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Notes to Accounts of Multi Commodity Exchange of India Ltd.

Mar 31, 2016

1. SEGMENT REPORTING

Based on the risks and returns identified, organizational structure and the internal financial reporting system, the business segment is the primary segment for the Company and accordingly "business of facilitating trading in commodities and incidental activities thereto" is considered as the only Primary Reportable business segment. Further, since the Company renders services only in the domestic market in India and hence there is no geographical segment.

2. There are no amounts due to the suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006; this information takes into account the available data with the Company.

3. STOCK BASED COMPENSATION :

a) During the year ended 31 March 2009, the shareholders of the Company approved the ''Employee Stock Options Plan 2008 (''ESOP - 2008''). Under the said scheme, 1,625,000 Equity Shares of Rs. 10 each have been allotted to ESOP Trust who will administer the ESOP Scheme on behalf of the Company. Out of which, ESOP Trust has granted (i) 1,313,250 number of options convertible into 1,313,250 equity shares of Rs. 10 each to eligible employees on 2 July 2008 and 23 August 2008 in aggregate; (ii) 331,750 (including the lapsed options available for reissuance) numbers of options convertible into 331,750 equity shares of Rs.10 each to eligible employees on 24 October 2011; (iii) 10,000 numbers of options convertible into 10,000 equity shares of Rs.10 each to an eligible employee on 3 October 2012; (iv) 25,300 numbers of options convertible into 25,300 equity shares of Rs.10 each to eligible employees on 19 April 2013 ; (v) 10,000 numbers of options convertible into 10,000 equity shares of Rs. 10 each to an eligible employee on 19 February 2014 and (vi) 172,600 numbers of options convertible into 172,600 equity shares of Rs. 10 each to eligible employees on November 11, 2014.

4. Exceptional Items

a) The Company, along with Financial Technologies (India) Limited (FTIL), an erstwhile anchor investor/promoter of the Company, held equity shares and warrants in Metropolitan Stock Exchange of India Limited (MSEI), (formerly MCX-Stock Exchange). As per the applicable SEBI regulations, MSEI was required to adjust its shareholding pattern so as to bring it within the limits prescribed by the SEBI regulations within the time prescribed, i.e. June 19, 2015. Towards this end, the Company made serious efforts to dispose off the warrants. However, these efforts were significantly hampered by several factors that reduced the marketability of MSEI''s warrants, such as consistently reducing market share and net worth which reduced the value and demand for MSEI''s shares and warrants. This made it difficult to dispose off the warrants. Since these factors were outside the Company''s control, the Company approached SEBI seeking an extension of time to dispose off the warrants. Also, in view of the merger of the SEBI and the FMC, the Company also requested SEBI to consider treating the Company on par with recognized Stock Exchanges so that the Company could hold upto 15% shareholding/warrants in MSEI. SEBI, however, did not grant the Company''s request. Despite these factors, the Company continued to make vigorous efforts to dispose off the warrants. The Company''s efforts, however, were thwarted by MSEI, who announced a rights issue of equity shares on May 29, 2015 at par i.e. at Re.1 per share. Since the rights issue remained open until July 9, 2015, it was virtually impossible to dispose off all the warrants before June 19, 2015. Apprehending that MSEI would cancel the warrants and misappropriate the deposit placed by the Company with MSEI against the warrants, the Company filed a Suit against MSEI before the Hon''ble Bombay High Court seeking an injunction against cancellation of the warrants and appropriation of the deposit. The Company also sought refund of the amount of Rs.415.92 million, being the amount of deposit presently held by MSEI against the warrants. Vide its interim orders dated July 9, 2015 and July 10, 2015, the Hon''ble High Court restrained MSEI from cancelling and / or extinguishing the warrants or any rights relating thereto, and from dealing in any manner with the remaining deposit of Rs.415.92 million till further orders. The Hon''ble Court also restrained MSEI from taking any steps in pursuance of any Board resolution that MSEI may have passed for cancellation of the warrants. By a further order dated August 3, 2015, the Hon''ble Court recorded MSEI''s statement that MSEI would deposit a sum of Rs.200.00 million in Court within a period of four weeks, on a without prejudice basis, to establish its bona fides. The matter was heard on October 8, 2015 and the order pronounced on October 13, 2015. The Hon''ble Court, inter alia, has held that although the Company may have been deprived of its rights to trade the warrants for shares or trade the warrants for consideration after June 19, 2015 this does not mean that the extinguishment of the warrants would entail appropriation of the deposit. The Hon''ble Court has also held that the money admittedly belongs to the Company and there is no provision in law or in contract whereby MSEI could appropriate the money towards its own capital reserves. In view of the above, the Hon''ble Court has concluded that it would not be desirable to allow MSEI to retain the deposit pending trial of the Suit. Accordingly, the Hon''ble Court has made the Company''s Notice of Motion absolute and directed MSEI to deposit an additional sum of Rs.21,59,17,672/- to the credit of the suit account, within a period of eight weeks from the date of the Order. Thus, the total amount deposited by MSEI would be equal to Rs.415.92 million. This amount is to be invested in a fixed deposit with a nationalized bank pending hearing of the Suit ("October 13 Order").

On December 9, 2015, MSEI filed Appeal No. (L) 927 of 2015 before a Division Bench of the Bombay High Court against the October 13 Order. MSEI also filed Notice of Motion (L) No.3471 of 2015 seeking a stay on the operation and implementation of the October 13 Order, pending final hearing and disposal of the Appeal inter alia on the grounds that (a) the Company was aware that it had to divest its excess shareholding in the form of Warrants by June 19, 2015; (b) MSEI was required to ensure compliance of applicable laws and regulations, and thus only cancelled the warrants as otherwise it apprehended being derecognized by SEBI; (c) MSEI had established its bona fides by not acting on its Board Resolution dated June 27, 2015 and also by depositing a sum of Rs.200.00 million with the Bombay High Court; and (d) Given that the Company''s warrants have not been cancelled and MSEI has been restrained from implementing its Board Resolution dated June 27, 2015, MSEI cannot be additionally called upon to deposit a further Rs.215.92 million in Court. The matter was listed on 17.02.2016, for hearing on the Notice of Motion filed in the said appeal. On December 10, 2015, MSEI also filed Notice of Motion (L) 3486 of 2015 in the Suit before the Single Judge seeking a vacation of the October 13 Order on the ground that MSEI has now passed a resolution withdrawing their earlier resolution of cancellation.

