Home  About Us  Media Room  Careers   Contact Us   FAQs  Downloads  Sitemap  
Change Language:  ગુજરાતી | हिंदी | मराठी
 
MCX MARKET OPERATIONS MCX MARKET DATA Products MCX MEMBERSHIP RISK MANAGEMENT MCX TRAINING FTKMC - KNOWLEDGE HUB CORPORATE SOCIAL OPPORTUNITIES IG & ARBITRATION INVESTOR RELATIONS
 
 
 
CHAIRMAN’S STATEMENT AT THE 11TH AGM OF THE COMPANY
 
Dear Shareholders,

It gives me great pleasure in welcoming you to the 11th Annual General Meeting of your Company, the Multi Commodity Exchange of India Limited (MCX).

At the outset, I would like to assure you that your Company, MCX is a healthy regulated exchange, totally ring fenced from the National Spot Exchange Limited (NSEL). MCX & NSEL are totally different entities with no financial commitments or exposure to each other whatsoever. I am deliberately mentioning this at the beginning to disabuse any perception on the minds of shareholders of any financial linkages between the two entities.

I would like to draw your attention to the fact that MCX is a Company with a strong financials and a healthy Balance Sheet. It has zero debt and a healthy net worth of Rs. 1,154.65 crores, which stands testimony to its strong fundamentals and business.

Even though the Indian commodity futures market registered a 6 per cent decline in turnover during the financial year 2012-13, due to low volatility witnessed by commodities, your Company's performance during the period was good because of your Company’s operating efficiency. Your MD&CEO would make a detailed presentation on the financial & operational performance of the Company for FY2013.

In line with your Company’s commitment towards enhancing shareholder value, it has a dividend policy of paying 50% (inclusive of tax) of its annual PAT. MCX has paid a total dividend of 360%; that is, Rs.36 per share, since your Company’s listing in March 2012. Further, a final dividend of 120%; that is, Rs.12 per share, has been proposed, pending approval at the AGM today. If this proposal is approved by you, dear shareholders, the total dividend paid by your Company since listing in March 2012 will be to the extent of 480%; that is, Rs. 48 per share, and the total dividend paid during the fiscal would be 240 per cent.

As of March 31, 2013, your Company completed its first year as the only listed exchange in India with élan, enabling the masses to be a part of its success story. With an aim to drive socio-economic inclusion, your Company has been undertaking various initiatives based on its interactions with the commodity market stakeholders. During FY2012-13, your Company adopted a multi-stakeholder approach of outreach and dialogue to achieve this critical mandate. With this vision, your Company brought about necessary innovations, dispersed the market across varied geographies of the economy, and widened its participant base. This I may add is in keeping with the Vision and Mission statement as envisaged when your Company was formed.

Domain expertise backed by extensive research has helped your Company introduce new products and services on a regular basis. Your Company follows a structured mechanism for reviewing products, and based on these interactions, brings about innovation in product design of existing and new products. MCX’s mini contracts with small lot sizes are examples of such innovative products, which have greatly benefitted many micro, small and medium enterprises.

Your Company’s contribution in fostering and promoting growth in India’s commodity derivatives market has been phenomenal. Besides creating modern institutional frameworks for trading and settlement, it has also established linkages with diverse ecosystem entities, which play a mutually-supportive role and help the Exchange modernise the ecosystem by helping it provide services including clearing and warehousing, amongst others.

In this context a special resolution is being tabled at this AGM for the approval of the shareholders subject to approval of FIPB and FMC and any other regulatory authority, as applicable, for increasing the limit of shareholding by Foreign institutional Investors (FIIs) from the current 23% upto 49% of the paid–up equity share capital of the Company within an overall sectoral cap of 49% & making the sub-limit of 23% for FII interchangeable with 26% FDI. The increase from 23% to 49% & fungibility should help boost the market.

Your Company continues to focus on enabling inclusion and creating livelihoods by developing the market through products and services that enhance participation on its trading platform, while maintaining operational excellence. These initiatives include: knowledge empowerment of existing and potential market participants; product innovation aimed at inclusion of small participants within the ambit of the market; best-in-class technological advancements by deploying solutions that address its customers’ top trading needs; product innovation in line with changing market dynamics and emerging challenges; and research-backed policy advocacy to sensitise policymakers and relevant authorities of the policy issues that impact the growth of the commodity futures market and its ecosystem. Moreover, your Company through its functioning and linkages with commodity value chains has created employment and income opportunities across the commodity market ecosystem which has been established in various studies like ‘A Million Jobs & A Million More Opportunites’ – study by TATA institute of Social Science in 2012.

