ace derivatives commodity exchange limited · ace derivatives & commodity exchange limited ......

ACE DERIVATIVES

&

COMMODITY EXCHANGE LIMITED

ANNUAL REPORT 2009-10

Registered Office

Rawat-ni-wadi, Near Central Bank of India

Gandhi Road, Ahmedabad – 380001

Corporate Office

Infinity I T Park, Building No. 4, 4th

Floor

Gen. A K Vaidya Marg

Dindoshi, Malad (E)

Mumbai – 400097

DIRECTORS’ REPORT

To

The Members of Ace Derivatives and Commodity Exchange Limited

The Directors present their 54th Annual Report together with the audited accounts of

your Company for the year ended March 31, 2010.

1. FINANCIAL RESULTS

The financial position of the company at the end of the current financial year is given

below:

(Rs.) 2009- 2010 2008-2009

Gross income 4,453,497 6,058,701

Profit/(Loss) before Depreciation and Tax (23,763,297) 3,435,578

Depreciation 1,912,329 160,129

Profit before Tax (25,675,626) 3,275,449

Profit after Tax (25,675,626) 3,275,449

Balance of Profit from previous years 5,938,523 4,141,421

Amount available for appropriation (19,737,103) 7,416,870

Appropriations 315,172 1,478,347

Surplus carried forward to the Balance

Sheet

(20,052,275) 5,938,523

The income during the period under consideration has decreased from Rs 6,058,701

in FY 2008-09 to Rs 4,453,497 in FY 2009-10. Your Company is in the process of

upgrading itself into Nationwide Multi-Commodity Exchange.

2. DIVIDEND

Your Directors do not recommend any dividend for the financial year under review, due

to loss incurred by the Company on account of increased expenditure for upgradation

and transformation into a Nationwide Multi-Commodity Exchange.

3. THE UPGRADATION AND TRANSFORMATION PROJECT AND ITS

PROGRESS:

Your Company is in the process of upgrading itself into a Nationwide Multi-Commodity

Exchange. Forward Markets Commission has given its In-Principle approval vide its

letter dated 14th May, 2009 for the proposed upgradation and transformation subject to

fulfillment of certain conditions as prescribed in the in-principle approval.

Mr. Dilip Bhatia, a qualified Chartered Accountant with more than 17 years experience

in financial services and commodity futures trading has been appointed as Chief

Executive Officer.

4. EQUITY SHARE CAPITAL

Your Company was a Company Limited by Guarantee and was to be converted into a

Company Limited by Shares to enable infusion of capital required to upgrade the

Exchange. Registrar of Companies, Gujarat has permitted the conversion and issued

revised incorporation certificate on July 27, 2009.

The Company made allotment of Equity shares to the members of the Company. At

the end of the financial year, the Authorised share capital was Rs. 100 Crore and the

equity share capital of the company was as given below:

Details Number of equity

shares

Amount in Rs

lakhs

Equity shares of Rs 10 each per share 48,721,308 487,213,080

Premium on equity shares Not applicable 267,490,979

Total 48,721,308 754,704,059

5. MANAGEMENT DISCUSSION AND ANALYSIS

Indian Commodity markets in the year 2009-10

This financial year 2009-10 has been good for the Indian commodity futures market.

All the national level commodity exchanges have witnessed growth in volume and

value traded. Volume of the National commodity exchanges has increased by 61% in

financial year 2009-10 compared to the year 2008-09. Volume in the year 2009-10 was

19,18,70,527 (contracts traded) compare to 11,94,38,337 (contracts traded) in 2008-

09. Value of commodity traded on National commodity exchanges has witnessed a

growth of 49% in the year 2009-10 compare to the year 2008-09. Value of

commodities traded in 2009-10 was Rs 76,74,313.716 Crore compared to Rs

51,85,257.556 Crore in 2008-09.