Vide an interim order dated December 11, 2015, the Division Bench extended the time given to MSEI for deposit of the amount of Rs.215.92 million till the next date of hearing. As the matter is yet to be heard on merits, this interim order granting further time to MSEI to deposit the money has been extended from time to time. In March, 2016, the assignment of the Judges changed and the matter was listed before a different Bench. However, in view of the fact that the earlier Division Bench had already heard the matter and was aware of the facts, both parties made a representation to the Ld. Chief Justice of the Bombay High Court seeking assignment of the matter to the same Division Bench. The parties are still awaiting necessary directions from the Ld. Chief Justice for re-assignment of the matter.

In view of the above, the Company has valued the warrants at its face value of Re.1 each and brought down the carrying cost by Rs.425.89 million. As the Company was only able to sell 148,277,938 warrants to various parties/entities at bids below its carrying cost, a loss of Rs.134.83 million was incurred on the sale of these warrants. Further, based on the market price determined on a weighted average basis for the sale of warrants by MCX, the equity shares have been brought to the lower of cost and this aforesaid market value. This is as per the Company''s Accounting Policy on current investments and accordingly a provision of Rs.33.30 million has been made. The aggregate loss, diminution and provision of Rs.594.02 million on account of the investments in MSEI are exceptional in nature and were accordingly disclosed in the financial results for the quarter ended June 30, 2015. Further provision of Rs.16.43 million has been made in quarter ended March 31, 2016 towards equity shares investments as per Company''s Accounting Policy. The aggregate loss, diminution and provision on account of the investments in MSEI for FY 2015-16 is Rs.610.45 million. As at March 31, 2016, the Company held 6,65,99,408 equity shares of MSEI (valued at Rs.57.25 million at the rate of Rs.0.86 per share) and 41,59,17,672 warrants of MSEI (valued at Rs.415.92 million) and 65,00,000 equity shares of Metropolitan Clearing Corporation of India Limited (MCCIL) (formerly known as MCX-SX Clearing Corporation Limited (valued at Rs.65.00 million).

b) Pursuant to compliance of regulatory inspection, certain penalties pertaining to financial years 2010-11 and 2011-12 amounting to Rs.19.40 million were transferred to Multi Commodity Exchange Investor (Client) Protection Fund (IPF). Further, similar penalties for earlier years pertaining to financial years 2007-08 to 2009- 10 amounting to Rs.36.91 million transferred to IPF. Accordingly during the year ended March 31, 2016 a total sum of Rs.56.31 million was transferred to IPF and disclosed as an exceptional item.

5. The Board of Directors of SME Exchange of India Limited (SME) at its meeting held on January 19, 2015 considered that SME had not commenced any operations and with no possibility of commencing in the foreseeable future, agreed to the members'' voluntary winding up. The Directors of SME after having made inquiry into the affairs of the Company and on the basis of the Auditors report for the period commencing from April 1, 2014 to January 21, 2015, formed the opinion that the SME is solvent and will able to pay its debt in full within 36 months from the commencement of winding up. Thereafter, the members of SME at its Second Extra Ordinary General Meeting held on March 18, 2015, accorded their consent for members'' voluntary winding up, pursuant to the provisions of Section 484(1) (b) of the Companies Act, 1956 and also approved the appointment a Liquidator for the same.

The Liquidator realised all the assets and paid off the liabilities and returned the share capital to the respective shareholders. Thereafter, the liquidator at the final General Meeting of SME held on March 28, 2016, submitted the accounts showing in detail the manner in which the winding up has been conducted and the asset of the SME has been disposed off which was approved by the shareholders of SME. The Company has realised Rs.0.37 million against its carrying value of Rs.0.40 million in equity shares. The requisite filing with Registrar of the Companies and the Official Liquidator w.r.t. the final general meeting is being done by the Liquidator and the final order of dissolution is awaited.

6. During the year ended 31 March, 2016, the Company has spent Rs.29.69 million (previous year Rs.5.33 million) as Corporate Social Responsibility (CSR) expenditure.

7. With effect from September 28, 2015 Forward Markets Commission was merged with Securities and Exchange Board of India and accordingly SEBI regulations are applicable to the Company. As per clause 3 of Securities and Exchange Board of India (Regulatory Fees on Stock Exchanges) Regulations, 2006, every recognised stock exchange is required to pay regulatory fees on its annual turnover at the rate prescribed from time to time. Accordingly, as per the prevalent rates the Company has accrued regulatory fees of Rs.21.20 million, which is disclosed under Note 22 "Other Expenses".

8. During the previous year, pursuant to Companies Act, 2013 (''the Act'') being effective from 1 April, 2014, the Company has revised depreciation rates on certain fixed assets as per the useful life specified in ''Part C'' of Schedule II of the Act. In respect of assets whose useful life is already exhausted as on 1 April, 2014, depreciation of Rs. 87.55 million (net of tax impact of Rs. 29.76 million) has been adjusted in the Retained Earnings, in accordance with the requirements of Schedule II of the Act.

Consequent to the applicability of the Companies Act, 2013 with effect from 1 April, 2014 depreciation for the year ended 31 March, 2015 charged to the Statement of Profit and loss was higher by Rs.28.55 million for the assets, whose useful life continues beyond 1 April, 2014.

9. In accordance with the directions of the Forward Markets Commission (FMC), a Special Audit of the Company was carried out for the period since inception of the Company to 30 September, 2013. The terms of reference, inter alia, included identification of related parties (as defined by FMC in the terms of reference and a working definition arrived at for the purpose of the review), review of non-trading transactions between the Company and significant related parties, and review of transactions of expenses incurred (individually) above Rs. 2.50 million. As per the Report, the working definition of related parties is not as may be defined under any provisions of any prevailing laws or guidance from any professional bodies in India.

The Final Report of the Special Audit was received on 21 April, 2014 and was placed before the Board of the Company on 26 April, 2014. The Management of the Company after making a detailed analysis of the observations in the Report, and after ascertaining the facts in each case has taken appropriate action including legal and filing of recovery suits as it deemed fit. As a part of this action, Rs.112.07 million (Rs.35.10 million included under Other income - note 19 under the head "Miscellaneous Income" and Rs.76.97million included under Other expenses - note 22 under the head "Provision for doubtful advances" was recovered during the previous year ended 31 March, 2015.

10. Forward Markets Commission (FMC) had issued revised norms regarding Shareholding, Ownership, Net worth, Fit & Proper criteria, etc. on 6 May, 2014. Pursuant to this order, in addition to other entities, Kotak Mahindra Bank Ltd acquired 15% equity stake in the Company from Financial Technologies (India) Limited (FTIL, erstwhile Promoter of the Company) during the year. Accordingly, FTIL is no longer a related party w.e.f. 29 August, 2014.

