for the appropriateness of their respective carrying values at each balance sheet date. Note 2 SHARE CAPITAL As at As at Authorised 1,30,00,000 (Previous Year 1,30,00,000) Equity Shares of ` 10 Each. 130,000, ,000, Issued, Subscribed and Paid-up 1,20,00,000 (Previous year 1,20,00,000) Equity shares of ` 10 each fully paid up. 120,000, ,000, Total 120,000, ,000, There is no movement either in the number of shares or in amount between previous year and current year. The Company has only one class of shares referred to as equity shares having a par value of ` 10/-. Each holder of equity shares is entitled to one vote per share. Note 2 SHARE CAPITAL (Contd...) Details of shareholders holding more than 5% share in the company No. % holding No. % holding National Stock Exchange of India Limited 12,000, ,000, Note 3 RESERVE AND SURPLUS General reserve Note 4 TRADE PAYABLES Long - term (As at) Short - term (As at) Sundry creditors ,961, ,407, Provision For Expenses - - 1,513, ,430, Total ,475, ,838, Note 5 OTHER LIABILITIES Long - term (As at) Short - term (As at) Income received in advance ,250, Tax deducted at source - payable - - 5,991, ,749, Service Tax - payable - - 3,326, ,975, Other liabilities , Total - - 9,332, ,975, Note 6 PROVISION As at 31 March, 2012 As at 31 March, 2011 As per last balance sheet 325,000, ,000, Add : Transferred from profit & loss account 110,000, ,000, ,000, ,000, Surplus/(deficit) in the statement of profit and loss Balance as per last financial statements 23,325, ,507, profit for the year 145,670, ,667, Excess corporate dividend tax - 69, Less : Appropriations Transfer to general reserve 110,000, ,000, Proposed dividend 24,000, ,000, Tax on proposed dividend 3,893, ,101, ,920, ,325, Total reservesand surplus 466,101, ,325, Long - term (As at) Short - term (As at) Proposed dividend ,000, ,000, Corporate dividend tax - - 3,893, ,920, Provision for Tax (Net of Advance Taxes paid) , ,930, Total ,477, ,850, Page 10 Page 11

121 DotEx International Limited Twelfth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 7 FIXED ASSETS DESCRIPTION GROSS BLOCK DEPRECIATION NET BLOCK As on Additions Deletions As on As on For the Deletions Total upto As on As on during the during the Year year year TANGIBLE ASSETS Computer Hardware 4,040, , , ,107, ,449, , , ,716, , , Computer Sys-Others 60,258, , ,133, ,711, ,503, ,435, ,630, ,309, ,401, ,754, Office Equipments 219, , , , , , , , , Telecom Installations 93,495, ,903, ,544, ,854, ,529, ,979, ,749, ,759, ,094, ,965, TOTAL (A) 158,014, ,535, ,676, ,873, ,620, ,691, ,378, ,933, ,939, ,393, INTANGIBLE ASSETS Computer Software 8,827, ,675, ,502, ,629, , ,792, ,709, , TOTAL (B) 8,827, ,675, ,502, ,629, , ,792, ,709, , TOTAL (A+B) 166,841, ,210, ,676, ,375, ,250, ,854, ,378, ,726, ,649, ,591, Previous Year 150,413, ,353, ,925, ,841, ,521, ,654, ,925, ,250, ,591, Note 8 NON CURRENT INVESTMENTS Maturity Number of Number of Face Value Face value As at As at Date Units Unit per Unit Particulars As at As at QUOTED BONDS Taxfree 6.85 % India Infrastructure Finance Company Limited /Jan/ , ,000, ,112, ,174, UNQUOTED EQUITY SHARES In Associate Companies Omnesys Technologies Pvt. Ltd. 833, , ,339, ,800, ,800, (Extent of holding 26%) INXS Technologies Limited 4,505, ,160, ,609, ,987, ,000, (Extent of holding 32.50%) TOTAL 5,339, ,995, ,949, ,899, ,974, Note : Aggregate Market Value of the quoted investments is ` 98,54, (Previous Year :1,00,00,000.00) NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 9 CURRENT INVESTMENTS Maturity Number of Face Value Face As at As at Date Units per Unit value Particulars UNQUOTED BONDS Taxable 6.25 % Rural Electrification Corporation Limited. 31-Mar , ,930, ,930, MUTUAL FUNDS Sundaram Fixed Term Plan AP-367 Days Growth 4-Nov-11 1,000, ,000, ,000, QUOTED MUTUAL FUNDS BIRLA SUN LIFE FIXED TERM PLAN SERIES DT GROWTH 29-Nov-12 1,000, ,000, ,000, RELIGARE FIXED MATURITY PLAN - SERIES X - 3-Dec-12 1,000, ,000, ,000, PLAN F (371 DAYS) - GROWTH TOTAL 3,000, ,930, ,000, ,930, Note : Aggregate Market Value of the quoted investments is ` 2,05,22, (Previous Year :NIL) Page 12 Page 13

122 DotEx International Limited Twelfth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 10 DEFERRED TAX ASSETS Note 14 CASH AND BANK BALANCES As at 31 March, 2012 As at 31 March, 2011 Non-current (As at) Current (As at) Related to depreciation and other expenditure 6,298, , Related to disallowance u/s 43B 272, , Related to other items 594, , Total 7,165, ,475, Note 11 LOANS AND ADVANCES Long - term (As at) Short - term (As at) Security deposit Unsecured, considered good 88, , , , (A) 88, , , , Advances recoverable in cash or kind Unsecured, considered good - - 2,844, , (B) - - 2,844, , Total (A+B) 88, , ,879, , Note 12 TRADE RECEIVABLES Note 13 OTHER ASSETS Non-current (As at) Non-current (As at) Current (As at) Outstanding for a period of over six months Unsecured, considered good , , Doubtful - - 1,833, ,033, ,378, ,627, Provision for doubtful receivables - - (1,833,766.00) (2,033,766.00) , , Other debts Unsecured, considered good ,406, ,728, ,406, ,728, Total ,951, ,322, Current (As at) Non-current bank balances 38,590, Other receivable ,257, ,938, ,590, ,257, ,938, Other Interest accrued on Investments , , Interest accrued on Bank deposits - - 8,393, ,850, ,522, ,068, Total 38,590, ,780, ,007, Cash and cash equivalents Balances with banks : On current accounts - - 2,614, ,946, Cash on hand - - 6, , ,620, ,951, Other bank balances Deposits with original maturity for more than 12 months 38,590, ,841, ,500, Deposits with original maturity for more than 3 months but less than 12 months ,920, ,590, ,761, ,500, Amount disclosed under non-current assets (38,590,000.00) Total ,382, ,451, Note 15 REVENUE FROM OPERATIONS Year ended Year ended Sale of services Online Datafeed Service Fees 284,923, ,336, Sale of Data 2,034, ,654, Recovery of expenses from NSEIL 236,097, ,991, Dealer / Access Charges 2,500, , Total 525,554, ,206, Note 16 OTHER INCOME Year ended Year ended Interest Income on Long Term Investments 807, ,226, Interest Income on Bank Deposits 11,839, ,484, Dividend income 7,991, ,476, Net gain / loss on sale of current Investment 842, , Provision for Doubtful Debts (recovery) 200, Miscellaneous Income 208, , Profit on Sale of Fixed Assets - 4, Total 21,889, ,316, Page 14 Page 15

123 DotEx International Limited Twelfth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 17 OTHER EXPENSES Note 18 CONTINGENT LIABILITY: Year ended Year ended Licence Fees 84,843, ,050, Repairs & Maintanence - Computers 19,394, ,397, Repairs & Maintenance - Others 36,388, ,119, Internet Charges 27,628, ,490, Legal & Professional Charges 15,238, ,828, Empanellement Charges 1,875, , Software Expenses 638, , Travelling Expenses 265, , Data Subscription Fees 1,514, ,600, Telecom - Co-location charges 1,810, ,633, Telephone Expenses 613, , Electricity Charges 806, , Insurance 123, , Space and Infrastructure usage charges 8,951, ,129, Loss on Sale of Fixed Assets 883, Fees & Subscription 511, , Profit/Loss on Foreign Exchange Fluctuation (net) 150, Payment to Auditors Audit Fees 100, , Out of Pocket Expense 1, For Other Services 25, Amortisation of Premium on Government/Debt Securities (Note 8) 62, , Bad debts / Sundry balance written off - 168, Miscellaneous Expenses 563, ,026, Total 202,390, ,506, A. Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for ` Nil (Previous Year: ` 55,15,975/-) B. Capital commitment towards investment ` Nil (Previous Year: ` 5,09,87,556.25) C. On account of disputed matters of Income Tax ` 39,44,825/- (Previous Year ` 33,83,206/-). Note 19 The Company is primarily engaged in the business of dissemination of data. Additionally it provides a facility to the members of various Stock Exchanges / Commodity Exchanges to access respective markets. Segmental information on the basis of above mentioned operations as per Accounting Standard 17 `Segment Reporting` is as below : Particulars DataFeed Others Unallocated Total Segment Revenue. 286,957, ,597, ,889, ,443, (287,991,279.00) (245,215,290.54) (11,316,533.45) (544,523,102.99) Segment Result. 190,449, ,889, ,338, (199,763,424.12) - (11,316,533.45) (211,079,957.57) Taxes ,668, (69,412,097.00) Net Profit After Taxes ,670, (141,667,860.57) Segment assets. 5,953, ,435, ,999, ,387, (18,549,648.55) (330,163,992.42) (182,275,775.05) (530,989,416.02) Segment liabilities. 4,806, ,995, ,691, ,494, (4,786,463.00) (26,226,240.15) (31,651,644.11) (62,664,347.26) Capital Expenditure - 8,210, ,210, (965,515.00) (17,388,414.22) - (18,353,929.22) Depreciation 2,347, ,506, ,854, (3,230,828.27) (32,424,073.55) - (35,654,901.82) Note: Previous year figures are given in bracket. Note 20 In compliance with Accounting Standard 18 - Related Party Disclosures, the required disclosures are given in the table below: (a) Names of the related parties and relationship Sr. Related Party Nature of No. Relationship 1 National Stock Exchange of India Limited Holding Company 2 National Securities Clearing Corporation Limited Fellow Subsidiary 3 NSE.IT Limited Fellow Subsidiary 4 NSE.IT (UK) Limited Fellow Subsidiary 5 NSE.IT (US) Limited Fellow Subsidiary 6 India Index Services & Products Limited Fellow Subsidiary 7 NSE Infotech Services Limited Fellow Subsidiary 8 National Commodity Clearing Limited Fellow Subsidiary 9 Power Exchange India Limited Associate Company 10 National Securities Depository Limited Associate Company 11 Mr Suresh Narayan - Director Key Management Personnel 12 Omnesys Technologies Pvt. Ltd. Associate Company 13 INXS Technologies Limited Associate Company Page 16 Page 17

124 DotEx International Limited Twelfth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 20 (Contd...) (b) Details of transactions (including service tax wherever levied) with related parties are as follows: Name of the Related Party Nature of Transaction Year ended Year ended National Stock Exchange of Reimbursement paid for expenses for staff on deputation 25,503, ,475, India Limited Space and Infrastructure usage charges paid 9,872, ,069, Capital Items Purchased - 5,396, Amount paid towards revenue sharing 79,128, ,413, Reimbursement paid for other expenses incurred 104,048, ,969, Dividend Paid 18,000, ,000, Recovery of expenses 260,415, ,226, Outstanding balance included in Current Assets. (Net) 141,897, ,992, NSE.IT Limited Amount payable towards Sale & Technical Support charges, 40,616, ,874, Scripting support for NOW testing automation products and reimbursement of expenses. Outstanding balance included in Current liabilities 6,073, ,577, India Index Services & Receipt of fees for right to create indices 2,470, ,499, Products Limited Data Subscription Fees Paid 1,667, ,600, Outstanding balance included in Current Liabilities 1,550, National Commodity Sale of Capital Item 337, Clearing Limited Outstanding balance included in Current Assets 30, Omnesys Technologies Pvt. Ltd. License Fees Paid 83,025, ,750, Receipt of fees for Online Data Feed Services 641, Receipt of fees for Historical Data CD - 95, Investment in Equity Shares (Closing Balance) 46,800, ,800, Outstanding balance included in Current Liabilities 6,485, ,906, INXS Technologies Limited License Fees Paid 6,287, ,639, Investment in Equity Shares (Closing Balance) 97,987, ,000, Outstanding balance included in Current Liabilities 508, , Key Management Personnel Gross Remuneration including allowances, non-cash 2,460, ,108, perquisites and contribution to Provident Fund and Superannuation Fund etc. Note 21 In accordance with Accounting Standard 20 - Earning per Share, the required disclosure is given below. Year ended Year ended Note 22 Year ended Year ended Particulars Expenditure in foreign currency: 73, , Earnings in foreign exchange : 138,054, ,585, Note 23 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small, and Medium Enterprises Development Act, 2006 to whom the company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made. This information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the company. This has been relied upon by the auditors. Note 24 The Company is in the business of dissemination of data and has a Revenue sharing agreement with National Stock Exchange of India Limited (NSEIL). Note 25 C.I.F. value of imports in respect of Capital goods : ` Nil (Previous Year : ` 4,36,944.00). Note 26 Previous years figures are regrouped, reclassified and rearranged wherever necessary. As per our report of even date attached For and on behalf of the Board of Directors For K. S. Aiyar & Co. Ravi Narain Chitra Ramkrishna Chartered Accountants Chairman Director Raghuvir M. Aiyar J Ravichandran Suresh Narayan Partner Director Director-in-charge Membership Number: Place : Mumbai Ved Malla Date : April 25, 2012 Asst. Company Secretary Net Profit attributable to Shareholders 145,670, ,667, Weighted Average number of equity shares issued 12,000, ,000, Basic earnings per share of ` 10/- each The Company does not have any outstanding dilutive potential equity shares. Consequently, the basic and diluted earning per share of the Company remain the same. Page 18 Page 19

