As on March 31, 2024, there were no capital work-in-progress, where the actual cost of an asset/project has already exceeded the estimated cost as per original plan or actual timelines for completion of an asset/project have exceeded the estimated timelines as per original plan. Accordingly, no additional disclosure was required.
3.2 Significant estimate: Useful life of intangible assets. As at 31 March 2024, the net carrying amount of the software & & license fees was f 18,797 lakh (as on March 31,2023: f 1,357 lakh). The Company estimates the useful life of the software based on the expected technical obsolescence of such assets. However, the actual useful life may deviate, depending on future technical innovations and competitor action.
As on March 31,2024, there were no intangible assets under development, whose completion is overdue or has exceeded its cost compared to its original plan. Accordingly, no additional disclosure was required.
6.1: The Company is subject to tax assessments and ongoing proceedings, which are pending before various Tax Appellate Authorities. Management periodically evaluates the positions taken in tax returns with respect to such matters, including unresolved tax disputes, which involves interpretation of applicable tax regulations and judicial precedents. Current tax liability and tax asset balances are presented, after recognising as appropriate, provision for taxes payable and contingencies basis management’s assessment of outcome of such ongoing proceedings and amounts that may become payable to the tax authorities. Considering the nature of such estimates and uncertainties involved, the amount of such provisions may change upon final resolution of the matters with tax authorities. Refer also note 31 for details of contingent liabilities and litigations.
9.1 Trade receivables are dues in respect of services rendered in the normal course of business.
9.2 The normal credit period allowed by the company ranges from 0 to 30 days.
9.3 There are no dues from directors or other officers of the company or any of them either severally or jointly with any other person or debts due by firms or private companies respectively, in which any director is a partner or a director or a member.
9.4 Credit risk management regarding trade receivables has been described in note 39.c.vii.
9.5 Trade receivables have a short credit period and does not have any significant financing component.
The Company has only one class of shares referred to as equity shares having a par value of f 10/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend recommended by the Board of Directors is subject to the approval of the shareholders at the ensuing annual general meeting, except in the case of interim dividend. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts in the proportion of equity shares held.
d. During the year ended March 31, 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 f 10 each have been allotted to ESOP trust who will administer the ESOP scheme on behalf of the company. Lapsed options available for reissuance are 95,551 (As at March 31, 2023: 95,551) shares. During the year,there are no shares granted under Employee Stock Option Scheme.
e. There are no shares reserved for issue under options and contracts / commitments for the sale of shares / disinvestments.
f. There are no bonus shares issued or bought back during the period of five years immediately preceding the reporting date.
g. Shares allotted as fully paid-up pursuant to contract without payment being received in cash during the year of five years immediately preceding the date of the Balance Sheet as under: Nil
Notes:
General reserve
The general reserve created from time to time transfer profits from retained earnings for appropriation purposes. As the general reserve created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in general reserve will not be reclassified to the Statement of Profit and Loss.
Retained earnings
The same reflects surplus/deficit after taxes in the Statement of Profit and Loss. The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the balance in this reserve and also considering the requirements of the Companies Act, 2013.
Securities premium
Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purpose such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
Other comprehensive income
a. Equity instruments through other comprehensive income - This represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income, under an irrevocable option, net of amounts reclassified to retained earnings when such assets are disposed off.
b. Re-measurements gain/(loss) on the defined employee benefit plan - This represents the cumulative gains and losses arising on re-measurements on the defined employee benefit plan.