41. The previous year figures have been reclassified / regrouped to conform to this year''s classification.


Mar 31, 2015

1. Contingent liabilities and commitments (to the extent not Provided FOR)

a) contingent liabilities:

Rs,in million

Particulars as at as at 31 march 2015 31 march 2014

(i) Claims against the Company not acknowledged as debts:

- Income tax demands against which the Company is in appeals 51.18 42.56

(including interest)

- Others (excluding interest) 7.59 6.35

(ii) Bank guarantee given 36.50 36.50

b) In addition to the matters as specified in (a) above, the Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Company''s management does not reasonably expect that the legal actions, when ultimately concluded and determined, will have adverse effect on the Company''s financial statements.

c) commitments:

(i) capital commitments:

The estimated amount of capital contracts remaining to be executed and not provided for (net of advances) is Rs. 64.16 million (as at 31 March 2014: Rs. 2.47 million).

(ii) Other commitments:

The Company has commitments to pay for the services related to (i) maintenance of core network equipment and (ii) technology support and managed services based on long-term agreements, the cancellation of which may entail monetary compensation.

2. Segment Reporting

Based on the risks and returns identified, organizational structure and the internal financial reporting system, the business segment is the primary segment for the Company and accordingly "business of facilitating trading in commodities and incidental activities thereto" is considered as the only Primary Reportable business segment. Further, since the Company renders services mainly in the domestic market in India there is no geographical segment.

3. Related Party information:

a) names of related parties and nature of relationship:

(i) company having significant influence over the company:

Financial Technologies (India) Limited (FTIL) (up to 29 August, 2014) [Refer Note 36(i)] (ii) Subsidiary companies:

a) Multi Commodity Exchange Clearing Corporation Limited (MCXCCL).

b) SME Exchange of India Limited (SME) (Refer Note 38)

(iii) associate company:

MCX SX Clearing Corporation Limited (MCX-SX CCL)

(iv) Shareholders'' Directors

a) Ajai Kumar

b) R.Amalorpavanathan*

c) M. A. K. Prabhu*

d) B. V. Chaubal* (up to December 31,2014)

e) K. N. Reghunathan* ( upto August 19, 2014)

f) P Paramasivam* ( upto August 11, 2014)

g) P. Satish ( upto July 4, 2014)

h) Rajiv Abhyankar (upto June 26, 2014)

(v) Key managerial Personnel (KmP):

a) Parveen Kumar Singhal - Joint Managing Director

b) Sandeep Kumar Sarawgi - Chief Financial Offer

c) Ajay Puri - Company Secretary and Chief Compliance Offer

d) Manoj Vaish - Managing Director & CEO (up to 10 May,2014)

e) Shreekant Javalgekar - Managing Director & CEO (up to 22 October, 2013)

(v) Others:

(A) Relatives of KMPs or company in which KMP is interested and where transaction exists: Adya IT Services Private Limited

(B) Controlled Employee Welfare Trust : MCX ESOP Trust

(C) Multi Commodity Exchange Investor (Client) Protection Fund (IPF) * Sitting fees are paid directly to the nominee institutions

4. Pursuant to Companies Act, 2013 (''the Act'') being effective from 1 April, 2014, the Company has revised depreciation rates on certain fixed assets as per the useful life specified in ''Part C'' of Schedule II of the Act. In respect of assets whose useful life is already exhausted as on 1 April, 2014, depreciation of Rs. 87.55 million (net of tax impact of Rs. 29.76 million) has been adjusted in the Retained Earnings, in accordance with the requirements of Schedule II of the Act.

Consequent to the applicability of the Companies Act, 2013 with effect from 1 April, 2014 depreciation for the year ended 31 March, 2015 charged to the Statement of Profit and loss is higher by Rs. 28.55 million for the assets, whose useful life continues beyond 1 April, 2014

5. In accordance with the directions of the Forward Markets Commission (FMC), a Special Audit of the Company was carried out for the period since inception of the Company to 30 September, 2013. The terms of reference, inter alia, included identification of related parties (as defend by FMC in the terms of reference and a working definition arrived at for the purpose of the review), review of non-trading transactions between the Company and significant related parties, and review of transactions of expenses incurred (individually) above Rs. 25 Lakhs. As per the Report, the working definition of related parties is not as may be defend under any provisions of any prevailing laws or guidance from any professional bodies in India.

The Final Report of the Special Audit was received on 21 April, 2014 and was placed before the Board of the Company on 26 April, 2014. The Management of the Company after making a detailed analysis of the observations in the Report, and after ascertaining the facts in each case has taken appropriate action including legal and fling of recovery suits as it deemed ft. As a part of this action, Rs. 112.07 million (Rs. 35.10 million included under Other income – note 19 under the head "Miscellaneous Income" and Rs. 76.97million included under Other expenses – note 22 under the head "provision for doubtful advances" was recovered during the year ended 31 March, 2015.

6. (i) Forward Markets Commission (FMC) had issued revised norms regarding Shareholding, Ownership, Net worth, Fit &Proper criteria, etc. on 6 May, 2014. Pursuant to this order, in addition to other entities, Kotak Mahindra Bank Ltd acquired 15% equity stake in the Company from Financial Technologies (India) Limited (FTIL, erstwhile Promoter of the Company) during the year. Accordingly, FTIL is no longer a related party w.e.f 29 August, 2014.

(ii) The Board of Directors had constituted a Negotiation Committee to discuss the contracts with entities related to the erstwhile promoter group, in particular, Financial Technologies (India) Limited (FTIL). Consequent to the negotiations, effective 1 July, 2014 the Company entered into Master Amendment to Principal Agreements with FTIL.

(iii) Consequent to the Master Amendment to the Principal Agreements with FTIL and divestment by FTIL of its entire stake in the Company, the Company has complied with the FMC Order dated 17 December, 2013 and the revised norms regarding shareholding, ownership, net worth, Fit & Proper Criteria, etc. of the Nationwide

Multi Commodity Exchanges (NMCE) dated 6 May, 2014. Accordingly, FMC vide its letter, dated 29 September, 2014 granted its approval for Continuous Contract Launch Calendar for the futures contracts expiring in the year 2015 and onwards.