The growth in the number of contracts traded was fuelled by the surge in trade of

metals and energy. Energy future trading saw a growth of 145% in number of contracts

traded in 2009-10 (5,27,26,111) compared to 2008-09 (2,15,48,201). Base Metals saw

a growth of 123% in number of contracts traded in 2009-10 (4,77,94,920) compared to

2008 -09 (2,13,97,120). Bullion registered a growth of 18% in number of contracts

traded in 2009-10 (5,89,81,006) compared to 2008-09 (5,01,18,189). Agricultural

future trading, which includes CPO, RSO, Soyabean, Chana, Barley, Wheat, Maize,

Kapas, Cardamom, Coriander, Turmeric, Rubber, Yellow Peas, Pepper, Jeera, Chilli,

Indian 28.5 mm (Medium Staple Cotton), V 797(Cotton), Castorseed, Cottonseed

Oilcake, Soyameal, Mustard seed, Kachhi Ghani and RBD trading saw a growth of

14% in number of contracts traded in 2009-10 (2,04,50,016) compare to 2008-09

(1,79,69,107). Others commodities, which include Almond, Guarseed, Mentha Flakes,

Mentha Oil, Potato, Guar Gum, Gur, Sugar, CER and Polyvinyl Chloride witnessed a

growth of 42% in number of contracts traded in 2009-10 (1,19,18,474) in comparison

with 2008-09 (84,05,720).

Volume of Castor trading on your Exchange declined to 21.38 lakh tonnes in 2009-10

from 35.53 lakh tonnes in 2008-09, a decline of 40%. Traded value has declined to

5979.38 Crore in 2009-10 compare to 8781 Crore in 2008-09, a decline of 32%.

6. DIRECTORS

Your Company has the following twelve directors on the Board as on the date of this

report

Name of the Director Nominee

Mr. S.A.Narayan Chairman &

Kotak Group Nominee

Mr. Kodavali Jayanth FMC Nominee

Mr. Dileep C.Choksi Public Interest Nominee

Ms. Dharmishta N. Raval Public Interest Nominee

Mr. Pranab Kumar Dutta Public Interest Nominee

Mr. Kamlesh Kumar B Shah Shareholders’ Nominee

Mr. Prahaladbhai R Patel Shareholders’ Nominee

Mr. T.V.Raghunath Kotak Group Nominee

Mr. Prakash Nayak Kotak Group Nominee

Mr. Shivendra Gupta Kotak Group Nominee

Ms. Shanti Ekambaram Kotak Group Nominee

Mr. V.R.Narasimhan Kotak Group Nominee

Mr. Pravinkumar P. Thakkar, Mr. Kaushik B. Shah,Mr. Nimeshbhai K. Patel, Mr.

Rajesh B. Mehta, Mr. Satishchandra S. Shah,Mr. Govindbhai H. Patel , Mr. Kanayalal

M. Thakkar,Mr. Jayesh J. Shah,Mr. Rashmikant T. Parikh,Mr. Deepakkumar D.

Thakkar, Mr. Bharat J. Shah and Mr. Hiteshkumar N. Thakkar ceased to be the

Directors of the Company during the year 2009-10.

None of the Directors of the Company have been disqualified for being appointed as

Directors as specified in Section 274 of the Companies Act, 1956, as amended.

7. COMMITTEES

Your Company has constituted a Daily Rate Committee comprising of Mr.

Prahaladbhai P. Patel, Mr. Kamlesh Kumar B. Shah, Mr. Bharat Ishwarlal Patel and

Mr. Nilesh K Shah from trading-member representative category and Mr. Prakash

Nayak, Mr. Dilip Bhatia and Mr. Chirag Shah from non trading member representative

category, as members.

Pursuant to Sec 292A of the Companies Act, 1956, an Audit Committee has been

constituted by the Board comprising of Mr. Dileep C Choksi, Mr. Pranab Kr. Dutta, Mr.

Narasimhan V. R. and Mr. S.A. Narayan as its members.

8. INTERNAL AUDIT AND CONTROLS

During the financial year, your Company introduced the internal audit process for the

first time in the history of the Company by appointing M/s Shah Mehta & Majmudar,

Chartered Accountants, Ahmedabad, an external practicing Chartered Accountant

firm, as internal auditors.