125 DotEx International Limited Twelfth Annual Report FY CASH FLOW STATEMENT For the year ended 31 March, A) CASHFLOW FROM OPERATING ACTIVITIES Net Profit Before Tax 212,338, ,079, Add : Adjustments for : - Depreciation 37,854, ,654, Bad debts / Sundry Balances Written Off , Provision for Doubtful Debts - 662, Amortisation of premium on Govt/debt Securities 62, , Loss on sale / discard of assets (Net) 883, Less : Adjustments for : - Interest on Investments (807,170.86) (821,530.88) - Interest income on Bank & Inter-corporate deposits (11,839,262.83) (6,889,591.21) - Dividend on Investment (7,991,172.24) (3,476,344.73) - Profit on sale of redemption of Investments (842,848.59) (115,245.69) - Profit on sale of assets - (4,000.00) - Sundry Balances Written Back - (4,773.94) Oprating Profit Before Working Capital Changes 229,657, ,317, Adjustments for : Sundry Debtors 28,371, (86,942,346.39) Loans & Advances (17,050,712.15) 37,906, Current Liabilities & Provisions (9,005,770.26) (17,423,300.40) Cash Genrated From Operations 231,971, ,857, Direct Taxes paid (Net of Refunds) (74,704,149.91) (70,292,353.66) NET CASH FROM OPERATING ACTIVITIES - Total (A) 157,267, ,565, B) CASHFLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (8,210,891.00) (17,607,375.22) Sale of Fixed Assets 415, , (Increase)/Decrease in Investment (149,066,487.49) (63,889,097.38) Interest received on deposits 9,296, ,631, Dividend on Investment 7,991, ,476, Interest on Investments 896, , NET CASH FROM INVESTING ACTIVITIES - Total (B) (138,678,711.63) (75,551,423.10) CASH FLOW STATEMENT (Contd...) For the year ended 31 March, 2012 C) CASHFLOW FROM FINANCING ACTIVITIES Dividend Paid (18,000,000.00) (18,000,000.00) Dividend Distribution Tax (2,920,050.00) (2,989,580.00) NET CASH FROM (USED IN) FINANCING ACTIVITIES - Total (C) (20,920,050.00) (20,989,580.00) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) (2,330,957.55) 3,024, CASH AND CASH EQUIVALENTS : OPENING BALANCE (Note 14) 4,951, ,927, CLOSING CASH AND CASH EQUIVALENTS : CLOSING BALANCE (Note 14) 2,620, ,951, NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (2,330,957.55) 3,024, Notes to Cash Flow Statement : 1 Cash and cash equivalent represent cash, bank balances and balance in fixed deposit account as per balance sheet 2 The above Cash Flow Statement has been prepared under the "Indirect Method" as set out in the Accounting Standard-3 on Cash Flow Statements issued by the Institute of Chartered Accountants of india 3 All figures in brackets are outflows 4 Previous Years figures have been regrouped/restated wherever necessary 5 Direct taxes Paid/ Refunded are treated as arising from operating Activities and not bifurcated between investing and financing activities. As per our report of even date attached For and on behalf of the Board of Directors For K. S. Aiyar & Co. Ravi Narain Chitra Ramkrishna Chartered Accountants Chairman Director Raghuvir M. Aiyar J Ravichandran Suresh Narayan Partner Director Director-in-charge Membership Number: Place : Mumbai Ved Malla Date : April 25, 2012 Asst. Company Secretary Page 20 Page 21

126 India Index Services & Products Limited (Subsidiary of National Stock Exchange of India Limited) IISL Fourteenth Annual Report

127 India Index Services & Products Limited Fourteenth Annual Report FY CORPORATE INFORMATION Board of Directors* Mr. Ravi Narain : Chairman Ms. Chitra Ramkrishna Ms. Roopa Kudva Mr. J. Ravichandran Mr. Mukesh Agarwal Mr. R. Sundararaman Mr. Raman Uberoi Auditors : M/s. K. S. Aiyar & Co. Chartered Accountants F 7, Laxmi Mills, Shakti Mills Lane, (Off. Dr. E. Moses Road) Mahalaxmi Mumbai Registered Office : Exchange Plaza Plot No. C-1, Block G Bandra Kurla Complex, Bandra (East) Mumbai * As on June 6, 2012 Page 1

128 India Index Services & Products Limited Fourteenth Annual Report FY DIRECTORS REPORT Your Directors have pleasure in presenting the Fourteenth Annual Report and the Audited Accounts of India Index Services & Products Limited (IISL) for the year ended March 31, I. Operations and events during the year Developments Your Company continued to be the primary provider of indices and related products and services to various participants in the Capital Market in India, in the fourteenth year of its operation. The S&P CNX Nifty Futures traded on National Stock Exchange (NSE) recorded a turnover of ` 29,56,162 crores in the financial year as compared to a turnover of ` 37,18,462 crores in the financial year , thus registering a decrease of %. Turnover of S&P CNX Nifty Options traded on NSE increased from ` 1,83,31,379 crores in the financial year to ` 2,26,43,851 crores in the financial year , registering an increase of 23.52%. During the financial year , your Company granted licenses to three asset management companies for launching Exchange Traded Funds (ETFs) based on S&P CNX Nifty Index and to one asset management company for launching an Index Fund based on CNX Midcap Index. Your Company also granted licenses to three investment banks for launching structured products based on S&P CNX Nifty Index. The total numbers of index-based funds linked to your Company s indices are as follows: 1. Sixteen funds and Six ETFs on S&P CNX Nifty Index available in India. 2. Six ETFs on S&P CNX Nifty Index listed outside India. 3. Two funds & One ETF on CNX Nifty Junior Index listed in India. 4. Two ETFs on CNX Bank Index listed in India. 5. One ETF on CNX Midcap Index listed in India. 6. One ETF on CNX Infrastructure Index listed in India. 7. Two ETFs on CNX PSU Bank Index listed in India. 8. One ETF on S&P CNX Shariah Nifty listed in India. 9. One Index fund on S&P CNX Shariah 500 available in India. 10. One Index fund on S&P CNX 500 Index available in India. The corpus of index linked funds in India based on S&P CNX Nifty Index, CNX Nifty Junior Index, CNX Bank Index, CNX PSU Bank Index, S&P CNX 500 Index and S&P CNX 500 Shariah stood at ` 1, crores, ` crores, ` crores, ` crores, ` crores and ` crores respectively as on March 31, Your Company provides index and index related services to various stock exchanges, asset management companies, insurance companies, investment banks and other organisations across the globe for business purposes. Apart from the indices being used for Index linked funds and trading of index based derivative contracts, the indices of your Company are being used by the asset management companies for benchmarking the performance of their funds. During the year, your Company provided licenses to various clients for using your Company s indices as underlyings for their products. These clients issue products such as index linked notes / certificates, index linked bonds, index linked certificates of deposit, Exchange Traded Funds (ETFs), etc., using IISL Indices as the underlying for their products. Your Company also provides annual licenses to its Clients who issue many structured products with IISL indices as underlying for such products. In continuation of its efforts to develop indices that meet the requirements of market participants, your Company launched eight new indices during the year viz. S&P CNX Nifty Dividend Index, CNX 200 Index, CNX Commodities Index, CNX Consumption Index, CNX Auto Index, CNX Finance Index, CNX Media Index and CNX Metal Index. Products: The financial products based on IISL indices currently available are: (I) Derivative Contracts: 1. Futures and Options on S&P CNX Nifty index traded on NSE 2. Futures and Options on CNX IT Index traded on NSE 3. Futures and Options on CNX Bank Index traded on NSE 4. Futures and Options on CNX PSE Index traded on NSE 5. Futures and Options on CNX Infrastructure Index traded on NSE 6. Futures on S&P CNX Nifty Index traded on the SGX and CME (II) Mutual Fund Products: 1. Index Funds based on: S&P CNX Nifty S&P CNX 500 Index S&P CNX 500 Shariah Index CNX Nifty Junior Index 2. Exchange Traded Funds (ETFs) based on: S&P CNX Nifty Index CNX Nifty Junior Index CNX Bank Index CNX Midcap Index CNX PSU Bank Index CNX Infrastructure Index S&P CNX Nifty Shariah Index. 3. Active funds using IISL indices as benchmarks. 4. Exchange Traded Notes (ETNs) based on S&P CNX Nifty Index. (III)Debentures and insurance products based on S&P CNX Nifty Index and CNX Bank Index (IV)Other OTC / Structured Products 1. Index Linked Notes / Bonds 2. Index-linked Certificates of Deposit Operations During the year under review, the Company has widened the client base that uses IISL Indices and index data. Your Company has the following major sources of income viz. income from licensing indices to stock exchanges for trading in derivative contracts linked to such indices, income from licensing indices to asset management companies for Index Funds/Exchange Traded Funds, income from licensing indices to finance and insurance companies for debentures/ insurance products, income from licensing indices to investment banks for structured products and income from data subscription. The income received from these sources for the year was ` 2, lakhs. The revenues of your Company have increased from ` 2, lakhs in to ` 2, lakhs in The total outflow of the Company was ` lakhs in as compared to ` lakhs in Page 2 Page 3

129 India Index Services & Products Limited Fourteenth Annual Report FY Future Prospects During the last financial year, your Company had received enquiries from Indian entities for developing customised indices to suit the needs of these entities. Your Company is also receiving enquiries from investment banks for issuing structured products linked to the various indices of the Company. Your Company has also been receiving enquiries for index related data from various domestic entities viz., asset management companies, which are launching new funds and finance companies that are issuing debentures based on various indices of the Company. Further, enquiries have also been received from various fund houses based outside India for licensing the S&P CNX Nifty for index related data & issuance of structured products that include Index-linked Certificates of Deposit, Index linked Notes, etc. II. Financial Results The Company has earned a net profit after tax of ` 1, lakhs as per particulars given below:- (` in lakhs) Particulars Income 2, , Expenditure III. Dividend In view of the above results, your Directors recommend payment of dividend of ` 12/- per share for the year as against a dividend of ` 9/- per share for the previous year. IV. Directors Mr. J. Ravichandran and Mr.Mukesh Agarwal retire by rotation at the ensuing Annual General Meeting and are eligible for reappointment. Mr. Suresh Narayan resigned from the Board of IISL and accordingly ceased to be its Director with effect from April 26, The Board of IISL in its meeting held on April 26, 2012 co-opted Mr. R. Sundararaman as an Additional Director. Pursuant to the provisions of Section 260 of the Companies Act, 1956, he can hold office as Director only upto the date of the forthcoming Annual General Meeting. The Board recommends the appointment of Mr. J. Ravichandran, Mr. Mukesh Agarwal and Mr. R. Sundararaman as Directors on the Board of IISL by the shareholders. V. Directors Responsibility Statement Your Directors confirm that - i. in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any; Committee as per the provisions of Section 292A of the Companies Act, VII. Auditors M/s. K.S.Aiyar & Co., Chartered Accountants, Mumbai, will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. The Company has received a certificate from the Auditors to the effect that their reappointment, if made, would be within the limits prescribed under Section 224 (1B) of the Companies Act, The Board recommends the re-appointment of M/s. K.S.Aiyar & Co., Chartered Accountants, Mumbai as Auditors of the Company by the shareholders at the forthcoming Annual General Meeting. VIII. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings / Outgo (a) Conservation of Energy, Technology Absorption As the Company does not fall under any of the industries listed out in the Schedule appended to Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988, particulars required to be disclosed with respect to conservation of energy and technology absorption in terms of Section 217(1)(e) of the IX. Particulars of Employees A statement prepared pursuant to requirements of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is attached herewith. X. Certificate of Compliance A certificate of compliance for the financial year , as required by the provisions of the Companies Act, 1956, obtained from M/s. S.N. Ananthasubramanian & Co, Practicing Company Secretaries, is attached herewith. XI. Appreciation The Board of Directors wishes to place on record their appreciation of the support and co-operation received from NSEIL, CRISIL, Standard & Poor s, members of the Index Policy Committee and Index Maintenance Sub-committee, Bankers of the Company, business associates and the valued clients and looks forward to their continued support and co-operation. The Board of Directors also wishes to thank the staff at all levels for their exemplary dedication, support and co-operation to the continued growth of the Company. Profit before depreciation, priorperiod adjustment and tax 2, , Depreciation Profit before tax 2, , ii. the Directors had selected such 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 Company at the end of the Companies Act, 1956, read with the aforesaid Rules are not applicable to the Company. (b) Foreign Exchange earnings/outgo during the year under review For and on behalf of the Board of Directors Provision for tax Net Profit after tax 1, , Surplus brought forward from financial year i.e., 31st March, 2012 and of the profits of the Company for that year; iii. the Directors had taken proper and sufficient care for the The foreign exchange earnings during the year were ` 1, lakhs. The foreign exchange outgo during the year was ` lakhs. Place: Mumbai. Date: April 26, 2012 Ravi Narain Chairman previous year maintenance of adequate accounting records in accordance Excess Corporate Dividend tax for last year transferred back Amount available for appropriation 1, , with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and General Reserve 1, , iv. the Directors had prepared the annual accounts on a going Proposed Dividend concern basis. Corporate Dividend Tax Balance carried forward to Balance Sheet VI. Audit Committee Since the paid up capital of the Company is ` 1.30 crores only, it is not mandatory for the Company to constitute an Audit Page 4 Page 5