7. (i) During the year, the Company converted 2,10,46,514 warrants of Metropolitan Stock Exchange of India Limited (MSXI) [(formerly known as ''MCX Stock Exchange Limited (MCX-SX)] into equity shares. During the year the Company also sold 3,05,39,982 number of warrants. Accordingly, as at 31 March, 2015 the Company has investments in 482,11,514 (as at 31 March, 2014: 27,165,000) equity shares and 58,25, 83,504 (as at 31 March, 2014: 634,170,000) warrants of MSXI and investments in 6,500,000 equity shares of MCX-SX Clearing Corporation Limited (MCX-SX CCL). The warrants are valid till 19 June, 2015 and each warrant entitles the Company to subscribe to one equity shares of MSXI at any time after six months from the date of issue of warrants. The warrants are freely transferable by endorsements and delivery. The warrants do not carry any dividend or voting rights.

(ii) Pursuant to SEBI Order dated 19 March, 2014, the Company has been directed by SEBI to divest its holding in both MSXI and MCX-SX CCL. The Company through various correspondence and vide its recent letters dated 30 April, 2015 and 4 May, 2015 has once again represented to SEBI that FTIL and the Company no longer act in concert, especially in view of the developments during the year, the Company may be permitted to hold up to 15% of the paid up capital of MSXI and be granted extension of time till 31 December, 2015 to hold its warrants.

(iii) In accordance with Accounting Standard 13 on "Accounting for Investments" and the Company''s accounting policy, current investments are to be carried at the lower of cost and fair value in the Balance Sheet. Based on the latest available financial statements of these companies, the Management of the Company is of the view that the aggregate carrying amount of investments of Rs. 1,313.90 million which is equivalent to the cost of their acquisition represents the fair value of these investments as at 31 March, 2015.

8. (i) The Board of Directors of SME Exchange of India Limited (SME) in its meeting held on January 19, 2015 considered that SME had not commenced any operations and with no possibility of commencing in the foreseeable future, agreed to the members'' voluntary winding up and decided that the cut-off date for the financial statements shall be January 21, 2015. Further, the members of SME at its Second Extra Ordinary General Meeting, held on March 30, 2015, accorded their consent for its winding up pursuant to the provisions of Section 484(1) (b), of the Companies Act, 1956. The Directors of SME after having made inquiry into the affairs of the Company and on the basis of the Auditors report for the period commencing from April 1, 2014 to January 21, 2015, and Declaration of Solvency, formed the opinion that the Company is solvent and will able to pay its debt in full within 36 months from the commencement of winding up.

(ii) In accordance with Accounting Standard 13 on "Accounting for Investments" and the Company''s accounting policy long-term investments are stated at cost less provision for diminution. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management investments are to be carried at the lower of cost and fair value in the balance sheet. Accordingly, provision for diminution of Rs. 0.11 million has been made for the Company''s investment in SME.

9. During the year, the Company has spent Rs. 5.33 million as Corporate Social Responsibility (CSR) expenditure.

10. The previous year figures have been reclassified / regrouped to conform to this year''s classifcation.


Mar 31, 2014

1. General Information

Multi Commodity Exchange of India Limited (the ''Company'') is an electronic commodity futures exchange. The Company is a demutualised Exchange and has permanent recognition from the Government of India to facilitate nationwide online trading, clearing and settlement operations of commodities futures transactions.

2. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE ExTENT NOT PROVIDED FOR)

a. Contingent liabilities:

(Rs. in millions)

Particulars As at As at 31 March 2014 31 March 2013

1) Claims against the Company not acknowledged as debts:

- Income tax demands against which the Company is in appeal 42.56 30.34 (including interest thereon)

- Others 6.35 2.41

2) Bank guarantee given 36.50 36.50

b. Commitments:

i. Capital Commitments:

The estimated amount of capital contracts remaining to be executed and not provided for (net of advances) is Rs. 2.47 millions (As at 31 March 2013: Rs. 5.26 millions).

ii. Other Commitments:

As at 31 March, 2014, the Company has commitments to pay for the services related to (i) installations and maintenance of core network equipment and (ii) technology support and managed services based on long-term non-cancellable agreements, the cancellation of which could entail significant monetary compensation. Further, as stated in Note 35, the compensation will be subject to the outcome of agreements / conclusions by the Negotiations Committee, the financial implications, if any, in this regard cannot at present be ascertained.

3. SEGMENT REPORTING

Based on the risks and returns identified, organisational structure and the internal financial reporting system, the business segment is the primary segment for the Company and accordingly "business of facilitating trading in commodities and incidental activities thereto" is considered as the only Primary Reportable business segment. Further, since the Company renders services mainly in the domestic market in India there is no geographical segment.

4. RELATED PARTY INFORMATION:

a. Names of related parties and nature of relationship:

(i) Company having significant infuence over the Company:

Financial Technologies (India) Limited (FTIL) (Refer Note 36)

(ii) Subsidiary Companies:

a) Multi Commodity Exchange Clearing Corporation Limited (MCXCCL).

b) SME Exchange of India Limited (SME).

(iii) Associate Company:

MCX SX Clearing Corporation Limited (MCX-SX CCL).

(iv) Key Managerial Personnel (KMP):

a) Manoj Vaish - Managing Director and CEO (w.e.f. 1 February 2014)*

b) Shreekant Javalgekar - Managing Director and CEO (up to 22 October 2013)

c) Lambertus Rutten - Managing Director and CEO (upto 30 June 2012) * upto 10 May 2014

(v) Others:

(A) Entities over which KMP are able to exercise significant infuence and where transaction exists (enterprises that have a member of key management in common with the reporting enterprise):

Boursa Africa Limited (up to 30 June 2012)

(B) Controlled Employee Welfare Trust MCX ESOP Trust

(C) Multi Commodity Exchange Investor (Client) Protection Fund (IPF)(Refer Note below)

Note

As per the FMC Circular dated 13 January 2014, IPF Trust has been shown as a related party from the financial year 2013-14 onwards.

Notes forming part of the financial statements

Notes:

(i) There are no amounts written of or written back during the year in respect of debts due from or to related parties.

(ii) Previous year''s figures are given in brackets.

(iii) **The Compensation Committee at its meeting held on October 29, 2013, considering FMCs Directive vide letter no. 4/2/2013/(MCX)-MD-1 dated 17th October, 2013, decided that the stock options granted to Mr. Javalgekar which have not vested and option vested but not exercised be cancelled.

5. EMPLOYEE BENEFIT PLANS :

Defined contribution plans: Amounts recognised as expenses towards contributions to provident fund, employee state insurance corporation and other funds by the Company are Rs. 10.68 millions (Previous Year Rs. 9.85 millions).

6. There are no amounts due to the suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006; this information takes into account only those suppliers who have responded to the enquiries made by the Company for this purpose. This has been relied upon by the auditors.

