NCDEX – 6 th largest commodity exchange in the world

2. NCDEX – 6th largest commodity exchange in the world Source: UNCTAD, SFOA “ The world’s commodity exchanges – September 2006

3. NCDEX- 3rd largest agro-commodity exchange in the world Source: UNCTAD, SFOA “ The world’s commodity exchanges – September 2006

4. Market growth of 265% over FY05 volumes; 56% growth over FY06 Unlike developed markets, participation in Indian market is more retail & individual and not institutional

5. Present volumes a fraction of the potential USD Bn Farmers Agents Wholesalers Processors Retailers Bullion Metals etc * Agriculture Energy Total Source: NCDEX

6. Present legal & regulatory environment

7. Market Structure- Futures and Spot Ministry of consumer Affairs State Government 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

8. Regulatory Structure in India Ministry of Finance Ministry of Consumer Affairs National Housing Bank Insurance Regulatory Development Authority (IRDA) Pension Funds Regulatory Development Authority (PFRDA) Company Law Board FMC Commodity Exchanges Insurance Pension Funds Corporates Housing Finance Companies SIDBI RBI SEBI NABARD Banking / NBFCs Capital Markets Co-operative Banks & Regional Rural Banks State Financial Institutions

9. Structure of Indian Commodity Futures Exchanges FMC CommodityExchanges Nationalexchanges Regionalexchanges NCDEX NMCE MCX NBOT 20 Other Regional Exchanges

10. Going forward …

11. New Products • Market would move towards trading more exotic products • Index based products • Commodity Indices • Rainfall & other weather indices • Spread Trading • Electricity • Real Estate • Emission Credits ..Idea will be to forge closer links with global commodities

12. 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

13. 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

14. Risk Mitigation: Pre-harvest Small Farmers Small Farmers Large Farmers Aggregators Future price ensured Liquidity enhanced Banks Insurance NCDEX NCMSL Weather derivatives /Crop Insurance Bank lending

15. Risk Mitigation: Post-harvest Small Farmers Large Farmers Sell forward Banks NCDEX NCMSL Storage facility Assaying & grading Commodity backed bank finance (WR)

16. Survey carried out by A C Nielsen Wide Area Sample, Sample Size - 255 Narrow Area Sample, Sample Size - 473 • Over 78 % of farmers from NAS & 12 % of WAS agreed that they have benefited out of the price discovery taking place through commodity exchanges • As NAS respondents are well aware of market dynamics ( including futures market, they are able benefit through better price realization) • Increase in awareness level in interior areas about commodity futures will help the farmers

17. 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

18. Increased bank participation on the exchange platform farmer Bank branch farmer Banks takes consolidated position on behalf of its customers Exchange farmer farmer Bank branch farmer Bank to also take proprietary positions

19. Facilitating lending against commodities • Banks’ lending against commodities in FY06 was USD 1,334 million • NCMSL facilitated finance against commodities to the tune of about  USD 80 million as on 31st March, 2006  • ICICI  Bank: USD 50 million • HDFC Bank:  USD 22 million • Other banks: USD 8 million • Average Interest rate charged: 9.5% - 10.5% • Number of defaults so far: NIL 

20. Facilitation required • RBI Working Group Recommendations • Banks to be allowed to have proprietary positions in agricultural commodity derivatives • Evolution of a system for warehouse receipts which would be freely transferable • Banks to be granted general permission to become PCMs of commodity exchanges

21. Foreign Access • Foreign access permitted in securities market- equities & bonds under regulation • Currently can access commodity markets by setting up a domestic entity – for broking & investment • Require prior approval from FIPB • Precedents: Permission granted for Proprietary trade only • No precedents for Client trade

22. RBI/SEBI notification dated 22.12.2006 Permits Foreign Investment in infrastructure companies in Indian Stock Exchange to the tune of 49%, of which • 26% - FDI (Foreign Direct Investment) • With specific prior approval of FIPB • 23% - FII (Foreign Institutional Investment) • FII will be allowed purchases in secondary market • FII shall not seek & will not get representation on the Board • No foreign investor, including persons acting in concert, will hold more than 5% of the equity capital Similar notification expected for commodity markets…

23. Regulatory Action in Jan-Feb 2007

24. Sudden delisting of important cereals & pulses - Jan-Feb 2007 • Delisting of Urad & Tur contracts – Jan 07 • Suspension of Rice & Wheat contracts – Feb 07 Urad: Crop arrivals from Andhra & Burma expected in Feb-March Tur: Arrivals in March; 30-40% expected production shortage

25. NCDEX wheat price movements Temporary ban on wheat imposed Temporary ban; expected to be lifted soon…

26. Innovations by NCDEX

27. Spot price polling Exchange Website Mandi Traders Trading Terminals Statistical Cleansing of raw data Mill owners Near real-time nationwide prices Polled Prices Refiner Info-vendor terminals Commission Agents Manufacturers Media– electronic & print Polling done independently by CMIE & Crisil MW

28. Dematerialized holding of commodity balances WH WH CLIENT DP NSDL R&T AGENT WH WH - Open Demat a/c With DP Gets goods to the WH, fills in Demat Request form for Demat credit Empanelled DPs in which members/clients open Demat account -Holds commodity balances in electronic form Facilitates transactions in commodities Link between the warehouse and the Depository. Standardized Screens Accepts goods for storage/ delivery Assaying done and information given to NSDL via R&T

29. Collateral management • Set up National Collateral Management Services Ltd. (NCMSL) • Warehousing, assaying • Collateral Management • Commodity backed financing • Food procurement for FCI • 2005-06 Paddy procurement project • 1.2 lakh MTs paddy from MP, Orissa • 2006-07 Paddy project • 80,000 farmers involved • 600,000 MTs of paddy

30. Price Dissemination

31. Automatic weather stations • Cabled Vantage Pro 2 Plus Collecting & disseminating data over multiple weather parameters

32. About NCDEX

33. Our Shareholders

34. Ncdex’ market share in total volumes of key agri-commodities (April 2006 -Jan 2007)

35. Exchange Profile

36. Thank You

37. Market Share – Agri. Commodities

38. 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 40-50,000 MT per month Exchange’s are a platform for better prices discovery

39. Strategic Partners Tokyo Grain Exchange (TGE) Dalian Commodity Exchange (DCE) Intercontinental Exchange (ICE) Global Bharat Petroleum Gas Authority of India Ltd (GAIL) Bombay Bullion Association (BBA) Business Grading & Standards Central Institute for Research on Cotton Technology (CIRCOT) Indian Agriculture Research Institute (IARI) Food Corporation of India (FCI) CRIDA Punjab State Cooperative Supply & Marketing Federation Warehouse & others

40. Number of contracts traded - Economic Survey In millions