9. AUDITORS

M/s S.V. Ghatalia & Associates, Chartered Accountants, Mumbai are the statutory

auditors of the company. M/s. S. V. Ghatalia & Associates, Chartered Accountants,

Mumbai, have consented to act as Auditors of the Company and are eligible for

reappointment.

10. STATUTORY INFORMATION

Your Company did not accept any deposits during the year.

The Company has made a Capital Advance in foreign currency for purchase of

Software amounting to Rs 17,165,925. It had no foreign exchange earnings.

The other particulars prescribed under the Companies (Disclosure of Particulars in the

Report of Board of Directors) Rules, 1988 are not applicable since your Company is

not a manufacturing company.

11. HUMAN RESOURCE DEVELOPMENT

Your Company’s upgradation process into an online screen based multi product

national commodity futures exchange can be achieved only when human resources of

appropriate skills, experience and education are recruited.

12. DIRECTORS’ RESPONSIBILITY STATEMENT

Based on representations from the Management of Ahmedabad Commodity Exchange

Limited who is entrusted with maintenance of the books of account of your Company,

in pursuance of Section 217 (2AA) of the Companies Act, 1956, we state that:

i. Your Company has, in the preparation of the annual accounts for the year ended

31st March 2010, followed the applicable Accounting Standards along with proper

explanations relating to material departures, if any;

ii. they have selected such accounting policies and applied them consistently and

made judgments and estimates that are reasonable and prudent so as to give a

true profit and fair view of the state of affairs of your Company as at 31st March

2010 and of the Profit and loss of your Company for the financial year ended 31st

March 2010;

iii. they have taken proper and sufficient care to the best of their knowledge and

ability, for the maintenance of adequate accounting records in accordance with the

provisions of the Act for safeguarding the assets of your Company and for

preventing and detecting fraud and other irregularities; and

iv. they have prepared the annual accounts on a going concern basis.

13. PARTICULARS OF EMPLOYEES

No Director / Employee of the Company is in receipt of a remuneration as given under

Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of

Employees) Rules, 1975 as amended. Hence, no particulars of employees is required

to be disclosed.

14. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND

FOREIGN EXCHANGE EARNINGS AND OUTGO

As the Company has no manufacturing activity, the provisions of Section 217(1)(e) of

the Companies Act, 1956 with respect to conservation of energy are not applicable.

During the year, no foreign exchange was earned or used by the Company. The

relevant data pertaining to technology absorption is given in the prescribed format as

per ‘Annexure 1’ to this Report

15. ACKNOWLEDGEMENT

Your Directors thank the Forward Markets Commission, Government of India and the

Ministry of Corporate Affairs, Government of India for their support and guidance. Your

Directors thank Kotak Mahindra Bank and its associates for providing the technical and

managerial support to your Company in its endeavour to set up an online screen

based national commodity exchange.

For and on behalf of the Board of Directors

(NARAYAN S. A.)

Chairman

Mumbai

27th April, 2010

ANNEXURE TO DIRECTORS’ REPORT

Under Section 217(1)(e) of the Companies Act, 1956:

ANNEXURE - 1

Technology Absorption:

During the year under review, additional thrust has been placed on development of

system technologies and upgradation of system infrastructure of the Exchange. The

Exchange has executed and is in the process of executing various technology

agreements with various vendors for enhancement of systems of the Exchange in

order to meet the requirements of a Nationwide Multi-Commodity Exchange.


(NARAYAN S.A.)

Chairman

Mumbai

27th April, 2010

Auditors’ Report To The Members of Ahmedabad Commodity Exchange Limited

1. We have audited the attached Balance Sheet of Ahmedabad Commodity Exchange Limited (‘the Company’) as at March 31, 2010 and also the Profit and Loss account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

iii. The balance sheet and profit and loss account statement dealt with by this report are in agreement with the books of account;

iv. In our opinion, the balance sheet and profit and loss account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

v. On the basis of the written representations received from the directors, as on March 31, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2010; and

b) in the case of the profit and loss account, of the loss for the year ended on that date;

For S.V. GHATALIA & ASSOCIATES Firm registration number: 103162W Chartered Accountants per Amit Kabra Partner Membership No.: 094533 Place: Mumbai Date: April 27, 2010

Annexure referred to in paragraph 3 of our report of even date Re: Ahmedabad Commodity Exchange Limited (‘the Company’)

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details

and situation of fixed assets.