31. Contingent liabilities and commitments (to the extent not provided for)
f in Lakh
Particulars
As at
March 31, 2024
March 31, 2023
Contingent liabilities :
Claims against the company not acknowledged as debts :
- Income tax demands against which the company is in appeals (including interest upto date of order) (net of rectification orders)
13,786
12,705
- Others (excluding interest)
13
18
Capital commitments:
The estimated amount of capital contracts remaining to be executed and not provided for (net of advances)
6,506
10,453
The Company is subject to tax assessments and ongoing proceedings, which are pending before various Tax Appellate Authorities. Management periodically evaluates the positions taken in tax returns with respect to such matters, including unresolved tax disputes, which involves interpretation of applicable tax regulations and judicial precedents. Current tax liability and tax asset balances are presented, after recognising as appropriate, provision for taxes payable and contingencies basis management’s assessment of outcome of such ongoing proceedings and amounts that may become payable to the tax authorities. Considering the nature of such estimates and uncertainties involved, the amount of such provisions may change upon final resolution of the matters with tax authorities.
In addition to the matters as specified in contingent liabilities above, the Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business, the impact of which is unascertainable. The Company’s management does not expect that the legal actions, when ultimately concluded and determined, will have adverse effect on the Company’s financial statements.
The Company received various correspondences on matters relating to operations of the Company, including inspections from SEBI which have been replied to by the Company. Basis the replies filed; the Company’s management do not expect any material impact on the financial statements of the Company.
IND AS 108 establishes standards for the way that Companies report information about operating segments and related disclosures about products and services, and geographical areas. 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 there is no geographical segment.
The company's leasing arrangements are in respect of operating leases for office premises. The rent period range between 2 years to 9 years and usually renewable on mutually agreed terms.
Extension and termination options are included in many of the leases. In determining the lease term, the Management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. This assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the Company.
38. Employee benefit plans:
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 on 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.
Methodology adopted for valuation is projected unit credit method.
Sensitivity analysis is an analysis which will give the movement in liability if the assumptions were not proved to be true on different count. This only signifies the change in the liability if the difference between assumed and the actual is not following the parameters of the sensitivity analysis.
Since investment is with insurance company, assets are considered to be secured.
Assumptions regarding future mortality experience are set in accordance with the Indian Assured Lives Mortality (2012-14) Urban.
Expected rate of return on plan assets is based on expectation of the average long term rate of return expected to prevail over the estimated term of the obligation on the type of the investments assumed to be held by LIC, since the fund is managed by LIC.
The estimates of future salary increases, considered in actuarial valuation, takes into account of inflation, seniority, promotions and other relevant factors, such as supply and demand in the employment market.
The company expects to contribute f 88 lakh to the plan assets during financial year 2024-25.
Actuarial gains/losses are recognized in the period of occurrence under other comprehensive income (OCI). All above reported figures of OCI are gross of taxation.
The liability towards compensated absences (privilege leave and sick leave) for the year ended March 31, 2024 is based on acturial valuation carrried out by using projected accrual benefit method which resulted in increase in liability by f 25 lakh. (previous year - decrease by f 12 lakh).
39. Financial instruments a. Financial instruments by category
The fair values of the financial assets and liabilities are included at the amount at which the instrument could
be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
1. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities and other financial institutions approximate their carrying amounts largely due to the short-term maturities of these instruments.
2. Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for the expected losses of these receivables. Accordingly, fair value of such instruments is not materially different from their carrying amounts.
The Company's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company's focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.
The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s financial risk management policy is set by the Company's management.
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Since the Company has no borrowings, exposure to risk of change in market interest rate is nil.
The Company periodically transacts internationally and few of the transactions are conducted in different currencies. As the volume of the transactions are few, the company has not entered in foreign exchange forward exchange contracts.
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. To manage this, the company periodically assesses financial reliability of customers and other counter parties, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of financial assets. Individual risk limits are set and periodically reviewed on the basis of such information. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to f 5,865 lakh and f 1,207 lakh as at March 31,2024 and March 31,2023 respectively, unbilled revenue amounting to f 289 lakh and f 4,294 lakh as at March 31,2024 and March 31, 2023 respectively, non-current investments amounting to f 85,056 lakh and f 1,08,781 lakh as at March 31, 2024 and March 31,2023 respectively, current investments amounting to f 28,635 lakh and f 12,835 lakh as at March 31, 2024 and March 31, 2023 respectively, other non-current financial assets amounting to f 4,472 lakh and f 2,453 lakh as at March 31,2024 and March 31,2023 respectively, cash and cash equivalents amounting to f 16 lakh and f 41 lakh as at March 31, 2024 and March 31, 2023 respectively and Bank balances other than cash and cash equivalents amounting to f 1,680 lakh and f 1,324 lakh as at March 31, 2024 and March 31, 2023 respectively.