With an aim to widen the base of market participants, MCX organises awareness programmes in association with FMC and/or local trade associations in metropolitan cities as well as small towns and villages. These programmes are customised based on the target audience. During FY 2012-13, your Company conducted 1077 programmes across the country.

Your Company believes that the interdependence between its strategies and actions, and key stakeholders of India’s commodity market ecosystem, defines the sustainability of its business. This relationship with stakeholders is based on the trust arising from transparency, efficiency and accountability. In 2011, your Company had become the first exchange in India to report its ‘sustainability’ performance for the year 2009-10. In FY 2012-13, the Company published its third Sustainability Report titled - ‘Symbiotic Relationships for a Sustainable Tomorrow’ covering its performance during FY 2011-12. The content was developed using the G3.1 guidelines of the Global Reporting Initiative (GRI). As a signatory to the United Nations Global Compact (UNGC), your Company also submitted the report as communication of progress to UNGC. The report is also aligned with the Ministry of Corporate Affairs’ National Voluntary Guidelines for economic, social and environmental responsibilities of Business.

The exchange-traded commodity derivatives market in India has a huge growth potential, waiting to be realised. India’s commodity derivatives market still operates under the outdated Forward Contracts (Regulation) Act, 1952. Within the existing statute, FMC has been successful in regulating the futures market and controlling manipulation by dynamically using the available market regulation tools. In FY 2012-13, some of the key endeavours of FMC to enhance investors’ confidence entailed: using regulatory instruments like special margins and decreasing the open position limits of agri commodities such as guar complex, pepper, turmeric, and soyabean to curb volatility in prices; strengthening the investor protection fund; introducing staggered delivery in some commodities; initiating SMS and email alerts to individual traders; and disallowing algorithmic/high frequency trade in mini and micro contracts.

With an aim to improve commodity futures exchanges’ risk management, FMC on 23rd August, 2013, issued a clarification on Settlement Guarantee Fund (SGF) and the same has been implemented by 31st August, 2013 in-line with the composition as set-out by FMC. As of 31st August, 2013, the total SGF of MCX stood at Rs. 326.56 crore.

In an effort to strengthen corporate governance of commodity futures exchanges, and broaden the representation of the shareholders on the Board, FMC issued guidelines to reconstitute the Board vide its letter dated 13th September, 2013. We are in the process of compliance thereto.

The Indian Union Budget for the year 2013-14 imposed Commodity Transaction Tax (CTT) on the sale of non-agricultural commodity futures contracts to the tune of 0.01 per cent. MCX has operationalised CTT in compliance with the notification. The implementation of CTT had an adverse impact on the volumes of non-agri commodities traded on the Exchange, wherein the volumes have been reduced by 40% thereby impacting your Company’s profitability. As on date we have collected and paid CTT of Rs.150.91 crores for July and August 2013.

Indeed, these are tough times; however, as aptly said by Robert H Schuller, “Tough times never last, but tough people do.” And, drawing strength from your support, we have been able to withstand these tests of adversity, and are confident of tiding over the current spell of baseless rumours being spread against MCX. We see whatever challenges are posed by the current environment as opportunities to further develop our skill-sets particularly in the areas of Risk Analysis and Management.

While India’s commodity derivative Exchanges have played a significant role in modernising the Indian commodity sector, these Exchanges are still at the initial stages of the developmental trajectory. In view of the changing dynamics of Indian commodities market, the guiding law for commodity futures trade in India needs immediate consideration. The passage of the Forward Contracts (Regulation) Amendment Bill 2010 will not only strengthen the Indian commodity market regulator by rendering it the necessary autonomy, it will also pave the way to introduce new tools for hedging and price risk management, and bring about better price discovery. Moreover, the existing statutes do not permit banks, mutual funds and foreign institutional investors to trade on India's commodity futures market. There is an urgent need for the Government to allow participation of such institutions, as they can bring about greater benefits to all stakeholders of the commodity economy in our country, as also enable these institutions to manage their own risk and investment needs. Your Company is optimistic about the inherent potential of India’s commodity derivatives market and is confident of contributing significantly towards its growth.

Before I conclude, I thank you, dear Shareholders, for standing by your Company through thick and thin. We immensely value the trust reposed by you and look forward to your continued support.

Thank you for your kind attention.
Date: 30th September, 2013
Place: Mumbai
R.M.Premkumar
Chairman
 
(THIS DOES NOT PURPORT TO BE A RECORD OF THE PROCEEDINGS OF THE AGM)
 
 
 
 
 
 
For Latest commodity futures prices, SMS “MCX <space> <Commodity Name>“ to 58888
© Copyright 2010 | All rights reserved. Multi Commodity Exchange of India Ltd. (MCX) | Disclaimer
best viewed in 1024 x 768 screen resolution. | For IE8 users - Select compatibility view
RSS   
   
Follow Us on