(b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The Company did not have any inventory during the year. Consequently, clauses 4(ii)(a), 4(ii)(b)

and 4(ii)(c) are not applicable to the Company.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms

or other parties covered in the register maintained under section 301 of the Companies Act,

1956.

(b) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Act.

(c) The Company has not granted / taken any loan to / from parties covered under section 301 of the Companies Act, 1956 and therefore provision of clause iii(c) to iii(g) are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for the sale of services. The activities of the Company do not involve purchase of inventory and the sale of goods. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) (a) According to the information and explanations provided by the management, we are of the

opinion that the particulars of contracts or arrangements referred to in section 301 of the Act

that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions

made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have

been entered into during the financial year at prices which are reasonable having regard to the

prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 for the products of the Company.

(ix) (a)The Company is regular in depositing with appropriate authorities undisputed statutory dues

including provident fund, investor education and protection fund, employees’ state insurance,

income-tax, wealth-tax, service tax, cess and other material statutory dues applicable to it. The

provisions relating to sales-tax, customs duty, excise duty are not applicable to the Company.

Further, since the Central Governent has till date not prescribed the amount of cess payable

under section 441 A of the Companies Act,1956, we are not in a position to comment upon the

regularity or otherwise of the company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income-tax, wealth-tax, service tax, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable. The provisions relating to investor education and protection fund, employee’s state insurance, sales-tax, customs duty, excise duty are not applicable to the Company. Undisputed stamp duty of Rs. 49,011/- were outstanding at the year end, for a period of more than six months from the date it became payable.

(c) According to the information and explanation given to us, there are no dues of income tax,

wealth tax, service tax and cess which have not been deposited on account of any dispute. The provisions relating to sales-tax, customs duty, excise dutyare not applicable to the Company.

(x) The Company’s accumulated losses at the end of the financial year are less than fifty per cent of its net worth and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) In respect of dealing/trading in securities and other investments, in our opinion and according to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The securities and other investments have been held by the Company, in its own name.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xvi) The Company did not have any term loans outstanding during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company has not issued any debentures during the year.

(xx) The Company has not made any public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For S.V. GHATALIA & ASSOCIATES Firm registration number: 103162W Chartered Accountants per Amit Kabra Partner Membership No.: 094533 Place: Mumbai Date: April 27, 2010

AHMEDABAD COMMODITY EXCHANGE LIMITED

BALANCE SHEET AS AT MARCH 31, 2010

As at As at

31st March 2010 31st March 2009

Schedule Rupees Rupees

SOURCES OF FUNDS

1. Shareholders' Funds :

a) Share Capital (1) 487,213,080 -

b) Matta Capital (Refer Note 15 of Schedule 17) - 7,436,192

b) Reserves and Surplus (2) 35,880,597 24,894,052

2. Deferred Tax Liability (Refer Note 4 in Schedule 17) - -

Total 523,093,677 32,330,244

APPLICATION OF FUNDS

1. Fixed Assets (3)

Gross Block 50,831,227 15,675,877

Less : Accumulated Depreciation 3,572,544 1,660,215

Net Block 47,258,683 14,015,662

Capital work-in-progress including capital advances 18,205,925 -

2. Investments (4) 430,705,716 -

3. Current Assets , Loans and Advances

a) Sundry Debtors (5) 58,134 750,491

b) Cash and Bank balances (6) 26,318,257 28,417,484

c) Other Current Assets (7) 853,493 1,763,745

d) Loans and Advances (8) 2,904,851 264,298

30,134,735 31,196,018

Less : Current Liabilities and Provisions

a) Current Liabilities (9) 21,686,621 12,881,436

b) Provisions (10) 1,577,036 -

23,263,657 12,881,436

Net current assets 6,871,078 18,314,582

Profit & Loss Account 20,052,275 -

Total 523,093,677 32,330,244

0.04 0

Significant Accounting Policies and Notes to the Financial Statements (17) (0) (0)