130 India Index Services & Products Limited Fourteenth Annual Report FY ANNEXURE TO DIRECTORS' REPORT STATEMENT PURSUANT TO SECTION 217 (2A) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES (PARTICULARS OF EMPLOYEES) RULES, Sr. Name & Age in Designation/ Remuneration Experience Date of Last No. Qualifications years Nature of Duties Received (No.of years) Commencement Employment Gross Net of Employment 1 Mr. Suresh Narayan 42 Director & CEO January 24, Manager, National B.Com, Grad. CWA 2005 Securities Depository Limited Notes: 1 Gross Remuneration includes Salary and other benefits, Company's contribution to Provident Fund, Superannuation Fund, taxable value of perquisites, etc. Net remuneration represents gross remuneration less Company's contribution to provident and superannuation funds, taxable value of perquisites, profession tax and income tax. Where applicable, the amounts also includes certain allowances accrued during previous year(s) but claimed in the current year. 2 The above employee is not a relative of any Director. 3 The above employee is on deputation basis from the Company's holding company i.e. National Stock Exchange of India Limited (NSEIL) and the proportionate remuneration mentioned above in respect of him has been reimbursed to NSEIL by the Company 4 None of the employees is holding any equity shares in the Company within the meaning of sub-clause (iii) of clause (a) of sub-section (2A) of Section 217 of the Companies Act, The Company does not have any Employees Stock Option Plan (ESOP) Scheme for its employees. COMPLIANCE CERTIFICATE Compliance Certificate for the financial year ended 31st March 2012 To, The Board of Directors INDIA INDEX SERVICES & PRODUCTS LIMITED Exchange Plaza, C-1, Block G, Bandra Kurla Complex, Bandra (East), Mumbai CIN: U73100MH1998PLC Nominal Capital: `1,50,00,000/- Paid-up Capital: ` 1,30,00,000/- We have examined the registers, records, books and papers of INDIA INDEX SERVICES & PRODUCTS LIMITED (the Company) as required to be maintained under the Companies Act, 1956, (the Act) and the rules made thereunder and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year ended on 31st March In our opinion and to the best of our information and according to the examinations, carried out by us and explanations furnished to us by the Company, its officers, we certify that in respect of the aforesaid financial year: 1. The Company has kept and maintained all registers as stated in Annexure A to this Certificate, as per the provisions of the Act and the rules made thereunder and all entries therein have been duly recorded. 2. The Company has duly filed the forms and returns as stated in Annexure B to this Certificate, with the Registrar of Companies, Regional Director, Central Government, Company Law Board or other authorities within the time prescribed under the Act and the rules made thereunder. 3. The Company being a Public Limited Company, following comments under this paragraph viz., the Company has a minimum prescribed paid-up capital and its maximum number of members during the said financial year were upto fifty and the Company during the year under review: (i) has not invited public to subscribe for its shares or debentures; and (ii) has not invited or accepted any deposits from persons other than its members, Directors or their relatives. (iii) is prohibited from making any invitation or acceptance of any deposits from persons other than its members, Directors or their relatives " Page 6 Page 7

131 India Index Services & Products Limited Fourteenth Annual Report FY are not required. 4. The Board of Directors of the Company duly met four times respectively on 25th April 2011, 1st August 2011, 21st November 2011 and 24th February 2012 in respect of these meetings proper notices were given and the proceedings were properly recorded and signed in the Minutes Book maintained for the purpose. 5. The Company has not closed its Register of Members as it was not required to close. 6. The Annual General Meeting for the financial year ended on 31st March 2011 was held on 12th September 2011 after giving due notice to the members of the Company and the resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose. 7. No Extraordinary General Meeting was held during the financial year under review. 8. The Company has not advanced any loans to its Directors or persons or firm or companies referred to under Section 295 of the Act. 9. The Company has not entered into any contracts falling within the purview of Section 297 of the Act. 10. The Company has made necessary entries in the Register maintained under Section 301 of the Act As there were no instances falling within the purview of Section 314 of the Act, the Company was not required to obtain approval from the Board of Directors, Members or Central Government, as the case may be. 12. The Company has not issued any duplicate share certificate(s) during the financial year. 13. The Company: i. was not required to deliver any certificates as there was no allotment/ transfer/transmission of securities during the financial year under review. ii. had deposited the amount of dividend declared at the Annual General Meeting in a separate bank Account within five days from the date of declaration of dividend. iii. has paid dividend to all members within a period of 30 (thirty) days from the date of declaration and there were no unclaimed/ unpaid dividend required to be transferred to unpaid dividend account of the company. iv. does not have amounts in the unpaid dividend account, application money due for refund, matured deposits, matured debentures and the interest accrued thereon which have remained unclaimed or unpaid for a period of seven years and hence transferring of the same to the Investor Protection Fund does not arise. v. has duly complied with the requirements of Section 217 of the Act. 14. The Board of Directors of the Company is duly constituted and the appointment and re-appointment of Directors, Additional Directors were duly made. 15. The Company has appointed Mr. Suresh Narayan as Wholetime Director in compliance with the provisions of Section 269 of the Companies Act, 1956 read with Schedule XIII of the Act. 16. The Company has not appointed any sole selling agents during the financial year under review. 17. The Company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Director, Registrar of Companies and / or such other authorities prescribed under the various provisions of the Act during the financial year. 18. The Directors have disclosed their interest in other firms / companies to the Board of Directors and complied with the provisions of the Act and the rules made therunder. 19. The Company has not issued any shares, debentures or other securities during the financial year. 20. The Company has not bought back any shares during the financial year. 21. The Company has not issued any Preference Shares or Debentures and hence redemption, if any, of Preference Shares or Debentures does not arise. 22. There were no transactions necessitating the Company to keep in abeyance the rights to dividend, rights shares and bonus shares pending registration of transfer of shares in compliance with the provisions of the Act. 23. The Company has not invited/accepted any deposits including any unsecured loans within the purview of Section 58A during the financial year under review. 24. The Company has not made any borrowings during the financial year ended 31st March The Company has not made any loans or advances or given guarantees or provided securities to other bodies corporate and consequently no entries have been made in the register kept for the purpose. 26. The Company has not altered the provisions of the Memorandum of Association of the Company with respect to situation of the Company s registered office from one state to another during the year under review. 27. The Company has not altered the provisions of the Memorandum of Association of the Company with respect to the objects of the Company during the financial year under review. 28. The Company has not altered the provisions of the Memorandum of Association of the Company with respect to name of the Company during the financial year under review. 29. The Company has not altered the provisions of the Memorandum of Association of the Company with respect to share capital during the financial year under review. 30. The Company has not altered the Articles of Association of the Company during the financial year under review. 31. There were no prosecutions initiated against or show cause notices received by, the Company for offences under the Act and no fines or penalties or any other punishment was imposed on the Company, during the financial year under review. 32. The Company has not received any money as security from its employees during the financial year under review. 33. The Company is not required to comply with the provisions of Section 418 of the Act with regard to employees and employer s contribution to provident fund. Place: Thane S. N. Ananthasubramanian Date: 16th April, 2012 C. P. No.: 1774 Page 8 Page 9

132 India Index Services & Products Limited Fourteenth Annual Report FY ANNEXURE A REGISTERS AS MAINTAINED BY THE COMPANY Sr. No. Registers Under Section 1. Register of Members and Index of Members 150 and Register of Share Transfers - 3. Register of Directors, Managing Director(s) and Secretary Register of Directors Share and Debenture Holdings Register of Charges Register of Contracts Register of Directors Attendance Register of Shareholders Attendance Register of Proxies Register of Documents Sealed Minutes Book Books of Accounts Register of documents on which Common Seal was affixed - Place: Thane S. N. Ananthasubramanian Date: 16th April, 2012 C. P. No.: 1774 ANNEXURE B Forms and Returns as filed by the Company with Registrar of Companies, Regional Director, Central Government or other authorities during the financial year ended on 31st March Sr. No. Form No. Date of Filing For 1. Form 32 7th June 2011 Cessation of Mr. Arun Panicker as Director of the Company w.e.f. 26th May Form 32 12th August 2011 Appointment of Mr. Raman Uberoi as Additional director of the Company w.e.f. 1st August Form 32 20th September 2011 Appointment of Mr. Raman Uberoi as Director of the Company at the Annual General meeting of the Company held on 12th September Form 66 20th September 2011 Filing of Compliance Certificate for 31st March Form 23 AC & ACA 10th October 2011 Balance Sheet and Profit & Loss Account for the year ended 31st March 2011 adopted in the Annual General Meeting held on 12th September Form 20B 4th November 2011 Annual Return made up to the date of the Annual General Meeting held on 12th September Place: Thane S. N. Ananthasubramanian Date: 16th April, 2012 C. P. No.: 1774 To, The Members of, INDIA INDEX SERVICES & PRODUCTS LIMITED, 1. We have audited the attached Balance Sheet of INDIA INDEX SERVICES & PRODUCTS LIMITED, as at March 31, 2012, the Statement of Profit and Loss and Cash Flow 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 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 required by the Companies (Auditor's Report)(Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, 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: (i) (ii) AUDITORS' REPORT 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; 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; (iii) 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; (iv) 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 Companies Act, 1956; (v) On the basis of 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 of the Company 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 Companies Act, 1956; (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 Companies Act, 1956, 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 K. S. Aiyar & Co, Chartered Accountants Registration No: W Raghuvir M. Aiyar Place: Mumbai Partner Date: April 26, 2012 Membership No.: Page 10 Page 11

133 India Index Services & Products Limited ANNEXURE TO THE AUDITORS REPORT Referred to in paragraph 3 of our report of even date on the Accounts for the year ended March 31, 2012 of INDIA INDEX SERVICES & PRODUCTS LIMITED. In our opinion, and on the basis of such checks of the books and the nature of its business with regard to purchases of fixed records as we considered appropriate and according to the assets and with regard to the sale of goods and services. information and explanations given to us during the normal During the course of our audit, no major weakness has been course of audit, which were necessary to the best of our noticed in the internal controls. knowledge and belief, we report that: (v) (a) In our opinion and according to the information and (i) (a) The Company has maintained proper records showing explanations given to us, there are no transactions or full particulars including quantitative details and situation arrangements as referred to in section 301 of the of fixed assets. Companies Act, 1956 that have to be required to be maintained under that section. Sub clause (b) of clause (b) A substantial portion of the fixed assets have been (v) is not applicable. physically verified by the management during the year and in our opinion the frequency of verification is (vi) The Company has not accepted any deposit from the public reasonable having regard to the size of the Company and and consequently the directives issued by the Reserve Bank of the nature of its assets. No material discrepancies were India, provisions of section 58A and 58AA of the Companies noticed on such verification. Act, 1956, and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the (c) The fixed assets disposed off during the year were not public are not applicable to the Company. No order has been substantial. According to the information and passed by the Company Law Board, National Law Tribunal or explanation given to us; we are of the opinion that the Reserve Bank of India or any other court or any other tribunal. disposal of the fixed assets has not affected the going concern status of the Company. (vii) In our opinion, the Company has an internal audit system (ii) The Company is a service Company and therefore does commensurate with the size and nature of its business. not maintain any inventory; the directions in this regard (viii) According to the information and explanations given to us, are therefore not applicable. the Central Government has not prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, (iii) (a) The Company has not granted any loans, secured or 1956 in respect of services carried out by the Company. unsecured, to the companies, firms and other parties covered in the Register maintained under Section 301 of (ix) (a) During the year there were no employees in the the Companies Act, Accordingly sub clause (b), (c) employment of the Company. Accordingly the directions and (d) of clause (iii) are not applicable. relating to Provident Fund and Employee s State Insurance are not applicable to the Company. Further, (e) As informed, the Company has not taken any loans, based on our examination of the records maintained secured or unsecured from the companies, firms and during the year, the Company is not liable to make any other parties covered in the Register maintained under payments towards Investor Education Protection Fund, Section 301 of the Companies Act, Accordingly Sales Tax, Wealth Tax, Customs Duty, Excise Duty and sub clause (f) and (g) of clause (iii) are not applicable. Cess. The Company has been regular in depositing (iv) In our opinion and according to the information and Income Tax and Service Tax dues along with cess thereon explanations given to us, there are adequate internal control with the appropriate authority. procedures commensurate with the size of the Company and Fourteenth Annual Report FY (b) According to the records of the Company, Sales tax, Income-tax, Customs duty, Wealth tax, Service tax, Excise duty and Cess which have not been deposited on account of any dispute, are as follows: Name of Statute Year to which Forum where the (Nature of dues) the amount relates dispute is pending Amount Income Tax (Tax/ Interest) Assessing Officer Commissioner 54,99, of Income Tax (Appeals) 1,24,60, ,10,41,238 (x) The Company does not have any accumulated losses at the basis have been used for long-term investment. end of the financial year and has not incurred any cash (xviii) The Company has not made any preferential allotment of losses during the financial year covered by our audit and in shares to parties and companies covered in the register the immediately preceding financial year. maintained under section 301 of the Companies Act (xi) The Company has neither taken any loans from any bank or financial institution nor issued any debentures. (xix) The Company has not issued any debentures during the year. (xx) The Company has not raised any money by way of public (xii) The Company has not granted loans and advances on the issue during the period. Therefore, the provision of clause basis of security by way of pledge of shares, debentures and (xx) of the order is not applicable to the Company. other securities. (xxi) According to the information and explanations furnished by (xiii) The Company is not a chit fund or a nidhi / mutual benefit the management, which have been relied upon by us, there fund / society. Therefore, the provisions of clause 4 (xiii) of were no frauds on or by the Company noticed or reported the Order are not applicable to the Company. during the course of our audit. (xiv) In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other For K. S. Aiyar & Co, investments. Chartered Accountants (xv) The Company has not given any guarantee for loans taken Registration No: W by others from bank or financial institutions. (xvi) The Company has not raised any term loans. (xvii) According to the information and explanations given to us Raghuvir M. Aiyar and on an overall examination of the balance sheet of the Place: Mumbai Partner Company, we report that the no funds raised on short-term Date: April 26, 2012 Membership No.: Page 12 Page 13