7. STOCK BASED COMPENSATION :

a) During the year ended 31 March 2009, the shareholders of the Company approved the ''Employee Stock Options Plan 2008 (''ESOP - 2008''). Under the said scheme, 1,625,000 Equity Shares of Rs. 10 each (post consolidation and bonus) have been allotted to ESOP Trust who will administer the ESOP Scheme on behalf of the Company.

Out of which ESOP Trust has granted (a) 1,313,250 (post consolidation of shares and bonus issue) number of options convertible into 1,313,250 equity shares of Rs. 10 each to eligible employees on 2 July 2008 and 23 August 2008 in aggregate; (b) 331,750 (including the lapsed options available for reissuance) numbers of options convertible into 331,750 equity shares of Rs. 10 each to eligible employees on 24 October 2011; (c) 10,000 numbers of options convertible into 10,000 equity shares of Rs. 10 each to an eligible employee on 3 October 2012;(d) 25,300 numbers of options convertible into 25,300 equity shares of Rs. 10 each to eligible employees on 19 April 2013 and (e) 10,000 numbers of options convertible into 10,000 equity shares of Rs. 10 each to an eligible employee on 19 February 2014.

Each option entitles the holder to exercise the right to apply and seek allotment of one equity share of Rs. 10 each. Exercise period for each option granted on 2 July 2008 and 23 August 2008 is three years from the date of their respective vesting. Exercise period for each option granted on 24 October 2011, 3 October 2012, 19 April 2013 and 19 February 2014 is one year from the date of their respective vesting.

e) For options granted on 24 October 2011, 3 October 2012, 19 April 2013 and 19 February 2014 under ESOP 2008 Schemes; the intrinsic value of each option is Rs. Nil. The estimated fair value of each option is Rs. 324.99, Rs. 342.64, Rs. 202.34 and Rs. 181.47 for options granted on 24 October 2011, 3 October 2012, 19 April 2013 and 19 February 2014 respectively. The weighted average fair values have been determined using the Black Schole Formula considering the following parameters :

8. The Company has not entered into any forward exchange contract being derivative instruments.

The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

35. In accordance with the directions of the Forward Markets Commission (FMC), a Special Audit of the Company was carried out for the period since inception of the Company to 30 September, 2013. The terms of reference, inter alia, included identifcation of related parties (as Defined by FMC in the terms of reference and a working defnition arrived at for the purpose of the review), review of non-trading transactions between the Company and significant related parties, and review of transactions of expenses incurred (individually) above Rs. 25 Lakhs. As per the Report, the working defnition of related parties is not as may be Defined under any provisions of any prevailing laws or guidance from any professional bodies in India.

The Final Report of the Special Audit was received on 21 April 2014 and was placed before the Board of the Company on 26 April 2014. The Management of the Company is making a detailed analysis of the observations in the Report, and after ascertaining the facts in each case is in the process of taking legal and other action, as appropriate. The Board of Directors has constituted a Negotiations Committee to discuss the contracts with entities related to the erstwhile promoter group, in particular, Financial Technologies (India) Limited. Pending the completion of the detailed analysis of the Report, ongoing internal enquiry and agreements / conclusions by the Negotiations Committee, the financial implications, if any, in this regard cannot at present be ascertained and, accordingly, no adjustments have been made in the financial statements.

The Company has currently identified amounts aggregating Rs. 119.70 millions incurred during 2013-14 where Corresponding services may not have been received. Accordingly, such expenses have been reversed and a provision for doubtful recoverable has been made in the books for an equivalent amount. While this does not have any impact on the net profit before tax for the year, the corresponding efect on provision for tax has been accounted for, resulting in a lower profit after tax for the year by Rs. 39.90 millions.

9. (i) As at March 31, 2014, Financial Technologies (India) Limited (FTIL) holds 26% of the equity shareholding in the Company. The FMC vide its Order dated December 17, 2013 has, inter alia, held that FTIL is not a ''ft and proper person'' to continue to be a shareholder of 2% or more of the paid-up equity capital of MCX as prescribed under the Guidelines issued by the Government of India for capital structure of commodity exchanges post five years of operations.

(ii) Further, FMC issued revised norms regarding Shareholding, Ownership, Net worth, Fit and Proper Criteria, etc. on May 6, 2014 which inter-alia state that ''In the event of any person ceasing to be a ''fit and proper person'' or being declared so by the Commission, such person shall forthwith divest his shareholding. Pending divestment of shares, the voting rights of such person shall stand extinguished and any corporate benefit in lieu of such holding shall be kept in abeyance/withheld by Exchange. The Exchange shall take necessary steps as it may deem ft so as to ensure that the shareholding of such person is divested forthwith. The Company vide letter dated 12 May 2014 intimated FTIL that voting rights stand extinguished and any corporate benefit in lieu of such holding shall be kept in abeyance/withheld. MCX has initiated necessary steps to amend its Articles of Association to comply with the new Guidelines.

(iii) The Securities and Exchange Board of India (SEBI) vide its Order dated March 19, 2014 has also held that FTIL is not a ''ft and proper person'', to acquire or hold any equity shares or any instrument that provides for entitlement for equity shares or rights over equity shares at any future date in a recognized Stock Exchange or Clearing Corporation, either directly or indirectly.

(iv) The FMC vide its letter dated May 8, 2014 observed inter alia, that as the Exchange (i.e. the Company) had not taken tangible and concrete measures to implement the directives of the FMC regarding their December 17, 2013 Order with respect to divestment of shareholding by FTIL in the Company and the fndings of the Special Audit and Oversight Committee of the Board of Directors and decided that till such time the directives are implemented, no new contracts will be approved for trading as well as the contract launch calendar for 2015 will be kept in abeyance. However, the approved contracts as per the contract launch calendar for 2014 shall be available for trading.

The ability of the Company to continue as a going concern beyond calendar year 2014, is therefore predicated on its compliance with the aforesaid FMC Order dated 17 December, 2013. The Company is taking steps for implementing the FMC directives and is confdent of being fully compliant before the end of the calendar year.

9. As at 31 March 2014 the Company has investments in 27,165,000 equity shares and 634,170,000 warrants of MCX Stock Exchange Limited (MCX-SX) and investments in 6,500,000 equity shares of MCX-SX Clearing Corporation Limited (MCX-SX CCL). Pursuant to the SEBI Order dated 19th March, 2014, the Company has been directed by SEBI to divest its holding in both MCX-SX and MCX-SX CCL. The Company vide its letter dated April 4, 2014 has represented to SEBI that FTIL and the Company no longer act in concert and therefore the Company should not be required to divest its holding in MCX-SX and MCX-SX CCL.