The Schedule referred to above and notes to accounts form an integral part of balance sheet

As per our attached report of even date

For S.V. Ghatalia & Associates

Firm registration number: 103162W

Chartered Accountants

per Amit Kabra

Partner Director Director

Membership No.: 094533

Place: Mumbai

Date: April 27, 2010


Company Secretary

of Ahmedabad Commodity Exchange Limited

Manager


PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010

Year Ended Year Ended31st March 2010 31st March 2009

Schedule Rupees Rupees

INCOME

Operating Income (11) 1,866,426 2,739,264

Interest Income (12) 1,415,366 3,208,770

Other Income (13) 1,171,705 110,667

Total 4,453,497 6,058,701

EXPENDITURE

Personnel Expenses (14) 10,637,235 929,837

Interest and Other Finance Charges (15) 405,745 346,609

Administrative and Operating Expenses (16) 17,173,814 1,346,677

Depreciation 1,912,329 160,129

Total 30,129,123 2,783,252

Profit / (Loss) before Tax (25,675,626) 3,275,449

Provision for Taxation -Current tax - -

-Deferred tax (Refer Note 4 of Schedule 17) - -

Profit / (Loss) after tax (25,675,626) 3,275,449

Balance brought forward from previous year 5,938,523 4,141,421

(19,737,103) 7,416,870

Appropriations

Transfer To Trade Guarantee Fund 315,172 478,347

Transfer To General Reserve - 1,000,000

Surplus/ (deficit) carried to Balance sheet (20,052,275) 5,938,523

Total (19,737,103) 7,416,870

Basic Earnings per share (Refer Note 13 of Schedule 17) (1.04)

Significant Accounting Policies and Notes to the Financial Statements (17)

As per our attached report of even date

For S.V. Ghatalia & Associates

Firm registration number: 103162W

Chartered Accountants

per Amit Kabra Director Director Company Secretary

Partner

Membership No.: 094533

Place: Mumbai

Date: April 27, 2010

Manager


of Ahmedabad Commodity Exchange Limited


SCHEDULES FORMING PART OF THE BALANCE SHEET

As at As at31st March 2010 31st March 2009

Rupees Rupees

SCHEDULE 1 - SHARE CAPITAL

AUTHORISED: 100,000,000 (Previous Year NIL) Equity Shares of Rs. 10 each 1,000,000,000 -

1,000,000,000 -

ISSUED, SUBSCRIBED AND PAID UP:48,721,308 (Previous Year NIL) Equity Shares of Rs. 10 each fully paid up 487,213,080 - (Refer Note 5 in Schedule 17)

487,213,080 -

SCHEDULE 2 - RESERVES AND SURPLUS

Capital ReserveAs per last Balance Sheet 580 580 Add: Transferred from Matta Capital (Refer Note 15 of Schedule 17) 7,436,192 -

7,436,772 580 Securities Premium AccountAs per last Balance Sheet - - Add: Additions during the year 267,490,979 - Less: Utilised for issue of Bonus Shares ( Refer Note 5 in Schedule 17) (258,871,740) -

8,619,239 - General ReserveAs per last Balance Sheet 11,070,000 10,070,000 Add: Transferred from Profit & Loss Account - 1,000,000

11,070,000 11,070,000 Trade Guarantee FundAs per last Balance Sheet 7,884,949 6,898,243 Add: Transferred from Profit & Loss Account 315,172 478,347 Add: Trade Guarantee - Interest and other miscellaneous income 554,465 508,359