134 India Index Services & Products Limited Fourteenth Annual Report FY BALANCE SHEET As at 31 March, 2012 Note As at As at 31 March, March, 2011 I EQUITY AND LIABILITIES 1. Shareholder's funds a Share capital 3 13,000, ,000, b Reserves and surplus 4 470,728, ,436, ,728, ,436, Non-current liabilities Deferred tax liabilities (net) 8 1, , Current liabilities a Trade payables 5 15,074, ,480, b Other current liabilities 6 1,467, ,319, c Short-term provisions 7 18,831, ,882, ,373, ,682, Total 519,102, ,148, II ASSETS 1 Non-current assets a Fixed assets 9 Tangible assets 134, , Intangible assets - 134, , , b Non-current investments 10 29,580, ,165, c Other non-current assets 13 26,880, ,596, ,489, Current assets a Current investments ,051, ,591, b Trade receivable 12 19,150, ,685, c Cash and bank balances ,541, ,528, d Other current assets 13 37,762, ,854, ,506, ,659, Total 519,102, ,148, Summary of significant accounting policies ( Note 2) The accompanying notes are an integral part of the financial statements. As per our report of even date attached For K. S. Aiyar & Co. For and on behalf of the Board of Directors Chartered Accountants STATEMENT OF PROFIT & LOSS For the year ended 31 March, 2012 Note For the year ended For the year ended PARTICULARS 31 March, March, 2011 INCOME Revenue from operations ,692, ,593, Other income 16 34,899, ,159, Total Revenue (I) 264,591, ,752, EXPENSES Other expenses 17 47,989, ,954, Depreciation 9 208, , Total Expenses (II) 48,197, ,491, Profit before tax 216,394, ,261, Less : Provision for tax Current tax 66,000, ,500, Deferred tax (28,412.00) (117,541.00) Short Provision for tax - 504, Total tax expenses 65,971, ,887, Profit after tax 150,422, ,373, Basic Diluted Summary of significant accounting policies ( Note 2) The accompanying notes are an integral part of the financial statements. As per our report of even date attached For K. S. Aiyar & Co. Chartered Accountants For and on behalf of the Board of Directors Raghuvir M. Aiyar Ravi Narain Chitra Ramkrishna Roopa Kudva Partner Chairman Director Director Membership Number: Place : Mumbai J Ravichandran Raman Uberoi Mukesh Agarwal Date : April 26, 2012 Director Director Director Raghuvir M. Aiyar Ravi Narain Chitra Ramkrishna Roopa Kudva Partner Chairman Director Director Membership Number: Place : Mumbai J Ravichandran Raman Uberoi Mukesh Agarwal Date : April 26, 2012 Director Director Director Page 14 Page 15

135 India Index Services & Products Limited Fourteenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 1 The main objective of the Company is to develop, construct, compile, compute and maintain equity and commodity indices for domestic and international dissemination, marketing and market development and to provide very high quality indices and index related services. Note 2 SIGNIFICANT ACCOUNTING POLICIES a) The accounts are maintained on a mercantile basis in accordance with generally accepted accounting principles. The financial statements comply in all material respect with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, b) Fixed Assets & Depreciation: Fixed Assets are stated at historical cost less accumulated depreciation. Historical cost is inclusive of freight, duties, taxes, cost of installation, interest upto date of installation and other incidental expenses incurred towards acquisition and installation of fixed assets. The details of the estimated useful life of the assets where the depreciation is provided at the rate higher than the rate specified in Schedule XIV of the Companies Act, 1956 are as follows: Assets Estimated Useful Lives Computer Systems Office Automation Computer Systems Others Telecommunication Systems Furniture & Fixtures Office Equipments Computer Software c) Foreign Currency Transactions: Transactions in foreign currency are recorded at the rate of exchange in force at the date of transaction. Foreign currency assets and liabilities other than for financing fixed assets are stated at the rate of exchange prevailing at the year end and resultant gains/losses are recognised in the profit and loss account except in cases covered by forward exchange contracts in which case these are translated at the contracted rates and the resultant gains/losses are recognised over the life of the contracts. d) Revenue Recognition: The Company recognises the revenue on account of subscription fees with respect to the period of the contract on an accrual basis. Subscription fees received in respect of unexpired period of the contract is treated as a current liability and is recognised as income in the respective period. e) Investments : (i) Long Term Investments are considered as held till maturity and are valued at cost. (ii) Current Investments are valued at cost or fair value whichever is lower. 3 years 4 years 4 years 5-16 years 4-21 years 3-5 years (iii) Premium paid/discount received at the time of acquisition of Government / Debt Securities is amortised over the residual period of its maturity. f) Taxation : Tax expense for the year, comprising of current tax and deferred tax is included in determining the net profit / (loss) for the year. A provision is made for the current tax based on tax liability computed in accordance with prevailing tax rates and tax laws. A provision / accrual is made for deferred tax for all timing differences arising between taxable income and accounting income at the Balance Sheet Date based on prevailing enacted or substantively enacted tax rates. Note 3 SHARE CAPITAL As at 31 March, 2012 As at 31 March, 2011 Authorised 15,00,000 (Previous Year 15,00,000) Equity Shares of ` 10 each. 15,000, ,000, Issued, Subscribed and Paid-up 13,00,000 (Previous year 13,00,000) Equity shares of ` 10 each fully paid up. 13,000, ,000, Total 13,000, ,000, There is no movement either in the number of shares or in amount between previous year and current year. The Company has only one class of shares referred to as equity shares having a par value of ` 10/-. Each holder of equity shares is entitled to one vote per share. Details of shareholders holding more than 5% share in the company As at 31 March, 2012 As at 31 March, 2011 No. % holding No. % holding National Stock Exchange of India Limited 663, , Crisil Limited 637, , Note 4 RESERVE AND SURPLUS Note 5 TRADE PAYABLES As at 31 March, 2012 As at 31 March, 2011 General reserve As per last balance sheet 322,000, ,000, Add : Transferred from profit & loss account 130,000, ,000, ,000, ,000, Surplus/(deficit) in the statement of profit and loss Balance as per last financial statements 16,436, ,625, profit for the year 150,422, ,373, Excess corporate dividend tax - 35, Less : Appropriations Transfer to general reserve 130,000, ,000, Proposed dividend 15,600, ,700, Tax on proposed dividend 2,530, ,728, ,898, ,436, Total reserves and surplus 470,728, ,436, Long - term (As at) Short - term (As at) Sundry creditors ,337, ,365, Provision For Expenses - - 1,736, ,115, Total ,074, ,480, Deferred tax assets are recognized only if there is a reasonable certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each balance sheet date. Page 16 Page 17

136 India Index Services & Products Limited Fourteenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 6 OTHER LIABILITIES Long - term (As at) Short - term (As at) Income received in advance , Tax deducted at source - payable , , Service Tax - payable , , Total - - 1,467, ,319, Note 7 PROVISION Long - term (As at) Short - term (As at) Proposed dividend ,600, ,700, Corporate dividend tax - - 2,530, ,898, Provision for Tax (Net of Advance Taxes paid) , ,284, Total ,831, ,882, Note 8 DEFERRED TAX LIABILITIES (NET) As at 31 March, 2012 As at 31 March, 2011 Deferred Tax Liabilities Related to depreciation and other expenditure 1, , Related to other items - - Total 1, , NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 9 FIXED ASSETS Gross Block Depreciation Net Block Sr. As on Additions Deletions As on As on For the Deletions/ As on As on As on No. Description Year Adjustments Tangible Assets 1. Computer Systems 4,409, , ,685, ,177, , , ,599, , , Furniture & Fixtures 13, , , , , , , , Office Equipments 74, , , , , , , , , , Telecommunication Systems 9, , , , Total (A) 4,507, , , ,756, ,251, , , ,621, , , Intangible Assets 5. Computer Software 1,443, ,443, ,375, , ,443, , Total (B) 1,443, ,443, ,375, , ,443, , Total (A+B) 5,950, , , ,199, ,626, , , ,064, , , Previous Year 5,966, , , ,950, ,296, , , ,626, , Note 10 NON CURRENT INVESTMENTS (AT COST) Maturity Number of Face Value Face As at As at Date Units per Unit value Particulars QUOTED BONDS Taxfree 6.85% India Infrastructure Finance Company Limited Jan , ,000, ,084, ,131, %-Indian Railway Finance Corporation Feb ,000, ,000, ,769, ,033, Taxable 7.10% Power Finance Corporation 2012 Taxable Series 67 Bonds 15-Jul ,000, ,000, ,000, Mutual Funds Reliance Fixed Horizon Fund - XXI - Series 18-Growth Plan 3-Apr , ,400, ,400, Jpmorgan India Fixed Maturity Plan 400D Series 6 - Growth Plan 4-Apr , ,097, ,097, Jpmorgan India Fixed Maturity Plan 400D Series 6 - Growth Plan 4-Apr , ,230, ,230, Total 38,727, ,580, ,165, Note : Aggregate Market Value of the quoted investments is ` 2,96,24,896/- (Previous Year : ` 3,14,71,000/-) Page 18 Page 19

137 India Index Services & Products Limited Fourteenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 11 CURRENT INVESTMENTS (AT COST) Maturity Number of Face Value Face As at As at Date Units per Unit value Particulars QUOTED BONDS Taxable 7.10% Power Finance Corporation 2012 Taxable Series 67 Bonds 15-Jul ,000, ,000, ,000, MUTUAL FUNDS Birla Sun Life Fixed Term Plan Series DB Growth 21-May , ,150, ,150, ICICI PRUDENTIAL FMP Series 57-1 Year Plan A Cumulative 4-Jun-12 1,000, ,000, ,000, Sbi Debt Fund Series Days Growth 23-Nov-12 1,000, ,000, ,000, Reliance Fixed Horizon Fund - Xxi - Series 14-Growth Plan 26-Nov-12 1,000, ,000, ,000, Sundaram Fixed Term Plan Cb 366 Days Growth 3-Dec-12 1,000, ,000, ,000, DSP BLACKROCK FMP - Series 23-12m - Growth 13-Dec , ,900, ,900, HDFC FMP 370D January 2012 (2) - Growth - Series Xix 14-Jan , ,400, ,400, ICICI PRUDENTIAL FMP Series 62-1 Year Plan B Cumulative 25-Feb-13 1,000, ,000, ,000, UTI Fixed Term Income Fund - Series X - IX (368 Days) - Growth Plan 25-Feb-13 1,000, ,000, ,000, ICICI Prudential FMP Series 62-1 Year Plan C Cumulative 1-Mar-13 1,000, ,000, ,000, Religare Fmp Series Xiii Plan A Days - Growth 6-Mar , ,700, ,700, UNQUOTED MUTUAL FUNDS ICICI Prudential Interval Fund Annual Interval Plan - I Institutional Cumulative 21-Aug , ,100, ,100, Kotak FMP 15M Series 7 - Growth 23-Feb , ,300, ,300, ICICI Prudential Interval Fund Half Yearly Interval Plan - I Institutional Dividend 12-Apr , ,200, ,370, Birla Sun Life Fixed Term Plan Series CI - Growth 28-Nov-11 1,000, ,000, ,000, Birla Sun Life Fixed Term Plan Series CR - Growth 1-Mar , ,000, ,000, HDFC FMP 370D March 2011 (2) - Growth - Series XVI 13-Mar , ,000, ,000, IDFC FMP - Yearly Series 42 - Growth 25-Mar , ,000, ,000, Religare Fixed Maturity Plan Series VI - Plan D (370 DAYS) - Growth Plan 26-Mar-12 1,000, ,000, ,000, Axis Treasury Advantage Fund - Institutional Daily Dividend 10, ,821, ,821, ,097, Birla Sun Life Cash Plus - Institutional Premium Plan - Daily Div 5,465, NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 11 CURRENT INVESTMENTS (AT COST) Maturity Number of Face Value Face As at As at Date Units per Unit value Particulars Birla Sun Life Savings Fund - IP - Dly Dividend 17,403, Canara Robeco Treasury Advantage Fund - Ret - Daily Dividend 4, ,758, ,398, DWS Cash Opportunities Fund - Reg - Weekly Dividend 491, ,966, ,966, ,624, HDFC Cash Mgmt Fund - Savings Plan - Daily Div , HDFC Cash Mgmt Fund - Treasury Advantage - Retail - Daily Dividend 8,778, ICICI Prudential Flexible Income Plan - Daily Dividiend 67, ,174, ,174, ,122, ICICI Prudential Liquid - Super IP - Daily Div , ICICI Prudential Ultra Short Term Plan - Sup Prem - Wkly Dividend 12,891, IDFC Cash Fund - Plan A - Daily Dividend - Reinvestment JM MONEY MANAGER FUND - SUPER PLUS PLAN - DAILY DIVIDEND 747, ,478, JPMorgan India Liquid Fund - Super IP - Daily Dividend , , ,190, JPMorgan India Treasury Fund - Super IP - Daily Dividend 1, , , ,029, Reliance Liquid Fund -Treasury Plan - Institutional Option - Daily Dividend 388, ,940, ,940, ,529, Reliance Medium Term Fund - Daily Dividend 405, ,937, ,937, Reliance Money Manager Fund - IP - Dly Dividend 8, ,270, ,270, Religare Liquid Fund - Institutional Daily Dividend , , Religare Ultra Short Term Fund - IP - Daily Dividend 13, ,369, ,369, ,813, SBI Magnum Insta Cash Fund - Daily Dividend Option 120, ,017, ,017, Tata Floater Fund - Daily Div 488, ,906, ,906, Templeton India Ultra Short Bond Fund - IP - Dividend 934, ,354, ,354, ,722, Templeton India Ultra Short Bond Fund - IP - Weekly Dividend 1,111, ,331, ,331, ,583, UTI Treasury Advantage Fund - IP - Dly Dividend , , ,033, Total 5,764, ,642, ,051, ,591, Note : Aggregate Market Value of the quoted investments is ` 11,07,26,563/- (Previous Year : ` NIL) Page 20 Page 21

138 India Index Services & Products Limited Fourteenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 12 TRADE RECEIVABLES Non - current (As at) Current (As at) Outstanding for a period of over six months Unsecured, considered good Other debts Unsecured, considered good ,150, ,685, ,150, ,685, Total ,150, ,685, Note 13 OTHER ASSETS Non - current (As at) Current (As at) Non-current bank balances 26,880, Other Receivables ,252, ,168, ,880, ,252, ,168, Other Interest accrued on Investments - - 1,085, ,533, Interest accrued on Bank deposits ,425, ,152, ,510, ,686, Total 26,880, ,762, ,854, Note 14 CASH AND BANK BALANCES Non - current (As at) Current (As at) Note 15 REVENUE FROM OPERATIONS Year ended Year ended 31 March, March, 2011 Sale of services Index License Fees Within India : Derivatives Trading 76,591, ,460, : Index Funds/Exchange Traded Funds 29,153, ,212, Index License Fees Outside India 81,942, ,452, ETF Licensing Outside India 10,621, ,363, Data Subscription Fees 21,455, ,821, Revenue Sharing - S & P 9,928, ,284, Total 229,692, ,593, Note 16 OTHER INCOME Year ended Year ended 31 March, March, 2011 Interest Income on Long Term Investments 2,296, ,809, Interest Income on Bank Deposits 16,037, ,119, Dividend income 10,179, ,850, Net gain / (loss) on sale of current Investment 4,051, , Profit/(Loss) on Foreign Exchange Fluctuation (net) 2,331, , Profit on Sale of Fixed Assets - 10, Miscellaneous Income 2, Total 34,899, ,159, Cash and cash equivalents Balances with banks : In current accounts 845, , Deposits with original maturity of less than three months Cash on hand 7, , , , Other bank balances Deposits with original maturity for more than 12 months 26,880, ,483, ,709, Deposits with original maturity for more than 3 months but less than 12 months ,205, ,880, ,688, ,709, Amount disclosed under non-current assets (26,880,770.00) Total ,541, ,528, Page 22 Page 23

