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Spices Of Fortune All India Spices Conference 7 th Oct 2006, Bangalore

www.investsmartindia.com. A presentation by the IL&FS Commodities Division. Spices Of Fortune All India Spices Conference 7 th Oct 2006, Bangalore. Chillies. www.investsmartindia.com. A presentation by the IL&FS Commodities Division. ????? 6500/qtl !!! @ Chillies.

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Spices Of Fortune All India Spices Conference 7 th Oct 2006, Bangalore

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  1. www.investsmartindia.com A presentation by the IL&FS Commodities Division Spices Of Fortune All India Spices Conference 7th Oct 2006, Bangalore Chillies

  2. www.investsmartindia.com A presentation by the IL&FS Commodities Division ????? 6500/qtl !!! @ Chillies Who has stolen my chillies ?

  3. Agenda of the presentation Overview Supply-n-Demand Challenges Ahead Chilli on Exchange Exchange Advantages Price Outlook

  4. Agenda Overview • India • Major Producer, consumer & exporter in the world • Chilli accounts for 20-30% of total Indian spices exports valuing approx 400-500 crore • Practically all the states in India grows chilli resulting in arrivals round the year. • Andhra Pradesh is a leading producer of commercial grade of chilli

  5. Agenda Indian Supply –n-Demand

  6. Agenda Overview • Global • India contributes for around 25% of world chilli production • Other major producer are China, Pakistan, Morocco, Mexico, Spain and Turkey • Chilli contributes for 22% of world spices trade in terms of volume. • Globally China is emerging as major threat for India • Asian countries consumes chillies directly while USA and EU imports mainly for its oleoresin requirement

  7. Agenda Overview

  8. Agenda of the presentation Overview Supply-N-Demand Challenges Ahead Chilli on Exchange Exchange Advantages Price Outlook

  9. Year Area Production 2001-02 8.8 10.6 2002-03 8.5 8.8 2003-04 9.9 11.0 2004-05 E 9.5 10.0 2005-06 E 9.5 10-10.5 Agenda Supply – N- Demand Acreage and Production Stagnant or Declining Acreage and Production

  10. Agenda Supply – N- Demand Exports Share of Chilli in Indian spices export is around 20-40% in volumes India export its chilli mainly to Srilanka, Bangladesh, Korea, Malaysia, Singapore, Japan, UK, Germany, France and USA

  11. Year Quantity (tons) Value (Rs. Lakh) 1999-00 63,591 25471.55 2000-01 62,448 22973.30 2001-02 69,998 25244.02 2002-03 81,022 31514.68 2003-04 86,575 36687.81 2004-05 E 138000 49900.50 2005-06 E 113250 40350.00 Agenda Supply – N- Demand Exports - India

  12. Agenda Supply – N- Demand Exports • Country wise Percentage share of exports • India (25%) • China (24%) • Spain (17%) • Mexico (8%) • Pakistan (7.2%) • Morocco (7%) • Turkey (4.5%)

  13. Sheet 2005-06 (Lakh Tonne) Beginning Stock 1.1 Production 10 Total Supply 11.1 Exports 1.0 Domestic Consumption 10.1 Total Demand 10.0 Price Sensitive Agenda Supply – N- Demand Balance Sheet 2005-06

  14. Agenda of the presentation Overview Supply-n-Demand Challenges Ahead Chilli on Exchange Exchange Advantages Price Outlook

  15. Agenda Challenges Ahead • Adverse climatic conditions - Floods, drought, unseasonal rains etc • Increasing consumption - Growing population need • Emerging competitors - China – Future threat to Indian exports • Lack of sufficient carry over stocks - Due to increase in consumption • Malpractices and Speculation - On the basis of growing opportunities • Numerous varieties within same region

  16. Agenda of the presentation Overview Supply-n-Demand Challenges Ahead Chilli on Exchange Exchange Advantages Price Outlook

  17. Agenda Chilli on Exchange • Chilli first got remarkable participation on NCDEX futures exchange • Sanam best Guntur delivered was the first contract launched but was withdrawn on operational issues • LCA 335 variety contract introduced - March expiry & onwards • Contract trading lot is of 5MT (1 Re change = Rs.50) • Margin requirement = 15-25% (Case dependent) • Contract is of 3 months expiry • Client wise limit is applicable and is 5000 MT (Near month 1000 MT only)

  18. Contract months Average Volume (MT) Average Open Interest Average Traded Value (Rs. In lacs) March 3431.42 5756.78 1114.29 April 4838.11 5905.5 1778.9 June 4686.9 6445.1 2313.9 July 4059.7 6245.9 2056.1 Aug 5075.6 8906.9 2599.3 Sep 5430.6 6467.1 2961.4 Oct (4 oct) 9640.8 9951.7 5851.7 Nov (4 Oct) 4372.4 5336.4 2765.9 Dec (4 oct) 4355.7 9016.3 2801.4 Agenda Chilli on Exchange NCDEX Chilli – Average Volume, OI, Value

  19. ExpiryMonth Qty(MT) Settlement prices/tonnes Total Value lakhs April 10 36020 3.6 June 885 44630 394.97 July 2690 48390 1301.69 Aug 1690 54810 926.28 Sep 2340 51770 1211.41 Agenda Chilli on Exchange Exchange Deliveries & Settlement

  20. Agenda of the presentation Overview Supply-n-Demand Challenges Ahead Chilli on Exchange Exchange Advantages Price Outlook

  21. Agenda Exchange Advantage • Price discovery • India’s branding on world trade • Hedge availability to corporates and individual traders • Arbitrage opportunities – Investment demand • Directional trades or speculation • Jobbing and Punting

  22. Agenda of the presentation Overview Supply-n-Demand Challenges Ahead Chilli on Exchange Exchange Advantages Price Outlook

  23. Agenda Price Outlook • Forecasting model • Fundamental Analysis • - SND, Policies, Weather situation etc • Derivative Analysis • - Study of volume, Open Interest and Spreads • Technical Analysis • - Chart based study and forecasting of prices

  24. Agenda Price Outlook • Technical Analysis

  25. Agenda Price Outlook • Primary trendline intact with support taken recently at 5600. • Corroborative evidence of bullishness from the fact that the levels of 5600 - 5800 acted as a strong resistance during early days of May 2006 and has changed from. resistance to support, preventing further decline. • Second rally started in August from 4600, making a top of 6600. The 50% Fibonacci retracement of this rally reckons to 5600, which exactly coincides, with our support level. • The bull market is in place and the required correction has also come to an end. Any advance above 6100 levels should be considered as a buying opportunity for medium and long-term investors. • However intermediate consolidation phase cannot be ignored if it remains below 6100 in the near future. However the probability of prices resuming the uptrend is high.

  26. Agenda Price Outlook Trading Strategy Buy December Contract on Dips of around 6000 Medium to longer term Target – 6700 -7000 Six Month Range = 5500-7500 Exit or play short trades on breakout below 6000 - Dec Contract

  27. www.investsmartindia.com IL&FS Investsmart Commodities Limited Thank You ! K.N.Rahaman Manager – Commodities Research 022-67160 851-56

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