8,754,586 7,884,949

Balance in Profit and Loss Account - 5,938,523 35,880,597 24,894,052

Ahmedabad Commodity Exchange Limited

Schedules forming part of Balance Sheet

SCHEDULE 3- FIXED ASSETS

DESCRIPTIONS

As at Additions Deductions As at As at For the Adjustments On As at As at As at

1st April, for the Adjustments 31st March, 1st April, year (refer note Deductions 31st March, 31st March, 31st March,

2009 year for the year 2010 2009 below) 2010 2010 2009

TANGIBLE

Land 97,880 - - 97,880 - - - - 97,880 97,880

Dead stock 54,653 - 54,653 50,470 - 4,183 - 54,653 - 4,183

Premises 13,672,109 - - 13,672,109 162,357 236,448 38,301 - 437,106 13,235,003 13,509,752

Computers 630,903 33,528,732 - 34,159,635 536,244 1,071,218 94,659 - 1,702,121 32,457,514 94,659

Furniture and Fixtures 527,019 - - 527,019 419,909 - 107,110 - 527,019 - 107,110

Office Equipments 571,773 135,352 - 707,125 415,978 12,288 155,795 - 584,061 123,064 155,795

Motor Vehicles - 1,491,266 - 1,491,266 - 146,044 - 146,044 1,345,222 -

Intangible Assets

Software 121,540 - - 121,540 75,257 - 46,283 - 121,540 - 46,283

TOTAL 15,675,877 35,155,350 - 50,831,227 1,660,215 1,465,998 446,331 - 3,572,544 47,258,683 14,015,662

Previous Year 2,186,238 13,489,639 - 15,675,877 1,500,085 160,129 - 1,660,215 14,015,662 686,153

Note

Adjustments on account of change in method of depreciation (with retrospective effect) from Written Down Value (‘WDV’) method at the rates prescribed in Schedule XIV to the Companies Act, 1956

to the Straight Line (SLM) method at the rates based on managements estimates of useful life.

GROSS BLOCK DEPRECIATION/AMORTISATION NET BLOCK


SCHEDULES FORMING PART OF THE BALANCE SHEET

As at As at31st March 2010 31st March 2009

Face Value

Rupees Number of Units

Rupees Rupees

SCHEDULE 4 - INVESTMENTSCurrent Investments (non trade)(At cost or net realisable value, whichever is lower)UnquotedMutual Fund UnitsICICI Prudential Institutional Liquid Super Institutional Plan-Growth 100 453653.330 60,793,629 - Kotak Floater Long Term- Growth 10 17329107.811 250,712,087 - Templeton Floating Rate Income Fund Long Term Super Institutional- Growth 10 9615927.590 119,200,000 - (Refer Note 3 in Schedule 17 ) 430,705,716 -

Aggregate Value of Unquoted Investments-At Book Value 430,705,716 - -At Market Value 436,236,028 -

SCHEDULE 5 - SUNDRY DEBTORSSundry Debtors unsecured, considered gooda) Debts outstanding for more than six months - - b) Other Debts 58,134 750,491

58,134 750,491 Less: Provision for Doubtful Debts - -

58,134 750,491

SCHEDULE 6 - CASH AND BANK BALANCES Cash on hand 27,316 109,211 Balances with scheduled banks - in current accounts 2,639,586 8,777,038

- in fixed deposit accounts (refer note below) 23,651,355 19,427,608

26,290,941 28,204,646 Balance with Madhavpura Mercantile Cooperative Bank 103,627 103,627 [Maximum amount outstanding during the year Rs. 103,627 (previous year Rs. 103,627]Less: Provision for doubtful balances 103,627 -

- 103,627 Note: Fixed Deposits with Scheduled banks include Rs.5,000,000 (previous yearRs. Nil) which is under lien with Central Bank of India towards bank guaranteein favour of Forwards Market Commission.