139 India Index Services & Products Limited Fourteenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 17 OTHER EXPENSES Note 18 CONTINGENT LIABILITY: On account of disputed matters of Income Tax ` 2,79,84,910/- (Previous Year ` 1,93,62,213/-) of Fringe Benefit Tax ` 100/- (Previous Year ` 100/-). Note 19 In the opinion of the Board, current assets, loans and advances are approximately of the value stated, if realised in the ordinary course of business. Note 20 Year ended Year ended 31 March, March, 2011 Deputed Personnel Cost 13,389, ,754, Repairs And Maintenance- Computer 6,517, ,441, Data Usage Charges 2,239, ,266, Index Calculation Service Charges 7,500, ,500, Revenue Sharing - S&P 1,708, ,160, Software Expenses 103, , Auditor's Remuneration: - Audit Fees 62, , Out of Pocket Expenses 2, Registration Fees 89, , Lease Line Charges 143, , Committee Sitting Fees 60, Printing & Stationery 80, , Professional Fees 7,999, ,275, Space & Infrastructure Usage Charges 4,531, ,381, Electricity Charges 424, , Legal Fees/Expenses 38, , Postage and Courier 84, , Fees & Subscription 2,091, , Travelling & Conveyance expenses 286, , Telephone & Telex Charges 32, , Profession Tax 2, , Training Expenses 140, , Amortisation of Premium on Government/Debt Securities (Note 10) 311, , Miscellaneous Expenses 148, , Total 47,989, ,954, The Company is paying space and infrastructure charges and other reimbursement of expenses to National Stock Exchange of India Limited (NSEIL) and deputation expenses in respect of the employees of both the promoter companies (NSEIL and CRISIL Limited.) who are on deputation. Note 21 In compliance with Accounting Standard 18 - Related Party Disclosures, the required disclosures are given in the table below: (a) Names of the related parties and relationship Sr. Related Party Nature of No. Relationship 1 National Stock Exchange of India Limited Holding Company 2 CRISIL Limited Joint Venturer with Holding Company 3 National Securities Clearing Corporation Limited Fellow Subsidiary 4 NSE.IT Limited Fellow Subsidiary 5 NSE.IT (UK) Limited Fellow Subsidiary 6 NSE.IT (US) Limited Fellow Subsidiary 7 DotEx International Limited Fellow Subsidiary 8 NSE Infotech Services Limited Fellow Subsidiary 9 National Commodity Clearing Limited Fellow Subsidiary 10 Power Exchange India Limited Associate Company 11 National Securities Depository Limited Associate Company 12 Mr Suresh Narayan - Director Key Management Personnel (b) Details of transactions (including service tax wherever levied) with related parties are as follows: Name of the Related Party Nature of Transaction Year ended Year ended National Stock Exchange of Reimbursement of expenses for staff on deputation 14,473, ,980, India Limited Space and Infrastructure usage charges 5,007, ,632, Reimbursement for other expenses incurred 67,302, ,742, Index Calculation Service Charges 8,272, ,272, Dividend Paid 5,967, ,641, Index License Fees Received 84,480, ,717, Data Subscription Fees Received 220, , Outstanding balance included in Current Assets. 7,096, ,597, Outstanding balance included in Current liabilities 12,358, ,868, CRISIL Limited Reimbursement of expenses for staff on deputation 295, ,883, Index License Fees Received 624, , Dividend Paid 5,733, ,459, Outstanding balance included in Current Assets , Outstanding balance included in Current liabilities 265, ,695, DotEx International Limited Payment of fees for right to create indices. 2,470, ,499, Data Subscription Fees Received 1,667, ,600, Outstanding balance included in Current Assets. 1,550, Key Management Personnel Gross Remuneration including allowances, non-cash perquisites and contribution to Provident Fund and Superannuation Fund etc. 5,741, ,900, Page 24 Page 25

140 India Index Services & Products Limited Fourteenth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 22 In accordance with Accounting Standard 20 - Earning per Share, the required disclosure is given below. Year ended Year ended Net Profit attributable to Shareholders 150,422, ,373, Weighted Average number of equity shares issued 1,300, ,300, Basic earnings per share of ` 10/- each The Company does not have any outstanding dilutive potential equity shares. Consequently, the basic and diluted earning per share of the Company remain the same. Note 23 a) Expenditure in foreign currency: Year ended Year ended Particulars Meeting & Conference Expenses - 179, Refund of Excess License Fees - 45, Revenue Sharing - S&P 1,708, ,160, Fees & Subscription 627, Total 2,335, ,384, b) Earnings in foreign exchange : Year ended Year ended Particulars Index License Fees Outside India : 81,942, ,452, ETF Licensing Outside India: 10,621, ,363, Data Subscription Fees: 12,881, ,724, Revenue Sharing - S & P: 9,928, ,284, Total 115,373, ,824, Note 24 Sundry creditors includes ` 663/- (Previous Year ` 1,50,000/-) due to Micro, Small and Medium Enterprises. Total outstanding dues to Micro, Small and Medium Enterprises have been determined to the extent such parties have been identified on the basis of information available with the company. This has been relied upon by the auditors. CASH FLOW STATEMENT For the year ended 31 March, A) CASHFLOW FROM OPERATING ACTIVITIES NET PROFIT BEFORE TAX 216,394, ,261, Add : Adjustments for : - Depreciation 208, , Sundry Balances written off Amortisation of Premium on Govt/Debt Sec. 311, , Less : Adjustments for : - Interest on Investments (2,296,876.71) (1,809,273.97) - Interest income on Fixed deposits (16,037,577.22) (6,119,083.33) - Dividend From Mutual Funds (10,179,964.76) (8,850,566.41) - Profit on redemption of investment (4,051,073.93) (74,966.23) - Sundry Balances Written Back (2,340.69) (13.39) - Profit on Sale of Fixed Assets - (10,000.00) OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 184,345, ,164, Adjustments for : Sundry Debtors (8,462,717.76) (1,118,192.86) Loans & Advances (3,084,473.00) (4,179,923.00) Current Liabilities & Provisions 4,741, (8,008,128.61) CASH GENERATED FROM OPERATIONS 177,540, ,858, Direct Taxes paid (67,583,616.39) (56,633,468.29) NET CASH FROM OPERATING ACTIVITIES - Total (A) 109,956, ,224, B) CASHFLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (net) (18,730.33) (191,792.00) Sale of Fixed Assets - 10, (Increase)/Decrease in Investment (116,996,481.60) (91,561,631.61) Interest received on deposits 7,765, ,013, Dividend From Mutual Funds 10,179, ,850, Interest on Investments 2,745, , NET CASH FROM INVESTING ACTIVITIES - Total (B) (96,324,806.82) (80,475,373.65) Note 25 Previous years figures are regrouped, reclassified and rearranged wherever necessary. As per our report of even date attached For K. S. Aiyar & Co. Chartered Accountants For and on behalf of the Board of Directors Raghuvir M. Aiyar Ravi Narain Chitra Ramkrishna Roopa Kudva Partner Chairman Director Director Membership Number: Place : Mumbai J Ravichandran Raman Uberoi Mukesh Agarwal Date : April 26, 2012 Director Director Director Page 26 Page 27

141 India Index Services & Products Limited CASH FLOW STATEMENT (CONTD...) For the year ended 31 March, C) CASHFLOW FROM FINANCING ACTIVITIES Dividend Paid (11,700,000.00) (9,100,000.00) Dividend Distribution Tax (1,898,040.00) (1,511,400.00) NET CASH FROM (USED IN) FINANCING ACTIVITIES - Total (C) (13,598,040.00) (10,611,400.00) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) 33, (2,861,891.45) CASH AND CASH EQUIVALENTS : OPENING BALANCE (Note 14) 819, ,681, CLOSING CASH AND CASH EQUIVALENTS : CLOSING BALANCE (Note 14) 852, , NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 33, (2,861,891.45) NSE Infotech Services Limited (A wholly owned subsidiary of National Stock Exchange of India Limited) Notes to Cash Flow Statement : 1 Cash and cash equivalent represent cash, bank balances and balance in fixed deposit account as per balance sheet 2 The above Cash Flow Statement has been prepared under the "Indirect Method" as set out in the Accounting Standard-3 on Cash Flow Statements issued by the Institute of Chartered Accountants of india 3 All figures in brackets are outflows 4 Previous Years figures have been regrouped/restated wherever necessary 5 Direct taxes Paid/ Refunded are treated as arising from operating Activities and not bifurcated between investing and financing activities. As per our report of even date attached For K. S. Aiyar & Co. Chartered Accountants For and on behalf of the Board of Directors Raghuvir M. Aiyar Ravi Narain Chitra Ramkrishna Roopa Kudva Partner Chairman Director Director Membership Number: Place : Mumbai J Ravichandran Raman Uberoi Mukesh Agarwal Date : April 26, 2012 Director Director Director Sixth Annual Report Page 28

142 NSE INFOTECH SERVICES LIMITED Sixth Annual Report FY CORPORATE INFORMATION Board of Directors Mr. Ravi Narain : Chairman Ms. Chitra Ramkrishna Mr. Ravindra Apte Auditors : M/s. Gokhale & Sathe Chartered Accountants 302/303, Udyog Mandir No. 1 7-C, Bhagoji Keer Marg Mahim, Mumbai Registered Office : Exchange Plaza Plot No. C-1, Block G Bandra Kurla Complex, Bandra (East) Mumbai Page 1

143 NSE INFOTECH SERVICES LIMITED Sixth Annual Report FY DIRECTORS REPORT continuous and odd lot market has also been released to live. systems was developed, tested and moved to live within a period NEAT/NEAT Plus, the front end of the trading system, have been of 2 weeks with multiple mock sessions with all market made SME Ready with appropriate implementations on Risk participants. Your Directors have pleasure in presenting the Sixth Annual Report and the Audited Accounts of NSE Infotech Services Limited (NSETECH) for the Financial Year ended March 31, The last phase of the rollout of the New Market (NIFTY) is planned to be carried out in the last week of April SMFS in PT layer of CM Trading System: As a move towards next Management, clearing & settlement and other interfaces. The SME functionality has been kept disabled for live operations. Market Liquidity Provisioning: Development is completed for the Market Liquidity Provisioning project in the F&O segment. This is released in live environment with the functionality disabled. Secondary Market Listing (SML): As per the new regulatory requirements, call auction mechanism is now extended for securities listed after IPO and for relisted securities. End to end system implementation was done in areas of trading and risk management systems. I. Operations and major events during the year The focal areas of speed, quality, predictability, productivity and innovation have been institutionalised across NSETECH. This financial year has been path-breaking in terms of the new F&O trading system (New Market) which ushers a new era for the Exchange by future proofing the trading system to face the ensuing challenges of the coming years in terms of latency and throughput. Operations Highlights New Generation Initiatives New Market Retooling (F&O): Retooling project (New Market) in the Futures and Options segment went live with a special golive trading session on 7th January The new retooling engine ushers a new era for the Exchange, by future proofing the trading system to face the ensuing challenges of the coming years in terms of latency and throughput. The phased migration of the New market (Retooling Project in F&O) has successfully completed its third key milestone in which symbols present in Market Machine 3 have been shifted to New Market Machine. Currently New Market has 213 symbols out of 222 traded symbols of the F&O segment. It is processing around 70+ million messages per day in each of the machine. The migration of symbols from Market machine 3 to New Market was completed on 02nd April generation trading system, the in-memory database in the Post trade layer has been moved to state of the art SMFS (Shared Memory File System) in the CM trading system. This replaces the Appletree database system. These changes were released to live on 30th May New Products/Services 91 Day T Bill in CD segment: The project was undertaken for the introduction of 91-day Government of India Treasury-Bill contracts as underlying in the Currency Derivatives segment. The trading, risk management, clearing & settlement systems and other Interface applications have been modified for the same. A mock trading session was conducted on 11th June 2011 and the changes went live on the 4th July Global Indices: The new product Global Indices- Futures and Options has been successfully made operational in the Futures and Options segment from 29th August Futures and Options contracts on S&P 500 index and Futures contracts on Dow Jones Industrial Average (DJIA) index have been made available for trading in the F&O segment. The trading, risk management, clearing and settlement systems and other application interfaces have been modified to accomplish the same. SME segment: A new exchange platform for small and medium enterprises (SMEs), with a facility to conduct intraday call auctions for SME securities was introduced in the CM segment. SME for Market Data Buckets: TBT development has been completed and released in parallel live environment with couple of members doing testing. This is planned to go live in the end of April TWAP/VWAP Exchange hosted Algorithms: Time Weighted Average Price (TWAP) and Volume Weighted Average Price (VWAP)- Exchange hosted Algorithms have been made available to the members in the trading frontend. The implementation has been done through a generic framework that can be used in the future for implementing other algorithms. The design also ensures that the execution latency is not impacted. TWAP was released to live on the 3rd October 2011 and VWAP was released to live on 28th November NEATPRO (NEAT skin in NEATPLUS): The re-architecture of NEATPLUS front end (called as NEATPRO) with a NEAT look (NEAT Skin in NEAT+ project) has been released to members in the F&O segment. This will make available the NEAT+ product in NEAT Skin thus providing convenience of usage to the Trading Members. Offer for Sale (OFS): Disinvestment of promoter quota of shares using a special session, with online price discovery and risk management, was made live for a special session of disinvestment of ONGC on 01 March 2012 after multiple mock sessions. End to end system implementation was done in areas of trading, risk management and clearing and settlement of the IPO segment to enable this requirement. The entire implementation across all NSE Website Redesign: nseindia.com - NSE s Website has been revamped. The site has a new look and feel and an information architecture design that ensures quick availability of information to investors, members and corporates. New website highlights NIFTY as a prominent brand. Website has introduced new features such as better index charting, symbol suggest and peer comparison that were identified as investor community preferences during usability research. It has also been integrated with Google search engine to give the end users ability to search on the web site contents. NEAPS - Corporate Governance & Share Holding Pattern: NSE Electronic Application Processing System (NEAPS) is being widely used by Companies to file further issues (ESOP, ADR, GDR, Bonus, QIP and FCCB) applications with the Exchange. The second phase of NEAPS comprising of two new modules namely Corporate Governance (CG) and Share Holding Pattern (SHP) has been released to live. All corporates can now submit their CG and SHP compliance directly to the Exchange with digital signature. With this, the quality and speed of submission is enhanced and this is a step towards paperless submission of listing documents with the Exchange. Customer Benefits (including self-service) Voluntary Closeout and SSD: Voluntary close-out facility along with security specific disablement for Members in the Futures and Options segment has been implemented for the benefit of Page 2 Page 3

