NCDEX National Commodity and Derivatives Exchange

About NCDEX

Product Calendar
Dec 2003
Gold, Silver, Crude Palm oil, RBD Palmolein, Cotton, Mustard seed, Mustard oil Soybean, Refined soy oil

Apr-Dec 2004
Guar seed, Jute sacking, Chana, Rubber, Pepper, Wheat, Castor seed, Guar gum, Raw jute, Urad, Yellow peas, Sugar, Turmeric, Soymeal

Jan May 2005

Gur, Rice, Maize, Raw silk, Cocoon, Jeera, Chilli, Steel, Cashew, Cottonseed oilcake, Sesame seed, Tur, Arabica & Robusta Coffee, Copper Cathode

In pipeline
Other base Metals, Energy Products, More Agricultural products

IndicesNCDEXAGRI FUTEXAGRI

NCDEXRAIN

Each product is selected after an in-depth research & market feedback

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NCDEX Shareholders
Institution
NABARD

Share
15 %

Domain Expertise
Apex bank for agricultural lending

ICICI Bank

8%

Largest private sector bank in India. Listed on NYSE

NSE

15 %

Largest stock exchange in India. Highest volume in single stock futures in world. Largest life insurance company in India

LIC

15 %

CRISIL

12%

Indias first & largest credit rating agency. Now a Standard & Poor company Largest farmer cooperative with affiliation of 36,000 cooperatives Large public sector bank with strong rural reach specially in North India Large public sector bank with strong rural reach specially in South India Global Expertise in commodity markets

IFFCO

12%

PNB

8%

Canara Bank

8%

Goldman Sachs

7%

Ncdex market share in total volumes of key agri-commodities (April 2006 -Jan 2007)
Cereals & Pulses Chana\Gram Wheat Maize Barley Guar Seeds Urad Tur 87% 98% 99% 100% 85% 87% 91% Oil & Oil seed complex Rape/Mustard Seed 99% 83% 75% 15% 98% Spices Pepper Chilli Turmeric Jeera 85% 98% 100% 95%

Processed agri-products Guar Gum Sugar Gur Mentha oil

Soyabean Seeds
Refined Soya Oil Soya_Meal Castor

99%
27% 86% 100% 100% 100%

Fiber Medium Staple Cotton Kapas Indian 28 MM Cotton 100% 50% 100%

Groundnut (IN SHELL) Rape Mustard Oilcake

Exchange Profile
Number Products Members Terminals Delivery Centres Depository Participants Clearing Banks Weather Stations 51 852 18,500 550 59 12 194 By associate company NCMSL Remarks 41 agro, 2 bullion, 2 energy and 6 metals Spread across India Accessible from 700 centres All over the country

NCDEX- 3rd largest agro-commodity exchange in the world

99,175
100,000 90,000 80,000 70,000

91,872

in '000s

60,000 50,000 40,000 30,000 20,000 10,000 0

Dalian Commodity Exchange CBOT NCDEX NYBOT Zhenzhou Commodity Exchange Tokyo Grain Exchange Chicago Mercantile Exchange Shangai Futures Exchange Euronext LIFFE Tokya Commodity Exchange

43,287 33,149 28,473

25,575 12,501 9,503 8,499

7,156

Source: UNCTAD, SFOA The worlds commodity exchanges September 2006

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Market growth of 265% over FY05 volumes; 56% growth over FY06
1000 900 800 700 600 500 400 300 200 100 0 127 14.77 FY03 29 FY04 FY05 FY06 April-Feb 2007

739.2

USD Billion

474.33

Unlike developed markets, participation in Indian market is more retail & individual and not institutional
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Present volumes a fraction of the potential

USD Bn

Current physical volumes 17.5 48.0 175

Value chain

Futures Traded Volumes 175 239 1,225

Bullion

Metals etc
Agriculture Energy Total
Source: NCDEX

Farmers Agents Wholesalers Processors Retailers

85

426

325

2,065

Market Share Agri. Commodities

MCX

Other NCDEX

Share Exchange (%) NCDEX MCX Others 85.0 11.0 4.0 100

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Large number of Physical Deliveries taking place on NCDEX Platform

Globally less than 2% volumes result in deliveries Physical deliveries are incidental Exchanges not delivery platform However, NCDEX has seen an average delivery of 4050,000 MT per month

Period Q4' FY05 Q1 FY06 Q2 FY06 Q3 FY06 Q4 FY06 Q1 FY07 Q2 FY07 Q3 FY07 Jan-Feb FY07

Deliveries (MT) 43214 109562 83081 77160 134260 103,444 125,989 94,128 37,136

Exchanges are a platform for better prices discovery

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Strategic Partners
Global
Tokyo Grain Exchange (TGE) Dalian Commodity Exchange (DCE) Intercontinental Exchange (ICE)

Business

Bharat Petroleum

Gas Authority of India Ltd (GAIL)

Bombay Bullion Association (BBA)

Grading & Standards

Central Institute for Research on Cotton Technology (CIRCOT)

Indian Agriculture Research Institute (IARI)

Warehouse & others

Food Corporation of India (FCI) CRIDA Punjab State Cooperative Supply & Marketing Federation

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Present legal & regulatory environment

13

Market Structure- Futures and Spot

State Government Ministry of consumer Affairs

Spot markets

Forward Markets Commission

Futures Market

Unlike Forex and Stock markets; Spot markets in commodities are not within the purview of the Exchanges/Regulators
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Typical farmers awareness programmes