26,318,257 28,417,484

SCHEDULE 7 - OTHER CURRENT ASSETSInterest Accrued on Fixed Deposits 853,493 1,763,745

853,493 1,763,745

SCHEDULE 8 - LOANS AND ADVANCES(Unsecured, unless otherwise stated considered good)Advances recoverable in cash or in kind or for value to be received 2,039,929 1,000 Deposits - Others 586,500 13,447 Advance Tax and Tax deducted at source 278,422 249,851

2,904,851 264,298

SCHEDULE 9 - CURRENT LIABILITIESSundry Creditors SCHED12-6 SCHED12-10Total Outstanding Dues of(a) Micro and Small enterprises ( Refer Note 12 in Schedule 17) - - (b) Others 11,804,722 414,073 Advance from customers 2,500 2,500 Members Deposits 8,054,253 12,375,233 Other Liabilities 1,825,147 89,630

21,686,621 12,881,436

SCHEDULE 10 - PROVISIONSProvision for Gratuity 598,070 - Provision for Accumulated Compensated Absences 978,966 -

1,577,036 -


SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT

Year Ended Year Ended

31st March 2010 31st March 2009

Rupees Rupees

SCHEDULE 11- OPERATING INCOME

Transaction Fees 1,011,492 1,581,586

Subscription fees 247,313 331,750

Non member registration fees 607,621 825,928

1,866,426 2,739,264

SCHEDULE 12 - INTEREST INCOME

Interest on Bank Deposits 1,307,740 2,874,242

(Tax deducted at source Rs.243,386 (previous year Rs.132,900)

Interest Others 107,626 334,528

1,415,366 3,208,770

SCHEDULE 13 - OTHER INCOME

Profit on Sale of Current investments 1,020,659 -

Miscellaneous Income 151,046 110,667

1,171,705 110,667

SCHEDULE 14 - PERSONNEL EXPENSES

Salaries, allowances and bonus 9,964,249 583,591

Contribution to provident and other funds 312,273 28,398

Compensated absences and leave encashment 18,931 122,340

Gratuity 76,761 -

Staff Welfare 265,021 195,508

10,637,235 929,837

SCHEDULE 15 - INTEREST AND FINANCIAL EXPENSES

Interest on Bank Overdraft 8,589 9,481

Bank Guarantee, Commission and Other Charges 137,842 16,701

Interest - Others 259,314 320,427

405,745 346,609

SCHEDULE 16 - ADMINISTRATIVE AND OPERATING EXPENSES

Travelling, Conveyance and Motor Car Expenses 2,188,577 201,286

Legal and Professional Charges 5,123,722 147,861

Rent 1,022,255 -

Repairs and Maintenance 86,998 172,009

Rates and Taxes 664,924 114,317

Stamp Duty & Registration Charges 5,879,609 -

Electricity Charges 158,656 69,924

Advertisement and Business Promotion 279,323 121,000

Auditor's Remuneration :(excluding service tax)

- Audit Fees 200,000 32,500

- Tax Audit Fees 50,000 7,500

Printing and Stationery 207,934 133,606

Provision for doubtful debts / deposits 103,627 -

Bad debts/ advances written off 618,508 -

Miscellaneous Expenses 589,681 244,573

Donations - 102,101

17,173,814 1,346,677


Schedule 17- Notes to the Financial Statements Notes to Accounts

1. Nature of Operations

Ahmedabad Commodity Exchange Limited is a regional level exchange which offers trading in castor and cotton products through its platform. The company had applied to Forwards Market Commission to set up a national level exchange for which it received an in principal approval on May 14, 2009.

2. Statement of Significant Accounting Policies a. Basis of preparation

The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and except for the changes in accounting policy discussed more fully below, are consistent with those used in the previous year.

b. Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management‟s best knowledge of current events and actions, actual results could differ from these estimates.

c. Changes in Accounting Policies

Change in method of depreciation

(i) In the current year, the Company has changed (with retrospective effect) its method of providing depreciation on fixed assets, from the Written Down Value („WDV‟) method at the rates prescribed in Schedule XIV to the Companies Act, 1956 to the Straight Line Method (SLM) at the rates based on management estimates of useful life. The management believes that such change will result in a more appropriate presentation of these assets and will give a systematic basis of depreciation charge more representative of the time pattern in which the economic benefits will be derived from the use of such asset. Had the Company continued to use the earlier basis of providing depreciation, the charge to the Profit and Loss Account after taxation for the current year would have been lower by Rs. 170,734 (after adjusting deferred tax credit of Rs. 87,914) and the net block of fixed assets would correspondingly have been higher by Rs. 258,648.

d. Fixed Assets Fixed assets are stated at cost inclusive of incidental expenses less accumulated depreciation. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.


e. Depreciation

Depreciation is provided using the Straight Line Method as per the useful lives of the assets estimated by the management, or at the rates prescribed under schedule XIV of the Companies Act, 1956 whichever is higher.