144 NSE INFOTECH SERVICES LIMITED Sixth Annual Report FY members. This will allow the members to proactively define the close out percentage crossing which will trigger pre-order risk management for all subsequent incoming orders. The members can use this facility to bring down their exposure to acceptable levels and start trading normally. The same has been released to live on 6th February Margins UI revamp & Integration to Member Portal: The UI was revamped and integrated with Member Portal. The member has a single login now for UCI, ENIT, Extranet and Margins. The new UI has several new features like a single risk dashboard where user has access to view all his margins and collateral across segments. Additionally, features like multi columnar sort and filtering has been added. Beta release has been done for five members on 25th January Additional members were brought on board in the subsequent month. MBA in CD segment: Market By Aggregate, a feature demanded by various market participants, was introduced in the Currency derivatives segment. Market By Aggregate facilitates viewing of aggregate market depth and capturing of buy/sell orders on the basis of average price/aggregate quantity and aggregate value. Member Alert System: In the Equity and Currency Derivative segments, Member Alert System (MAS) has been introduced to provide SMS and alert notifications to members for penalty on the margin shortages/non-collection from clients. This was released to production in the first week of September GSEC Addition (Collateral): Addition, valuation & release of the G-secs provided by the member have been integrated with the existing collateral system across the segments. Prior to this release, all the operations pertaining to G-secs were being performed manually by the NSCCL users. This was released to production on 28th September Depository-wise MFSS Allocation: MFSS allocation process is dependent on completion of Pay-in processing at both NSDL and CDSL. Pay-out at both the depositories is delayed owing to delay of pay-in at any one of the depositories. MFSS allocation process was optimised in order to do pay-in and pay-out processing at a depository level, on mutually exclusive basis. The changes were released to Production on 8th April Automatic Delivery Out (Auto DO): Automatic Delivery Out (Auto DO) is a facility supported by a tripartite agreement among the clearing member, depository and NSCCL whereby, among other clauses, clearing member gives consent to NSCCL to share its delivery obligation with the depository and also to the depository to fetch the securities marked for the settlement from the clearing account at cut off time. Auto DO facility was operational for NSDL. A release was made to extend Auto DO facility to the clearing members for CDSL. Intraday margin reports: Intraday margin reports in F&O and CD Risk Management system has been released which provides provisional margin details to clearing members and trading members. These reports are generated during the day after application of new SPAN parameters to the market. This has gone live on 10th January Open ended Mutual Funds as Collaterals: A release was made for Open ended Mutual Funds, a new set of securities, to be accepted as cash & non-cash collaterals in the CM, F&O and CD segments. In addition, fungibility of these collaterals across segments was enabled, with the live implementation on 10th February Document Repository in ENIT is a new initiative for storing all member related documents in a single repository which is available online. Members can view the valid documents and submit the latest documents as per requirement. A secure channel has been put in place to upload the documents and ensure document safety. Members are encouraged to upload documents in ENIT vide digital signature. This initiative eliminates the hassles faced by members of resending documents to the Exchange several times. Information dissemination to investors on trades executed by them using the SMS facility has been enabled from 19th November 2011, according to the SEBI directive. This facility is available to clients registered with their members and further accepted the service through confirmatory SMS to NSE. Liquidity Enhancement Scheme was introduced by NSE on the 15th September The primary objective of this scheme is to attract market participants to actively participate in trading of Global Indices. Facility has been provided to members to download monthly incentive reports on LES. These reports are generated on the first business day of the following month. Online Listing Fees: With a view to provide diverse range of services to corporates listed on NSE, NEAPS platform is enhanced with the provision of online payment service. This facilitates corporates to make online payment of annual listing fees from the financial year onwards. Three payment options are provided viz., RTGS/NEFT Mode, Cheque Payment Mode and Net Banking Mode. Additionally, facility is provided to corporates to download these bills at any point of time. Equity Margin Calculator on Website: The Equity Margin Calculator on website, allows user to input Equity stock portfolio and calculate the margin requirement for the same. User can enter upto 10 securities in a portfolio. Daily margin calculated and displayed in equity segment comprises of VaR margin, Extreme Loss Margin and Total Margin. Operational Excellence Three BCP mocks were conducted in this financial year which covered trading, clearing and internal system applications. BCP internal mock was carried out in July 2011 by Technology team for clearing and settlement applications for all segments. External mock was also successfully carried out in October 2011 for CM, F&O and CD market segments along with interfacing online applications. Parallel operations were conducted from command center in Kohinoor and DR site. An internal mock was carried out in February 2012 by Technology team for internal applications like Membership, Listing, ENIT, NFA, Billing, UCI, NCFM, WDM back office, Inspection, Arbitration & Defaulters database. The IPNET Stratus FT6210 machines have been successfully upgraded to Stratus FT6300 machine in the CM segment. This has resulted in improved Order handling capacity and better performance in the NET layer. As a step towards capacity readiness for the budget session in the month of March 2012, the Market 1 machine was upgraded to a higher capacity V6308 server capable of handling additional load. Moreover, load balancing of securities across the four market machines has been done so that volumes get distributed across the market machines. Various steps have been taken for automation of operational procedures which will lead to improved reliability of operations. Trading Mock setup, Operational health checks of Production systems management team and Telecom teams are few examples in which automation has been achieved. Infrastructure Projects Key Accomplishments Data center relocation Development segment (Kohinoor): The new data center facility at Kohinoor hosts the development set-up as well as the NCDEX production set-up. The relocation of these set-ups from Exchange Plaza to Kohinoor was initiated in the last week of June This involved movement of 150+ servers along with their Network equipments. Around 250 users have been relocated from BKC to Kohinoor by second week of July Security Operations Center (SOC) has been implemented with the objective to ensure security incidents are detected, responded and resolved in a timely manner. The SOC is built around the automated tool ArcSight that collects logs from various network devices (firewalls, IDS, IPS etc.), servers and databases. SOC will help in detecting various attacks like Denial of Service (DoS), Interception and Eavesdropping, Malicious Activity, Network Breach, Reconnaissance, Unauthorised Access and Unauthorised Changes. International Network Services facility has been enabled for DMA clients hosting their Algo engines in Co-location. This set-up is dedicated for the purpose of accessing NSE s Co-location facilities from across the globe. Millennium Capital Management Pte. Ltd., DMA client of Deutsche Bank, based in Singapore has gone live using Transaction Network Services (TNS). Electronic readable news in Co-location from Thomson Reuters called Elektron has been made live to provide trading firms with low latency access to data required to fuel Algorithmic trading strategies. This facility is currently limited to NSE feed data only. Optimisation of IP s in Colocation: In an endeavor to keep offering innovative services and give benefits to members in terms Page 4 Page 5

145 NSE INFOTECH SERVICES LIMITED Sixth Annual Report FY of cost rationalisation, the Colocation facility of the Exchange has HR Updates been optimised in terms of the number of IPs available per full The Company has 264 employees. The status of the number of rack. In this regard the Exchange now provides 20 IPs per full rack with a maximum of 10 IPs each for Tick by Tick (TBT) and interactive messages respectively. This will enhance capacity for single rack with the same infrastructure thereby increasing revenue for Exchange and also provide release for members currently in pipeline. IP Network shifting: The IP Network, the backbone of the Trading infrastructure facilitating member connectivity, earlier deployed at the Development Area and old X.25 Room in 6th Floor Data Center of Exchange Plaza was shifted to a more secured zone on the 6th Floor. Redundant 10G fiber interconnectivity was introduced for the Peer, Upstream and Downstream devices in place of earlier copper connectivity. The setup was tested during Mock sessions on 26th and 27th November 2011 and made operational in live on 28th November The improved environment conditions in the new zone will improve the reliability of the IP Network. Virtualisation: Virtualisation of development and UAT servers for optimally utilising hardware resources has been completed. This has helped in improved environment availability and cost savings of around 2.8 Crores with respect to savings on hardware servers, network ports, power & cooling, and other associated setup. Near DR Setup at Kohinoor: Setting up of Near Online to enhance BCP to reduce recovery point objective (RPO) from 10 mins to few seconds (10 to 30 seconds) has been completed for orders and trade data in CM, F&O and CD segments. Three Datacenter Replication infrastructure has been put in place. II. Financial Results employees during the year is given in the following table:- Employee Strength as on April 01, Fresh recruitments (April, 2011 March 2012) 40 Total Employee Strength 328 Resignations (April, 2011 March 2012) 64 Net Employee Strength as on March 31, Total Requirement 310 No. of TASAs (Trainee Associate System Analysts) 26 No. of Lateral Hires 14 The financial results for the financial year are summarised hereunder:- Particulars (` In lakhs) (` in lakhs) Income 3, , Expenditure other than 3, , depreciation Profit before depreciation and tax Depreciation Profit before tax Provision for taxation Profit after tax Surplus brought forward from previous year Balance carried to Balance Sheet Meeting and is eligible for re-appointment. The Board recommends the re-appointment of Mr. Ravi Narain as Director on the Board of NSETECH by the shareholders. V Directors Responsibility Statement Your Directors confirm that i. in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any; ii. the Directors had selected such 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 Company at the end of the financial year i.e., 31st March, 2012 and of the profits of the Company for that year ; iii. the Directors had 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 Company and for preventing and detecting fraud and other irregularities; and iv. the Directors had prepared the annual accounts on a going concern basis. VI. Audit Committee Since the paid up capital of the Company is ` 5.00 lakhs only, it is not mandatory for the Company to constitute an Audit Committee as per the provisions of the Companies Act, VIII. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings/ Outgo a) Conservation of Energy, Technology Absorption: As the Company does not fall under any of the industries listed out in the Schedule appended to Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988, particulars required to be disclosed with respect to conservation of energy and technology absorption in terms of Section 217(1)(e) of the Companies Act, 1956, read with the aforesaid Rules are not applicable to the Company. b) Foreign Exchange earnings/outgo: There were no foreign exchange earnings during the year. However the foreign exchange outgo during the year was ` lakhs. X. Particulars of Employees Statement of Particulars of Employees covered under the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 is annexed. XI. Appreciation Your Directors are grateful for the support and co-operation extended by NSEIL and its group companies. Your Directors would like to place on record their deep appreciation of the contribution made by the employees at all levels to the continued growth of the Company. NSE s Colocation Service has been awarded the ISO Certification for services offered to its trading members. The central requirements of the ISO standard are Use of a management approach in line with the ISO management standard ISO 9001:2000, which includes IT Service delivery, Business relationship management, Finance Management, Security and aimed at continuous quality improvement. III. Dividend As the profit is required to augment operational needs, your Directors do not recommend any dividend for the financial year IV. Directors Mr. Ravi Narain retires by rotation at the ensuing Annual General VII. Auditors M/s. Gokhale & Sathe, Chartered Accountants, Auditors of the Company, retire at the forthcoming Annual General Meeting of the Company and are eligible for re-appointment. The Company has received a certificate from the Auditors to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224 (IB) Of The Companies Act, Place: Mumbai Date: April 25, 2012 For and on behalf of the Board of Directors Ravi Narain Chairman Page 6 Page 7

146 NSE INFOTECH SERVICES LIMITED Page 8 ANNEXURE TO DIRECTORS' REPORT Statement Pursuant to Section 217 (2A) of The Companies Act, 1956 Read with Companies (Particulars Of Employees) Rules, Sr. Name & Age in Designation / Remuneration Experience Date of Last No. Qualification Years Nature of Duties Received (No. of years) Commencement Employment Gross Net of Employment 1 Mr. N. Muralidaran 52 Chief Excutive 12,355,945 8,163, October 1, 2006 Sr. Vice President M.Sc, M.B.A Officer NSE.IT Limited 2 Mr. G. M. Shenoy 51 Senior Vice 7,177,748 4,766, October 1, 2006 Sr. Vice President B.E, M.F.M President NSE.IT Limited 3 Ms. Hema Iyer 44 Vice President 6,453,298 4,663, October 9, 2006 Asst. General BE Manager 3i Infotech Limited Notes: 1 Gross Remuneration includes Salary and other benefits, Company's contribution to Provident Fund, Superannuation Fund, taxable value of perquisites etc. Net remuneration represents gross remuneration less company's contribution to provident and superannuation funds, taxable value of perquisites, profession tax and income tax. Where applicable, the amounts also include certain allowances accrued during previous year(s) but claimed in the current year. 2 The employees are in permanent employment of the Company on contractual basis governed by the employment terms & conditions and service rules. 3 None of the employees mentioned above is a relative of any Director. 4 None of the employees is holding equity shares in the Company within the meaning of sub-clause (iii) of clause (a) of sub-section (2A) of Section 217 of the Companies Act, The Company does not have any Employee Stock Option Plan (ESOP) Scheme for its employees. AUDITORS REPORT To, The Members of NSE Infotech Services Limited Report on the Financial Statements We have audited the accompanying financial statements of NSE Infotech Services Limited ( the Company ), which comprise the Balance Sheet as at 31st March 2012, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ( the Act ). This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting Sixth Annual Report FY principles generally accepted in India: a. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 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 the Cash Flow Statement, of the cash flows for the year ended on that date. Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditor s Report) Order, 2003 ( the Order ) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. 2. As required by section 227(3) of the Act, 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 purpose of our audit; b. 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; 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 comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956; e. On the basis of written representations received from the directors as on 31st March 2012, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2012, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company. For Gokhale & Sathe Chartered Accountants Firm Regn. No W Atul Kale Place : Mumbai Partner Date : April 25, 2012 Membership No.: Page 9