However, in view of the aforesaid directive of SEBI, investments in warrants of MCX-SX and equity shares of MCX- SX CCL have been reclassified from non-current investments to current investments at their carrying values. In accordance with Accounting Standard 13 on Accounting for Investments and the Company''s accounting policy, current investments are to be carried at the lower of cost and fair value in the balance sheet. Based on the latest available audited financial statements of these companies, the Management of the Company is of the view that the aggregate carrying amount of Rs. 1,375.71 millions represents the fair value of these investments as on the balance sheet date.

10. The Management undertook a review of the estimated useful lives of office Equipment which were depreciated in accordance with the rates as specified in Schedule XIV of the Companies Act, 1956 which represent useful life of approx. 21 years. Post the review, the revised estimated useful life has been worked out to be ranging from 12 - 180 months. This change in estimate has been given efect to prospectively in the financial statements for the year ended 31st March, 2014. Accordingly, the revised unamortized value as at 1st January, 2014 is being amortized over the revised remaining useful life. This change has the efect of increasing the depreciation charge for the year by Rs. 45.91 millions.

11. The previous year figures have also been reclassified / regrouped to conform to this year''s classification.


Mar 31, 2013

1. GENERAL INFORMATION

Multi Commodity Exchange of India Limited (the ''Company'') is a state-of-the-art electronic commodity futures exchange.The Company is a demutualised Exchange and has permanent recognition from the Government of India to facilitate nationwide online trading, clearing and settlement operations of commodities futures transactions.

2. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

a. Contingent Liabilities:

in Rs. million

As at As at Particulars March 31,2013 March 31,2012

1. Claims against the Company not acknowledged as debts:

- Income tax demands against which the Company is in appeal (including interest thereon) 30.34 16.95

- Others 2.41 6.75

2. Bank guarantee given 36.50 36.50

b. Commitments:

1. Capital Commitments:

The estimated amount of capital contracts remaining to be executed and not provided for (net of advances) is Rs.5.26millions (As at March 31,2012:Rs.5.27 millions).

2. Other Commitments:

At March 31, 2013, the Company has commitments to pay for the services related to (i) installation and maintenance of core network equipment; and (ii) technology support and managed service based on long- term non-cancellable agreements. The cancellation of which will entail same monetary compensation as agreements will continue to remain valid.

3. SEGMENTREPORTING

Based on the risks and returns identified, organisational structure and the internal financial reporting system, the businesssegmentistheprimarysegmentforthe Company and accordingly "business of facilitating trading in commodities and incidental activities thereto"is considered as the only Primary Reportable business segment. Further, since the Company renders services mainly in the domestic market in India there is no geographical segment.

4. OPERATING LEASE

The Company has entered into operating lease agreements as lessee for various premises arranging from 18 to 60 months. The lease rentals recognised as an expense in the statement of profit and loss during the yearand the future minimum lease payments under non-cancellable operating leases are as follows:

5. RELATED PARTY INFORMATION

a. Names of related parties and nature of relationship:

i Company having significant influence over the Company:

Financial Technologies (India) Limited

ii. Subsidiary Companies:

a. Multi Commodity Exchange Clearing Corporation Limited (MCXCCL).

b. SME Exchange of India Limited (SME).

iii. AssociateCompany:

MCX-SX Clearing Corporation Limited (MCX-SXCCL).

iv. Key Managerial Personnel (KMP):

a. Lambertus Rutten - Managing Director and CEO (uptoJune 30,2012)

b. ShreekantJavalgekar - Managing Director and CEO (w.e.fJuly 1,2012)

v. Others:

A. Entities over which KMP are able to exercise significant influence and where transaction exists (enterprises that have a member of key management in common with the reporting enterprise):

a. Boursa Africa Limited (uptoJune 30,2012)

b. Bahrain Financial Exchange (BFX) (upto June 30,2012)

B. Controlled Employee Welfare Trust MCX ESOP Trust

6. EMPLOYEE BENEFIT PLANS

Defined contribution plans: Amounts recognised as expenses towards contributions to provident fund, employee state insurance corporation and otherfunds by the Companyare Rs.9.85 millions (Previous Year Rs.10.33 millions).

Post employment defined benefit plans

Gratuity Plan: The Company makes annual contributions to the Employee''s Group Gratuity Assurance Scheme administered by the Life Insurance Corporation of India (''LIC''), a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to fifteen days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

7. The Company holds 27,165,000 Equity Shares of XM- each in MCX Stock Exchange Limited (MCX-SX). As per the approval received from SEBI to MCX-SX, the Company''s equity holding alongwith Financial Technologies (India) Limited (FTIL) shall not exceed 5% of the total paid up equity capital of MCX-SX. Considering the time available to adhere to the direction of SEBI as communicated by MCX-SX, the Company has classified such investments under Current Investments at this point of time till both the entities together reduce the percentage of holding to 5% in MCX- SX. The Company intends to hold the remaining shares of MCX-SX after bringing down the shareholding in MCX-SX to 5% put together with FTIL, on a long term basis and accordingly the said Investments will be reclassified under Non- Current Investments.

8. STOCK BASED COMPENSATION

a. During the yearended March 31,2009,the shareholders ofthe Company approved the''Employee StockOptions Plan 2008 (''ESOP-2008''). Under the said scheme, 1,625,000 Equity Shares of Rs.10 each (post consolidation and bonus) have been allotted to ESOPTrust who will administer the ESOP Scheme on behalf of the Company.

Out of which ESOPTrust has granted (a) 1,313,250 (post consolidation of shares and bonus issue) number of options convertible into 1,313,250 equityshares of Rs.10each to eligible employees on July 2,2008 and August 23,2008 in aggregate; (b) 331,750 (including the lapsed options available for reissuance) numbers of options convertible into 331,750 equity shares of Rs.10 each to eligible employees on October 24, 2011; and (c) 10,000 numbers of options convertible into 10,000 equity shares of Rs.10 each to an eligible employee on October 3,2012.

9. During the year ended March 31,2012, the Company has completed its Initial Public Offer (IPO) consisting of Offer for Sale of 6,427,378 equity shares at a offer price of Rs.1,032 per share. As per arrangement with Selling Stakeholders, all the IPO expenses paid by the Company were recoverable from the Selling Stakeholders. Accordingly, an IPO expense of Rs.29.86 millions has been shown as other current assets (Note 17). This include an amount of Rs.4.42 millions paid to the previous auditors for prospectus related reports/certificate relating to IPO.

10. The Company does not treat member''s margins and income thereon as part of SGF as contemplated under the FMC guidelines of SGF issued in 2006 and therefore credits the said income (amount unascertained) to statement of profit and loss. Representations have been made to FMCand a response is awaited.