A large number of participants
Alwar, Rajasthan on 27 February 2007

Speakers include the regulators FMC; key officials of NCDEX; important officials of the government machinery

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17

1,000

1,050

1,100

1,150

Rs/quintal

800
01/02/2007 02/02/2007 03/02/2007 05/02/2007 06/02/2007 07/02/2007 08/02/2007 09/02/2007 10/02/2007 12/02/2007 13/02/2007 14/02/2007 15/02/2007 16/02/2007 17/02/2007 19/02/2007 20/02/2007 21/02/2007 22/02/2007 23/02/2007 24/02/2007 26/02/2007 27/02/2007 28/02/2007 01/03/2007

850

900

950

Spot F-May-07 F-Feb-07 F-Jun-07 F-Mar-07 F-Jul-07

Temporary ban; expected to be lifted soon

Temporary ban on wheat imposed

NCDEX wheat price movements

F-Apr-07 F-Aug-07

Spot price polling

Mandi Traders Mill owners Statistical Cleansing
Trading Terminals Exchange Website

Refiner Polled Prices

Commission Agents Manufacturers

of
raw data

Near real-time nationwide prices

Info-vendor terminals

Media electronic & print

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Instruments to be introduced

Options
Provide up-side benefits to the market participants Offer a market driven MSP to the farmers

Indices

Built-in diversification

Exchange for Physicals (EFPs)

Easy of trade for hedgers who would like to take or make deliveries

..new instruments to attract new market participants

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Attracting new participants

Farmers
Offering them pre & post harvest risk mitigation platform Ease of trade through aggregators

Banks
Role of aggregators Proprietary trade

Mutual Funds

Attracting retail trade to the commodity exchanges

FIIs FDIs

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Post-harvest conundrums

When to sell the commodity?

Spot market or futures market The closest mandi or the one offering best price?

Where to sell?

If selling in futures market, then

How to tide over financial requirements in interim period? Warehousing facilities

How to access the commodity futures market?

..How do we improve his holding power?

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Post Harvest Scenario

Farmer sees NCDEX spot and futures prices
Sells futures On NCDEX

Approaches mandi of choice

Lodges goods in NCDEX/NCMSL warehouse

90
WAREHOUSES

Goods assayed by approved assayers

Working with all leading assayers NCMSL arranges credit

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Warehouse Receipt

in electronic form
Bank finance against WR

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State-wise details of spread of terminals of National Exchanges

Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 ANDHRAPRADESH ASSAM BIHAR CHANDIGARH CHHATTISGARH DELHI GOA GUJARAT HARYANA HIMACHALPRADESH JAMMU & KASHMIR JHARKHAND KARNATAKA KERALA MADHYAPRADESH MAHARASHTRA MEGHAYALA NAGALAND ORISSA PONDICHERRY PUNJAB RAJASTHAN TAMILNADU UTTARANCHAL UTTARPRADESH WESTBENGAL TOTAL

States

MCX 329 1 19 25 35 899 3 609 76 1 6 7 161 83 326 2064 1 0 12 1 139 303 355 11 433 617 6516

NCDEX 165 14 19 0 53 1660 0 352 238 0 2 0 47 63 646 1484 0 2 7 0 205 1655 77 14 418 832 7953

NMCE 2 2 2 0 0 5 0 31 3 0 0 0 32 427 3 7 0 0 0 0 2 4 18 0 11 45 594

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YEAR

NCDEX

MCX

NMCE

NBOT

TOTAL (ii) to (v) (vi)

Other Exchanges (vii)

(i)

(ii)

(iii)

(iv)

(v)

2004-2005

47

29

10

88

12

2005-2006

49

45

97

2006-2007*

39

56

99

25

Share % age of major commodities in total volume

YEAR GUAR SILVER GOLD CHANA

04-05

25%

20%

11%

3%

05-06

17%

16%

22%

10%

06

(MAR-AUG)

11%

20%

32%

11%

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Share % age of major commodities in total volume

% Share of major commodities traded in India 35 30 25

% Share

20 15 10 5 0
2004-05 2005-06 2006 (MARJUN)

GUAR SILVER GOLD CHANA

Year

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Commodity Total Cereals Wheat Rice

India 214 72 117

World 2029 573 576

Indias Rank 3 2 2

Next to: China & USA China China

Total Pulses
Gr. Nut Rapeseed Sugar-cane Jute & Allied Fibres
28

14
5 5 279 1.99

55
34 33 1288 3.22

1
2 2 2 1 China China Brazil

Road

A h e a d .

BECOME A GLOBAL TRADING HUB

ALLOW BANKS, MUTUAL FUNDS, FINANCIAL INSTITUTIONS & FIIs TO TRADE COMMODITY DERIVATIVES
ALLOW OPTIONS, EPF, ON-CALL & OTHER EXOTIC CONTRACTS, INCLUDING DERIVATIVES IN INTANGIBLES

ALLOW SPOT CONTRACTS TO OVERCOME CONSTITUTIONAL CONSTRAINT

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ALLOW INDIANS TO TRADE ON FOREIGN EXCHANGES ALLOW INDIANS TO TAKE MEMBERSHIP ON FOREIGN EXCHANGES

ALLOW FOREIGN ENTITIES, INCLUDING HEDGE FUNDS, TO TRADE ON INDIAN EXCHANGES

(THESE ARE LONG-TERM GOALS)

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