147 NSE INFOTECH SERVICES LIMITED Sixth Annual Report FY ANNEXURE TO AUDITORS REPORT Annexure to the Auditor s Report as required by the Companies (Auditor s Report) Order, 2003 as amended by the Companies (Auditor s Report) Amendment Order, 2004 (Referred to in Paragraph 1 of the section Other Legal and Regulatory Requirements of our Report of even date on accounts of NSE INFOTECH SERVICES LIMITED as at 31st March 2012) As required by the Companies (Auditors Report) Order 2003 as amended by the Companies (Auditors Report) Amendment Order 2004 issued by the Central Government in terms of Section 227(4A) of the Companies Act 1956, on the basis of the checks, as we considered appropriate, we report on the matters specified in paragraph 4 and 5 of the said order to the extent applicable to given to us, in our opinion there are adequate internal control systems commensurate with the size of the Company and the nature of business with regard to the purchase of fixed assets and with regard to the service rendered. During the course of our audit we have not observed any continuing failure to correct major weakness in internal controls system. the company. (v) a) In our opinion and according to the information and (i) a) The Company has maintained proper records, showing full particulars including quantitative details and situation of fixed assets. explanations given to us, there are no contracts or arrangements that need to be entered into a register in pursuance of section 301 of the Companies Act Therefore, reporting of transaction under the provision b) We have been informed that the physical verification of of clause 4 (v) (b) is not applicable to the Company. fixed assets was carried out by the management during the year which in our opinion is reasonable having regard to the nature of the assets. We have been informed that no material discrepancy was noted on such verification. (vi) The Company has not accepted any deposits from public and accordingly the provisions of section 58A, 58AA of the Act, and Rules framed there under and any directive issued by the c) The Company has not disposed off substantial part of the Fixed Assets during the year. Reserve Bank of India are not applicable to the Company. (vii) The company has an internal audit system commensurate (ii) Considering the nature of the business and services rendered by the company, clause 4(ii) of the CARO is not applicable. with its size and nature of the business. (viii) We have been informed that Central Government has not prescribed maintenance of cost records under section 209 (iii) a) The Company has not granted any loan secured or (1) (d) of the Companies Act, 1956 for the products of the unsecured to companies, firms, or other parties covered Company. in register maintained u/s 301 of the Companies Act, Therefore the provision of clause 4(iii) (b), (c) and (d) are not applicable to the company. (ix) a) According to the information and explanations given to us and the books and records examined by us, the company was regular in depositing undisputed statutory b) The Company has not taken any loans, secured or dues with the appropriate authorities. There were no unsecured from companies, firms or other parties undisputed amount payable in respect of Provident Fund, covered in the register maintained u/s 301 of the Employees State Insurance, Income-tax, Sales-tax, Wealth Companies Act, Therefore, the provisions of clause Tax, Service Tax, Custom Duty, Excise Duty, cess and any 4 (iii) (f) and (g) are not applicable to the Company other statutory dues which have remained outstanding as (iv) On the basis of selective checks carried out during the course of audit and according to the information and explanation at 31st March 2012 for a period exceeding six months from the date they became payable. b] According to the information and explanation given to us, there are no disputed dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess which have not been deposited on account of any dispute except the following: Sr. Name of the Statute Nature of Period to which Amount Forum where dispute No. the Dues the amount relates is Pending 1 Income Tax Act Fringe Benefit Tax ,36,143 Income Tax Office-10(1)(4) 2 Finance Acts concerning Service Tax 02/08/2006 to 28,06,967 Additional Commissioner of Service Service Tax 31/03/2009 Tax, Worli, Mumbai x) The Company does not have accumulated losses as at 31st March 2012 and it has not incurred any cash losses in the (xvii) According to the information and explanations given to us, the company has not raised any funds on short term basis. financial year ended on that date or in the immediately (xviii) According to the information and explanations given to us, preceding financial year. the Company has not made any preferential allotment of (xi) In our opinion and according to the information and shares. explanations given to us, the Company has not taken any (xix) According to the information and explanations given to us, loan and no amounts were due towards principal or interest the company has not issued any debentures up to 31st to any financial institution, bank, or debenture holders March during the year. (xii) (xx) During the period covered by our audit report, there was no As per information given to us, the Company has not public issue of the Company s shares. granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xxi) According to the information and explanations given to us no fraud on or by the Company has been noticed or (xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Therefore, the provisions of reported during the year. clause 4 (xiii) are not applicable to the Company. For Gokhale & Sathe (xiv) In our opinion, the Company is not dealing in or trading in Chartered Accountants shares, securities, debentures, and other investments. Firm Regn. No W (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. Atul Kale (xvi) According to the information and explanations given to us Place : Mumbai Partner the company has not taken any term loan. Date : April 25, 2012 Membership No.: Page 10 Page 11

148 NSE INFOTECH SERVICES LIMITED Sixth Annual Report FY BALANCE SHEET STATEMENT As at March 31, 2012 Note No. EQUITY AND LIABILITIES 1. Sharholder's funds a Share Capital 2 500, , b Reserves and surplus 3 38,496, ,340, ,996, ,840, Non-current liabilities Long-term provisions 4 16,756, ,578, ,756, ,578, Current liabilities a) Other current liabilities 5 39,450, ,936, b) Short-term provisions 4 93,012, ,573, ,462, ,509, Total 188,215, ,928, ASSETS 1 Non-current assets a) Fixed assets 6 170, , b) Non-current investments 7-10,000, c) Long-term loans and advances 8 105, , d) Deferred tax Assets (net) 9 5,775, ,450, Current assets 6,051, ,872, a) Current investments 10 17,366, ,229, b) Short-term loans and advances 8 96,701, ,273, c) Trade receivable 11 63,919, ,221, d) Cash and bank balances 12 4,176, , ,163, ,056, Total 188,215, ,928, Summary of significant accounting policies ( Note 1) The accompanying notes are an integral part of the financial statements. As per our report of even date attached For GOKHALE & SATHE Chartered Accountants Firm No : W For and on behalf of the Board of Directors PROFIT & LOSS STATEMENT For the year ended March 31, 2012 Particulars Notes For the year ended For the year ended No INCOME Revenue from operations ,864, ,973, Other income 14 2,510, ,400, Total Revenue (I) 393,375, ,373, EXPENSES Employee Remuneration & Benefits ,669, ,944, Other expenses 16 19,953, ,438, Depreciation 54, , Total Expenses (II) 385,676, ,425, Profit before tax 7,698, ,948, Less : Provision for tax Current tax 3,000, ,400, Deferred tax (2,325,606.00) (2,144,271.00) Short/ (Excess) provision of tax of earlier years 1,868, (768,897.00) Total tax expenses 2,542, ,486, Profit after tax 5,155, ,461, Basic Diluted Summary of significant accounting policies ( Note 1) The accompanying notes are an integral part of the financial statements. As per our report of even date attached For GOKHALE & SATHE Chartered Accountants Firm No : W For and on behalf of the Board of Directors ATUL KALE RAVI NARAIN CHITRA RAMKRISHNA Partner Chairman Director Membership Number: RAVINDRA APTE Place : Mumbai Director Date : Apr 25, 2012 ATUL KALE RAVI NARAIN CHITRA RAMKRISHNA Partner Chairman Director Membership Number: Place : Mumbai Date : Apr 25, 2012 RAVINDRA APTE Director Page 12 Page 13

149 NSE INFOTECH SERVICES LIMITED Sixth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 1 SIGNIFICANT ACCOUNTING POLICIES : a) Basis of Accounting The financial statements have been prepared under the historical cost convention on accrual system and in accordance with the generally accepted accounting principles. b) Revenue Recognition i. Revenue from IT Services is recognized based on the terms agreed with the customers. ii. Sales excludes applicable taxes and other levies. c) Expenditure Expenses are accounted on accrual basis and provisions are made for all known losses and liabilities. d) Fixed Assets Fixed Assets are stated at cost of acquisition less accumulated depreciation. Cost of acquisition is inclusive of freight, duties, taxes and other incidental expenses e) Depreciation (i) Depreciation on fixed assets is provided using straight line method at the rates specified in schedule XIV to Companies Act, (ii) Depreciation is charged on a pro-rata basis for assets purchased during the year. f) Investments (i) Long term investments are considered as held till maturity and are valued at cost. (ii) Short term investments are valued at cost or fair value whichever is lower. g) Employee Retirement Benefits (i) Provident Fund: The Company has established NSE Infotech Services Limited Employee Provident Fund Trust to which both the employee and the employer make monthly contribution equal to 12% of the employee s basic salary respectively. Company's contribution to the provident fund for all employees, are charged to revenue. In case of any liability arising due to short fall between the return from its investments and the administered interest rate, the same is required to be provided for by the Company. Page 14 (ii) Superannuation: Superannuation benefit for employees designated as managers and above, as may be applicable is covered by Group Superannuation Scheme with the Life Insurance Corporation of India towards which it annually contributes a sum based on a specified percentage of each covered employees salary. The contribution paid for the year on the Group Superannuation Scheme is charged to revenue. (iii) Gratuity: The Company has maintained a Group Gratuity Cum Life Assurance Scheme with the Life Insurance Corporation of India towards which it annually contributes a sum determined by Life Insurance Corporation of India. The company provides for the defined benefit with respect to gratuity liability based on the present value of defined benefit obligation as reduced by the fair value of plan assets as per the actuarial valuation calculation. (iv) Other Long term benefits: Liability on account of other long term benefits such as Leave encashment is made on the basis of actuarial valuation at the end of the year. (v) Short term employee benefits are charged to revenue in the year in which the related service is rendered. h) Taxation (i) A provision is made for the current tax based on tax liability computed in accordance with relevant tax rates and tax laws. A provision is made for deferred tax for all timing differences arising between taxable income and accounting income at currently enacted tax rates. (ii) Deferred tax assets are recognised only if there is a reasonable certainty that they will be realised and are reviewed for the appropriateness of their respective carrying values at each balance sheet date. NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 2 SHARE CAPITAL As at As at a) Authorised 1,00,00,000 (Previous Year 1,00,00,000) Equity Shares of ` 10 Each. 100,000, ,000, Issued, Subscribed and Paid-up 50,000 (Previous year 50,000) Equity shares of ` 10 each fully paid up. 500, , Total 500, , b) Details of shareholders holding more than 5% share in the company As at As at No. % holding No. % holding National Stock Exchange of India Limited 50, % 50, % c) Reconciliation of the shares outstanding at the beginning and at the end of the reporting period As at As at No. ` No. ` At the beginning of the periopd 50, , , , Add: Issued during the period Less: Share boughtback during the year Outstanding at the end of the period 50, , , , d) The Company has only one class of share referred to as equity share having par value of ` 10/-. Each holder of equity shares is entitled to one vote per share. e) In the event of liquidation the holder of equity share will be entitled to receive any of the remaining assets of the company after distribution of all prefencial amounts, however no such amount exist currently. The distribution will be in proportion to the number of equity share held by the share holder. Note 3 RESERVE AND SURPLUS As at As at Surplus/(deficit) in the statement of profit and loss Balance as per last financial statements 33,340, ,879, profit for the year 5,155, ,461, Total reserves and surplus 38,496, ,340, Note 4 PROVISION Long - term Short - term As at As at As at As at Employee benefits Leave encashment 13,712, ,578, ,698, ,853, Gratuity 3,044, ,143, , Salaries & Allowances ,170, ,532, Total 16,756, ,578, ,012, ,573, Page 15

150 NSE INFOTECH SERVICES LIMITED Sixth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 5 OTHER LIABILITIES Long - term Short - term As at As at As at As at Tax deducted at source - payable - - 3,401, ,546, Service Tax Payable - - 1,896, , Advance received from customers ,587, Other Payable ,151, ,476, Total ,450, ,936, Other Payables includes ` Nil (Previous Year: ` Nil) due to Micro, Small & Medium Enterprises. Total outstanding dues to Micro, Small & Medium Enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company. Note 6 FIXED ASSETS GROSS BLOCK DEPRECIATION NET BLOCK Sr. Description As at Additions Deductions As at As at For the Deductions As at As at As at No Year Office Equipment 175, , , , , , , , Grand Total 175, , , , , , , , Previous Year 143, , , , , , , , , Note 7 NON CURRENT INVESTMENTS Mayurity Number Face Value Face As at As at Date of Units per Unit Value A) Quoted Mutual Funds Baroda Pioneer 380 Day FMP- Series 1- Growth Plan 28-Mar-12 1,000, ,000, ,000, Total 1,000, ,000, ,000, Notes : Market value of quoted investments is Nil ( Previous Year ` 1,00,92,800.00) NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 8 LOANS AND ADVANCES Long - term Short - term As at As at As at As at (A) Security deposit Secured, considered good Unsecured, considered good 19, , , , (B) Other advances Loans to employees 19, , , Income Tax paid including TDS (Net of Provisions) ,589, ,197, Fringe Benefit Tax (Net of Provisions) - - 4, , Prepaid Expenses 39, ,704, ,859, Other Advances 26, , , Receivable from related parties ,696, (Including dues from National Stock Exchange of India Limited ` Nil, Previous Year ` 8,45,37,968/- and National Securities Clearing Corporation Limited ` Nil, Previous Year ` 1,41,58,241/- ) 85, , ,701, ,273, Total (A+B) 105, , ,701, ,273, Note 9 DEFERRED TAX LIABILITIES / ASSET (NET) Note 10 CURRENT INVESTMENTS As at As at a) Deferred Tax liabilities - - b) Deferred Tax Assets Gratuity unpaid 991, , Related to depreciation 22, , Leave Encashment 4,761, ,370, ,775, ,450, Net Deferred Tax Liability / (Asset) (a-b) (5,775,676.74) (3,450,070.00) Sr. Number NAV as at As at Number As at No. of Units of Units A) Unquoted Mutual Funds 1 IDFC Money Manager Fund -Treasury Plan - Inst Plan B - Daily Div 233, ,355, , ,201, ICICI Prudential Flexible Income Plan - Premium - Daily Dividend 141, ,010, , ,006, Principal Cash Management Fund - Liquid Option Dividend Reinvestment Daily , , Birla Sunlife Savings Fund- Instl Daily Dividend - Reinvestment , Baroda Pioneer Liquid Fund- Instl Daily Dividend Plan , Total 375, ,366, , ,229, Page 16 Page 17