11. The Forward Markets Commission (FMC) has vide letter no. 2/1/2008-MKT-ll dated February 16,2012, clarified that all penalties (net off administrative expenses) effective from April 2006 should be transferred to IPF by March 31,2012. Accordingly, such penalties for the period April 1, 2006 to March 31, 2011 amounting to Rs.142.28 million which was earlier credited to statement of profit and loss has during the previous year been credited to IPF A/c by debiting to statement of profit and loss as an exceptional item. Further all penalties (net off administrative expense) for the period April 1,2011 to March 31,2013 has been also transferred to Multi Commodity Exchange Investor (Client) Protection Fund''(''theTrust'') which was formed as per the revised guidelines of FMC on March 28,2012.

12. There are no amounts due to the suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006; this information takes into account only those suppliers who have responded to the enquiries made by the Company for this purpose.This has been relied upon by the auditors.

13. The previous year figures have also been reclassified/regrouped to conform to this year''s classification.


Mar 31, 2011

1 (a) MCX Stock Exchange Limited is a recognized stock exchange under Section 4 of the Securities Contracts Regulation Act, 1956. The company suffered a loss of Rs. 57.80 crore for the year and cumulative losses as on March 31, 2011 are Rs. 143.88 crore. The CompanyRs.s income mainly consists of interest on fixed deposits and investments. The Company is not able to charge transaction fees in respect of currency futures trading in its Currency Derivatives Segment (CD Segment), in view of predatory zero pricing by its main competitor, National Stock Exchange of India Ltd (NSE). Further, the CompanyRs.s application seeking regulatory approvals to commence operations in other segments and products was rejected by an order dated September 23, 2010 passed by Securities and Exchange Board of India (SEBI).

The Company continues to have positive networth and the present networth is in excess of the regulatory minimum requirement laid down by Reserve Bank of India (RBI) and SEBI which is Rs. 100 crore. The Company has challenged the abovementioned order dated September 23, 2010 of SEBI before the HonRs.ble High Court of Bombay by way of a writ petition and the matter is pending for admission. The Company has been advised that it has all reasons to succeed in the matter. Further, the Company had approached the Com petition Commission of India (CCI) for relief against anticompetitive practices of a main competitor. The CCI had by an order dated May 25, 2011 found the competitor in contravention of several clauses of Section 4 of the Competition Act, 2002. CCI passed a further order dated June 23, 2011 under Section 27 of the Competition Act, 2002 inter alia directing NSE to cease and desist from unfair pricing, exclusionary conduct and unfairly using its dominant position in other market/s to protect the relevant CD market with immediate effect. The CCI also directed NSE to modify its zero price policy and ensuring levy of appropriate transaction costs within 60 days. It is therefore expected that the predatory practices of NSE would come to an end in the near future, and that conditions of free and fair competition would be restored in the stock exchange services market. The Company would then be able to charge transaction fees and also open up its other operational revenue streams. This would result in consequential improvement in the revenue earning model of the Company, which would improve the CompanyRs.s financial performance and net worth position significantly. In view of the said orders of CCI, the Company also has a right to seek compensation for losses and damages suffered by it due to the unfair and anticompetitive practices of NSE under section 53N of the Competition Act, 2002. In light thereof, the Company proposes to recover the losses suffered by it so far on account of such practices, which will further boost its financial position and networth. In view of the above, the financial statements have been prepared on a going concern basis and no provision has been considered necessary for impairment of fixed assets and capital work in progress.

(b) The Company has unutilized service tax credit of Rs. 14.98 crore as at March 31, 2011 (previous year Rs. 9.52 crore). As mentioned in note 1 (a) above the Company expects improved revenue earnings in the future years and hence is of the view that the unutilized service tax credit will be fully utilized and the same is considered as good for recovery.

2 Loan to ESOP Trust

The CompanyRs.s ESOP is administered through an ESOP Trust, which subscribes to shares of the Company and holds them until issuance thereof based on vesting and exercise of options by employees. At the time of formation of the trust the Company has provided an interest free loan amounting to Rs. 6,000,000 to the Trust to subscribe to 5,433,000 shares issued at Rs. 1 per share and were allotted on November 20, 2009.

3 Stock based compensation

The Company with the authorization of its shareholders, framed the Rs.MCX Stock Exchange Employees Stock Option Scheme, 2009, which contemplated issue of ESOPs through the Trust route. Accordingly, Rs.MCX Stock Exchange ESOP TrustRs. was formed on November 13, 2009, as a trust.

As per the Guidance Note on Accounting for Employee Share Based payments issued by the Institute of Chartered Accountants of India, the amount of loan equivalent to the face value of securities subscribed [Rs.5,433,000] has been deducted from share capital account and the balance part of the loan representing the amount of [Rs. 567,000] has been added to Advances recoverable in cash or in kind or for value to be received.

The balance of such loan as at March 31, 2011 is Rs. 6,000,000. The repayment of the loan is primarily dependent upon the exercise of options by the employees, the price at which fresh or reissued options are granted and dividend income earned thereon till exercise of options. The Company believes that the options would be exercised by the employees and the Trust would be able to repay the loan based on the price received by the Trust there against. On that basis, the loan, to the Trust is considered as good of recovery.

Under the Scheme, the Compensation Committee of the Company shall decide, the options to be granted, the vesting schedule of the options to be granted and other incidental and consequential matters. The Trust shall be obliged to act on the instructions of the Compensation Committee.

Each option entitles the holder to exercise the right to apply and seek allotment of one equity share of Rs. 1 each. Exercise period for each option is as stated above from the date of vesting.

The particulars of number of options granted and lapsed under the Scheme are tabulated below:

The intrinsic value per option under the Scheme is NIL. The estimated fair value per option for ESOP 2009 is Rs. 1.15 of which premium amount is Rs. 0.15 per option for options granted on November 27, 2009. The fair values have been determined using the Black-Scholes Model considering the following parameters:

The loss after tax of the Company for the year would have been higher by Rs. 83,585 (Previous Year Rs. 35,157) had the Company accounted the employee share-based payment using the fair value method. There is no material impact on the earnings per share.