Where receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognized as income in the Statement of Profit and Loss.
The Company measures the expected credit loss of trade receivables from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on the historical data, loss on collection of receivable is not material hence no additional provision considered.
Investment in mutual fund, target maturity funds, ETF, state development loans and bonds is with financial institutions with credit rating assigned by credit rating agencies.
The Company aim to manages its capital efficiently so as to safeguard its ability to continue as a going concern and to optimize returns to our shareholders. The capital structure of the Company is based on management’s judgement of the appropriate balance of key elements in order to meet its strategic and day-to-day needs.
The Company’s policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary adjust, its capital structure.
The Company requires a number of regulatory approvals, licenses, registrations and permissions to operate our business For example, the Company have licenses from SEBI in relation to, among others, introducing derivatives contracts on various commodities. The Company’s operations are subject to continued review and the governing regulations changes. The Company’s regulatory team constantly monitors the compliance with these rules and regulations. The Company’s regulatory team keeps a track regarding the amendments in SEBI circulars/regulations pertaining to the functioning of the Company.
40. Corporate social responsibility
As per Section 135 of the companies Act 2013, a Company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities.
The CSR activities of the company are generally carried out through charitable organisations, where funds are allocated by the Company. These organisations carry out the CSR activities as specified in the schedule VII of the companies Act, 2013 on behalf of the Company. , ,,
41. Contribution to Core Settlement Guarantee Fund (SGF):
In accordance with Securities and Exchange Board of India (SEBI) Circular dated August 27, 2014, the Exchange during the year ended March 31, 2024, has contributed f 2,452 lakh to the Settlement Guarantee Fund (SGF) maintained by MCXCCL.
42. Upon examination of the issues relating to the contracts executed with the software vendors, SEBI had issued a Show Cause Notice (SCN) dated October 16, 2023, to the Company and its four Key Managerial Personnel’s. SEBI has, inter alia, alleged in the SCN that the Management did not implement the SEBI outsourcing circular dated 13th September 2017. The Company along with its KMP’s have filed their individual response in the matter. Separately, the Exchange has also filed settlement application under the applicable SEBI Regulations, which is pending for disposal. Hearings in respect of SCN is pending.
43. Disclosure under the Micro, Small and Medium Enterprises Development Act, 2006 are provided as under for the year 2023-24, to the extent the company has received intimation from the "Suppliers" regarding their status under the Act.
Loans and advances in the nature of loans given to subsidiaries, associates and others and investments in shares of the Company by such parties:
i. Details of investments made are given in note 4 & 8.
ii. There are no loans or guarantees issued in accordance with section 186 of the Companies Act, 2013 read with rules issued thereunder.
The details of loans, guarantees and investments under section 186 of the Companies Act, 2013 read with the Companies (Meeting of Board and its Powers) Rules, 2014 are as follows:
(i) No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.
(ii) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
(iii) The Company does not have number of layers of Companies.
(iv) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
(v) The Company has not advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) to or in any other person or entity, including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(vi) There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
(vii) The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
(viii) All the title deeds of immovable properties are held in the name of Company.
(ix) There are no promoters for the Company.
(x) The Company has not revalued its property plant and equipment or intangible assets or both during current year or previous year.
(xi) The Company does not have any borrowings from bank and / or financial institutions.
(xii) There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.
(xiii) There are no Core Investment Companies (CIC) in the group.
(xiv) The Company has not granted any loans or advances to Directors', KMPs and related parties either severally or jointly with any other persons that are:
a) repayable on demand or
b) without specifying any terms or period for repayment.