151 NSE INFOTECH SERVICES LIMITED Sixth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 11 TRADE RECEIVABLES Page 18 Non-current Current As at As at As at As at Outstanding for a period of over six months Secured, considered good - - Unsecured, considered good Other debts Secured, considered good Unsecured, considered good (Including dues from National Securities Clearing Corporation Limited ` 1,69,55,453/-, Previous Year ` 32,21,772/- and - 63,919, ,221, from National Stock Exchange India Limited ` 4,69,63,868.95, Previous Year ` Nil ) ,919, ,221, Total ,919, ,221, Note 12 CASH AND BANK BALANCES As at As at Cash and cash equivalents Balances with banks : On current accounts 4,176, , Total 4,176, , Note 13 REVENUE FROM OPERATIONS For the year For the year ended ended Sale of services Income From IT Services ( Net of Taxes ) Income From Software Maintenance 229,698, ,613, Income From Facility Management & Ops 161,166, ,359, Total 390,864, ,973, Note 14 OTHER INCOME For the year For the year ended ended Interest Income on Employee Loans 6, , Interest Received On Income Tax Refund - 3,979, Dividend from Units 1,158, , Net gain / loss on sale of current Investment 1,023, Income from Short Notice Dues 297, , Profit/Loss on Foreign Exchange Fluctuation (net) 22, Miscellaneous Income 2, Total 2,510, ,400, NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 15 EMPLOYEE BENEFITS EXPENSES Note 17 CONTINGENT LIABILITY: On account of Income Tax ` 5,29,720/- (previous year ` 5,29,720/-), of Fringe Benefit Tax ` 1,40,780/- (previous year ` 1,74,347/-), of Service Tax ` 28,06,967/- (previous year ` 28,06,967/-). Note 18 For the year For the year ended ended Salaries & Allowances 328,506, ,523, Contribution to Provident Fund 5,853, ,207, Shortfall of Provident Fund Trust 836, ,274, Contribution to Pension Fund 1,795, ,967, Contribution to Group Gratuity Scheme 10,030, , Contribution to Group Gratuity Scheme - LSA Premium 91, , Contribution to Superannuation Scheme 1,098, , Staff Welfare Expenses 5,547, ,491, Insurance Premium - Mediclaim 7,921, ,949, Pantry Expenses 3,988, ,990, Total 365,669, ,944, Note 16 OTHER EXPENSES For the year For the year ended ended Rent (Net) 1,178, ,071, Insurance 1, , Rates & Taxes 2, , Professional & Consultancy Charges 5,623, ,158, Training Expenses 6,781, ,264, Auditors Remuneration - Audit Fees 62, , Out of Pocket Expenses 1, Preliminary Expenses written off - 167, Other Expenses 6,303, ,722, Total 19,953, ,438, In the opinion of the Board, current assets, loans and advances are approximately of the value stated, if realised in the ordinary course of business. Note 19 Particulars Current year Previous year a) Expenditure in foreign currency Travelling Expenses 157, Training Expenses 1,078, , b) Earnings in foreign exchange : Earnings in foreign exchange : Nil Nil Page 19

152 NSE INFOTECH SERVICES LIMITED Sixth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 20 (i) As on the Balance Sheet date, the amounts due to Small-Scale Industrial undertaking are not outstanding for more than 30 days (ii) There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days at the Balance Sheet date, computed on unit wise basis. Note 21 In the opinion of the management, the company has only one reportable business segment viz. offering IT related services. This takes into consideration the commonality in the risks and rewards of the services offered, nature of service, type / class of customers for the services, management structure and system of financial reporting. Accordingly, the results of the said segment have been disclosed in the financial statements. Further, the company has no reportable geographical segments and on that basis, no secondary segment information is furnished. Note 22 In compliance with Accounting Standard 18 - Related Party Disclosures issued by the Institute of Chartered Accountants of India, the required disclosures are given in the table below: (a) Names of the related parties and relationship Sr. Related Party Nature of No. Relationship 1 National Stock Exchange of India Limited Holding Company 2 National Securities Clearing Corporation Limited Fellow Subsidiary 3 NSE.IT Limited Fellow Subsidiary 4 NSE.IT (UK) Limited Fellow Subsidiary 5 NSE.IT (US) Inc. Fellow Subsidiary 6 DotEx International Limited Fellow Subsidiary 7 India Index Services & Products Limited Fellow Subsidiary 8 National Commodity Clearing Limited Fellow Subsidiary 9 Power Exchange India Limited Associate Company (b) Details of transactions with related parties as follows: Sr. Name of the Related Party Nature of Transaction Year ended Year ended No National Stock Exchange Income from IT Services (Net) 339,585, ,498,879 of India Limited Service Tax recoverable on above services 34,977,268 32,496,384 Advance against Services - 48,587,052 Rent Paid 1,981,458 2,021,143 Expenses incurred by NSEIL reimbursed 93,050,455 80,422,417 Closing Balance Debit / (Credit) 14,498,176 21,963,748 2 National Securities Clearing Income from IT Services (Net) 51,279,302 54,474,187 Corporation Limited Service Tax recoverable on above services 5,281,773 5,610,844 Closing Balance Debit / (Credit) 16,955,453 17,380,013 3 NSE.IT Limited Reimbursement received against expenses incurred - - Expenses incurred by NSE.IT reimbursed - 2,310 Closing Balance Debit / (Credit) - - Page 20 NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 23 EARNING PER SHARE In accordance with Accounting Standard 20 - Earning per Share issued by the Institute of Chartered Accountants of India, the required disclosure is given below. Lease obligations Year ended Year ended Net Profit attributable to Shareholders (` In Crores) 5,155, ,461, Weighted Average number of equity shares issued (No. in Crores) Basic earnings per share of ` 10/- each (in `) The Company does not have any outstanding dilutive potential equity shares. Consequently, the basic and diluted earning per share of the Company remain the same. Note 24 In accordance with the Accounting standard 29 Provisions, Contingent Liabilities and Contingent Assets, the Company has made provisions for employee related payments. The particulars of these provisions are as under: Particulars Performance Pay Long Term Project Leave Retention Bonus Incentive Encashment FY Carrying amount at the beginning of the year 19,041,000 16,121,000 46,708,771 10,432,023 Amount used during the year 17,933,874 14,475,541 43,933,009 1,853,737 Amount unused reversed during the year 1,107,126 1,645,459 2,775,762 - Provisions made during the year 17,599,744 14,225,000 46,405,000 6,832,223 Carrying amount at the end of the year 17,599,744 14,225,000 46,405,000 15,410,509 FY Carrying amount at the beginning Previous Year 17,931,559 16,211,895 33,827,197 9,431,819 Amount used during the Previous Year 17,931,559 16,177,019 33,827, ,790 Amount unused reversed during the Previous Year - 34, Provisions made during the Previous Year 19,041,000 16,121,000 46,708,771 1,741,994 Carrying amount at the end of the Previous Year 19,041,000 16,121,000 46,708,771 10,432,023 Leave encashment includes liability transferred from NSE.IT Limited. Note 25 DISCLOSURE UNDER REVISED ACCOUNTING STANDARD 15 ON EMPLOYEE BENEFITS: i) Defined Contribution Plan: Company s contribution towards superannuation amounting to ` 10,98,351/- (Previous Year : ` 7,63,425/-) has been charged to Profit & Loss account. ii) Defined Benefit Plan : (a) Provident Fund: The Company has contributed ` 0.58 Crores and ` 0.42 Crores towards Provident Fund during the year ended March 31, 2012 and March 31, 2011, respectively. As per Implementation Guidance on AS 15 (Revised 2005) Employee Benefits issued by the Accounting Standard Board (ASB), benefit involving employer established provident funds which require interest short fall to be recompensed are to be considered as defined benefit plans. The Actuarial Society of India has issued the final guidance for measurement of provident fund liabilities. The actuary has accordingly provided a valuation based on the below provided assumptions and the liability on account of interest shortfall amounting to ` 0.08 Crores has been provided in the books of accounts. Assumptions used in determining the present value obligation of the interest rate guarantee are as follows : i) Approach used - Stochastic ii) Increase in compensation levels - 5% p.a. iii) Discount Rate % Page 21

153 NSE INFOTECH SERVICES LIMITED Sixth Annual Report FY NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 25 DISCLOSURE UNDER REVISED ACCOUNTING STANDARD 15 ON EMPLOYEE BENEFITS: (Contd...) (b) Gratuity: Company has charged the gratuity expenses to Profit & Loss account based on the actuarial valuation of gratuity liability at the end of the year. The projected unit credit method used to show the position as at March 31, 2012 is as under. Pursuant to the actuarial valuation any amount recoverable from NSE.IT Limited on transfer of employee will be suitably dealt with. Year ended Year ended Particulars (i) (ii) (iii) (iv) (v) Assumptions: Discount Rate 8.25% 8.00% Rate of Return on Plan Assets 8.00% 8.00% Salary Escalation 5.00% 5.00% Attrition Rate 2.00% 2.00% Table showing change in benefit obligation: Obligation at the beginning of the year 13,100,643 11,459,751 Add: Interest cost 1,080, ,780 Add: Current Service Cost 2,816,164 2,392,554 Less: Benefits Paid 2,087, ,000 Add:- Actuarial (gains) / loss on obligations 7,107,502 (1,548,442) Obligation at the end of the year 22,018,062 13,100,643 Tables of Fair value of plan assets: Fair Value of plan assets at the beginning of the year 12,913,706 10,126,702 Add: Expected return on plan assets 1,033, ,136 Add: Contributions 2,029,062 1,822,084 Less: Benefits paid 2,087, ,000 Add: Actuarial (gain) / loss on Plan Assets (58,697) 274,784 Fair Value of plan assets at the end of the year 13,830,117 12,913,706 Total Actuarial Gain/(Loss) to be recognised Actual Return on Plan Assets: Expected return on plan assets 1,033, ,136 Acturial (gain)/loss on plan assets (58,697) 274,784 Actual Return on plan assets 974,399 1,084,920 Amount recognised in the balance sheet Liability as at the end of the year 13,830,117 12,913,706 Fair value of plan assets as at the end of the year (22,018,062) (13,100,643) Net (liability) / asset disclosed in the Balance Sheet (8,187,945) (186,937) NOTES TO FINANCIAL STATEMENTS for the year ended 31 March, 2012 Note 25 DISCLOSURE UNDER REVISED ACCOUNTING STANDARD 15 ON EMPLOYEE BENEFITS: (Contd...) Year ended Year ended Particulars (vi) Expenses recognised in the profit & loss account Current Service cost 2,816,164 2,392,554 Interest Cost 1,080, ,780 Expected return on plan assets (1,033,096) (810,136) Actuarial (Gain) or Loss 7,166,199 (1,823,226) Expenses recognised in the profit & loss account 10,030, ,972 (vii) Balance Sheet Reconciliation Opening Net Liability 186,937 1,333,049 Expense as above 10,030, ,972 Employers Contribution (2,029,062) (1,822,084) Amount recognised in the Balance Sheet 8,187, ,937 viii) Category of Assets ix) Note 26 Insurer Managed Funds 13,830,117 12,913,706 Total 13,830,117 12,913,706 Experience Adjustment On Plan Liability (Gain) / Loss 7,988,224 (1,273,846) On Plan asset (Loss) / Gain (56,697) 274,784 Previous years figures are regrouped, reclassified and rearranged wherever necessary. As per our report of even date attached For GOKHALE & SATHE Chartered Accountants Firm No : W For and on behalf of the Board of Directors ATUL KALE RAVI NARAIN CHITRA RAMKRISHNA Partner Chairman Director Membership Number: RAVINDRA APTE Place : Mumbai Director Date : Apr 25, 2012 Page 22 Page 23

154 NSE INFOTECH SERVICES LIMITED CASH FLOW STATEMENT For the year ended March 31, A) CASH FLOW FROM OPERATING ACTIVITIES Net profit before tax 7,698, ,948, Add: Adjustments for: Depreciation 54, , Preliminary Expenses W/off - 167, Dividend Received (1,158,871.84) (981,059.48) Loss on Sale of Fixed Assets - 16, (Profit)/ Loss on Sale of Investment (1,023,000.00) - Operating Profit before working capital change 5,570, ,194, Change in Working Capital Decrease / (Increase) in Trade Receivable (60,697,549.95) (436,632.63) Increase in Loans & Advances 96,144, (16,356,081.00) Increase in Current Liabilities & Provisions (16,868,743.14) 21,166, Cash Generated from Operations 24,149, ,568, Taxes Paid (Including TDS) (31,260,080.00) (3,854,517.00) Net Cash From Operating Activities - Total (A) (7,110,698.05) 13,713, B) CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (88,999.99) (125,667.00) Sale of Fixed Assets - 3, Dividend Received 1,158, , Investment in Mutual Fund 9,886, (14,745,459.48) Cash flow from investing activity - Total (B) 10,956, (13,887,067.00) C) CASH FLOW FROM FINANCING ACTIVITY Cash Flow from Financing Activity - Total ( C) - - Net Increase / (Decrease) In cash & Cash Equivalent 3,845, (173,305.76) Opening balance of Cash & Cash Equivalent 331, , Closing balance of Cash & Cash Equivalent 4,176, , Net Increase / (Decrease) In cash & Cash Equivalent 3,845, (173,305.76) National Commodity Clearing Limited (Subsidiary of National Stock Exchange of India Limited) Notes to Cash Flow Statement : 1. Cash and cash equivalent represent cash and bank balances. 2. The above Cash Flow Statement has been prepared under the "Indirect Method" as set out in the Accounting Standard-3 on Cash Flow Statements issued by the Institute of Chartered Accountants of India As per our report of even date attached For GOKHALE & SATHE Chartered Accountants Firm No : W For and on behalf of the Board of Directors ATUL KALE RAVI NARAIN CHITRA RAMKRISHNA Partner Chairman Director Membership Number: Place : Mumbai Date : Apr 25, 2012 RAVINDRA APTE Director Sixth Annual Report Page 24