4 Non-refundable interest free deposit (warrants):

A total of 1,196,630,000 warrants were allotted to certain shareholders under the Scheme of Capital Reduction cum Arrangement implemented from March 19, 2010 post sanction of the HonRs.ble High Court of Bombay under Sections 100-104 and 391-393 of the Companies Act, 1956. Under the Scheme, an amount of Rs. 1 was required to be maintained against each warrant as non-refundable interest free deposit. Accordingly, the Com pany holds an amount of Rs. 1,196,630,000 as interest free non- refundable deposit. Each warrant holder can exercise in one or more installments, its option to subscribe to the fully paid up equity shares of the Company of the face value ofRs. 1 each subject to conditions. The exercise of warrants would always be subject to the Securities Contracts (Regulation) (Manner of Increasing and maintaining Public Shareholding in Recognised Stock Exchange) Regulation, 2006 and other conditions. Upon exercise of the option, the proportionate non-refundable interest free deposit will be adjusted against the moneys receivable in respect of the equity shares so issued. The Equity Shares arising out of the exercise of Warrants will rank pari passu with the existing equity shares in all respects. The warrants do not carry any voting rights.

5 Managerial remuneration

Managerial remuneration has been paid to MD and CEO-Currency Derivative Segment (Whole- time Director) as below:

*Excludes gratuity and long term compensated absences which are actuarially valued and where separate amounts are not identifiable.

During the months of April and May, 2010 the Company paid an amount of Rs. 4.85 lakhs to the Managing Director which was in excess of the remuneration approved by the Central Government. An application made by the Company for waiver of recovery of the said amount was rejected by the Central Government due to non-submission of a Board resolution. The Company now intends to make a fresh application with the Board resolution in this regard. The Company has in the meantime debited the said amount to the account of the Managing Director and disclosed under the head Rs.Loans and AdvancesRs. in Schedule 10 to the Balance Sheet which has since been recovered. For the period from June, 2010 to March, 2011 the Company has, on an application made by it, received a letter from the Central Government stating that approval is no longer necessary for unlisted companies in view of amendments to Schedule XIII of the Companies Act, 1956.

6 Employee Benefits

The disclosures as per Accounting Standard - 15 (AS-15) "Employee Benefits" are given below:

Defined Contribution Plan:

Provident Fund - The Company makes

contribution towards provident fund as a specified percentage of the payroll cost to Regional Provident Fund Commissioner managed by the EmployeesRs. Provident Fund Organization, India. There are no other obligations other than the contribution payable to said fund.

Defined benefit plan:

Gratuity: The gratuity is payable to all members at the rate of 15 days salary for each year of service.

The most recent actuarial valuation of the present value of the defined benefit obligation for gratuity was carried out as at March 31, 2011 by an actuary. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

The following table sets out the status of the gratuity plan and the amounts recognized in the CompanyRs.s financial statements as at March 31, 2011.

7 Segment reporting

Primary segment

The Company considers business segment (business of facilitating trading in currency and incidental activities thereto) as its primary segment considering the risks and rewards of the services offered, nature of services, management structure and system of financial reporting. In the opinion of the management, the Company has only one reportable business segment, in accordance with requirements of AS-17 "Segment Reporting", the results of which are disclosed in the financial statements.

Secondary segment

The Company operates only in India and has no geographical segment. On that basis, no secondary segment information is furnished

8 Related party information

a) Names of related parties and nature of relationship:

The disclosures regarding related parties as required by Accounting Standard (Rs.ASRs.) 18 "Related Party disclosures" issued by the Companies (Accounting Standards) Rules, 2006 (Rs.the RulesRs.) are as under:

I. Subsidiary

- MCX-SX Clearing Corporation Limited (MCX-SX Clear)

II. Key Management Personnel (KMP)

- Mr. Joseph Massey (MD & CEO)

- Mr. U. Venkataraman (CEO of Currency derivative segment and Whole time director)

III. Company whose control exists

- Multi Commodity Exchange of India Limited (MCX), Holding company (upto May 20, 2009)

IV. Companies having significant influence over the Company

- Financial Technologies (India) Limited (FTIL), (upto March 18, 2010)

- Multi Commodity Exchange of India Limited (MCX), (upto March 18, 2010)

V. Others

- MCX-SX ESOP Trust

Notes:

(i) Related party relationship is as identified by the Company and relied upon by the auditors.

(ii) There are no amounts written off or written back in the year in respect of debts due from or to related parties.

(iii) Figures in bracket represent previous yearRs.s amounts.

(iv)The transactions with the related parties are disclosed only till the relation exists

9 Operating lease

The Company has entered into operating lease agreements for its office premises.

a) The minimum lease rentals on operating leases recognized in the Profit & Loss Account and the future minimum lease payments under operating leases are as follows:

b) Total future minimum sub-lease payments expected to be received under subleases is Rs.13,55,130 (Previous Year Rs. 46,07,442)

c) Lease payments recognised in Profit & Loss Account is Rs. 68,075,491 (Previous year Rs. 50,123,142)

d) Sub-lease payment received and recognised in Profit & Loss Account is Rs. 3,252,312 (Previous Year Rs. 3,252,312)

The effects of conversion of warrants into equity shares and the shares allotted to the ESOP trust pursuant to the employee share based payment plan are anti-dilutive and accordingly not considered for the computation of diluted earnings per share.

In the absence of virtual certainty that surplus taxable income will be available against which the Deferred Tax Asset can be realized, the same has not been recognized in the books of account in line with AS-22 dealing with "Accounting for Taxes on Income"

10 Dues to Micro, Small and Medium Enterprises

As per Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 the amounts due to the Micro, Small and Medium Enterprises on the basis of the information available with the Company regarding the status of suppliers are as under:

11 Investor Protection Fund

Investor Protection Fund of Rs. 2,500,000 was established by the Company based on the Rs.Comprehensive guidelines for Investor Protection Fund at Stock ExchangesRs. dated October 28, 2004 issued by SEBI and in accordance with SEBI approval letter dated September 18, 2008.

The Office of Charity Commissioner had on March 17, 2010, granted registration to the MCX Stock Exchange Investor Protection Fund Currency Derivatives Segment Trust under the provisions of the Bombay Public Trust Act, 1950. On June 22, 2010 the Company has transferred the entire amount to the Trust.

12 Investor Service Fund

Investor Service Fund of Rs. 1,000,000 was established by the Company in accordance with SEBI approval letter dated September 18, 2008. The fund is maintained to provide services to investors which include maintenance of investor grievance cell, education and awareness about securities market, price dissemination and other services that are in the interest of the investor. The balance amounting to Rs. 1,188,410 as at March 31, 2011 represents the initial amount of Rs. 1,000,000 and interest earned thereon.

13 The previous year's figures have been reworked, regrouped, rearranged and reclassified wherever necessary. Amounts and other disclosures for the preceding year are included as integral part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the current year.

14 Disclosures under Part II of Schedule VI to the Companies Act, 1956, have been made to the extent applicable to the Company.

 
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