47. The Company had entered into an agreement with Tata Consultancy Services Ltd. (TCS), according to which the new Commodity Derivative Platform (CDP) was to be developed, tested and delivered by TCS by September 30, 2022.
However, since the new platform was under development, the Company considering the exigency to ensure continuity of the commodity trading and clearing platform, continued with the services of the vendor, 63 Moons Technologies Ltd., initially for a period for quarter ended December 2022 for f 6,000 lakh (plus applicable taxes). Accordingly, for the quarter ended December 31, 2022, Company had incurred f 4,020 lakh (net of recoveries from MCXCCL, excluding applicable taxes). Later, these services were extended for another two quarters ending June 30, 2023 for f 8,100 lakh per quarter (plus applicable taxes) as per the minimum period of services offered by the vendor. Accordingly, for the quarter ended March 31, 2023 and June 30, 2023, Company has incurred f 5,427 lakh (net of recoveries from MCXCCL, excluding applicable taxes) each.
Further, due to delay in the delivery of the CDP platform, the Company had decided to extend the support services being rendered by the vendor, 63 Moons Technologies Ltd. for further two quarters, being the minimum period of services offered by the vendor, beginning from July 01, 2023 at a consideration of f 12,500 lakh (plus applicable taxes) per quarter. Accordingly, for the quarter ended September 30, 2023, Company has incurred f 8,375 lakh (net of recoveries from MCXCCL excluding applicable taxes) and for the quarter ended December 31, 2023 has incurred f 11,827 lakh (net of recoveries from MCXCCL, excluding applicable taxes only till October 15, 2023 on “pay for use basis” as per the existing resources sharing agreement).
TCS has completed development of CDP and the Company has gone live with CDP with effect from October 16, 2023 after requisite approvals.
48. The Code on Social Security, 2020 (Code) relating to employee benefits during employment and postemployment, received Presidential assent in September 2020. The Company will assess the impact and its evaluation once the subject rules are notified. The Company will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
49. MCX has established an Investor Protection Fund with the objective of compensating investors in the event of defaulters’ assets not being sufficient to meet the admitted claims of investors, promoting investor education, awareness and research. The Investor Protection Fund is administered by way of a registered Trust created for the purpose. In order to enhance the effectiveness of Investor Protection Fund (IPF) of Stock Exchange, SEBI comprehensively reviewed the existing framework. The Company recognizes a provision for contribution payable to IPF, which is estimated by assessing maximum amount which can be paid to the individual claimant as per the extent regulations. As on March 31, 2024, the corpus with the IPF was f 22,776 lakh (Unaudited) (March 31, 2023: f 21,962 Lakh). During the previous year, the Company had made a contribution of f 560 lakh (March 31,2023: f 426 lakh) recognized as an expense.
50. In accordance with the relevant provisions of the Companies Act, 2013, the Company has long term contracts as of March 31,2024, and March 31,2023, for which there were no material foreseeable losses. The Company did not have any derivative contracts as at March 31, 2024, and March 31, 2023.
51. For the year ended March 31,2024, and March 31, 2023, the Company is not required to transfer any amount to the Investor Education & Protection Fund as required under section 125 of the Companies Act, 2013.
52. The Ministry of Corporate Affairs (MCA) has issued a notification (Companies (Accounts) Amendment Rules, 2021) which is effective from April 01,2023, states that every company which uses accounting software for maintaining its books of account shall use only the accounting software where there is a feature of recording audit trail of each and every transaction, and further creating an edit log of each change made to books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.
The Company uses SAP as a primary accounting software for maintaining books of account, which has a feature of recording audit trail edit logs facility.
The audit trail features was enabled and operative throughout the financial year for the transactions recorded in the software impacting books of account at application level.
53. Previous year figures have been regrouped/reclassified wherever necessary to conform to current year figures.
54. The Financial Statements were approved by the Audit Committee and Board of Directors on April 23, 2024.