Assets Rates Schedule XIV

Premises 1.72% 1.63%

Furniture and Fixtures 16.67% 6.33%

Computers 33.33% 16.21%

Office Equipments 20.00% 20.00%

Motor Vehicles 25.00% 9.50%

f. Impairment

The carrying amounts of assets are reviewed at each balance sheet date if there is any

indication of impairment based on internal/external factors. An impairment loss is recognized

wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable

amount is the greater of the asset‟s net selling price and value in use. In assessing value in

use, the estimated future cash flows are discounted to their present value at the weighted

average cost of capital.

g. Investments

Investments are classified into long term investments and current investments. Investments which are intended to be held for more than one year are classified as long term investments and investments which are intended to be held for less than one year are classified as current investments. Long term investments are accounted at cost and any decline in the carrying value other than temporary in nature is provided for. Current investments are valued at cost or market/fair value, whichever is lower. In case of investments in units of a mutual fund, the net asset value of units is considered as the market / fair value.

h. Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

Transaction charges

Transaction fees are charged to members based on the volume of transactions entered into by the members through the exchange. These are accrued when orders placed by members on the network are matched and confirmed. Subscription fees Subscription fees are charged to members on annual basis. This is recognised on accrual; basis. Non member registration fees Non member registration fees are charged to new clients who enter into transactions through the members of the exchange. Interest Income Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.


i. Foreign currency transactions

(i) Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(ii) Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

(iii) Exchange Differences Exchange differences arising on the settlement of monetary items, or on reporting monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.

j. Retirement and other employee benefits

(i) Retirement benefits in the form of Provident Fund are a defined contribution scheme and

the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective funds.

(ii) Gratuity liability is a defined benefit obligation and are provided for on the basis of an

actuarial valuation on projected unit credit method made at the end of each financial year.

(iii) Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method

(iv) Actuarial gains/losses are immediately taken to profit and loss account and are not

deferred.

k. Income Tax

Tax expense comprises of current and deferred tax. Current income tax is measured at the

amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961

enacted in India. Deferred income taxes reflects the impact of current year timing differences

between taxable income and accounting income for the year and reversal of timing differences

of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably


certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized.

l. Earnings Per Share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue and bonus element in a rights issue to existing shareholders.

m. Provisions

A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

n. Cash and Cash equivalents- Cash and cash equivalents comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

3. Investments During the year investments were made in mutual funds. For detail of units and value of Mutual Funds Purchased and Sold during the year refer annexure 1.

4. Deferred Tax Asset / Liabilities (Net)

The breakup of deferred tax asset / liability is as under:

Particulars As at March 31, 2010 (Rupees)

Deferred Tax Assets

Premlinary Expenses 1,522,680

Provision for Gratuity 203,284

Leave encashment 149,539

Carry forward losses* 5,676,447

Total Deferred Tax Assets 7,551,950

Deferred Tax Liabilities

Depreciation on fixed assets 7,551,950

Total Deferred Tax Liability 7,551,950

Net Deferred Tax Asset* NIL

Previous Year: NIL *The Company has recognised Deferred tax asset on the accumulated carry forward business

losses only to the extent of net deferred tax liability. Deferred tax asset on balance amount of accumulated carry forward business losses aggregating Rs. 4,325,245 is not recognised as the Company is unable to substantiate virtual certainty of future profits against which such asset can be realised.


5. Rights and Bonus Issue Right Issue During the year the Company has issued 17,739,209 equity shares of Re.10 each at a premium of Rs.10.50 per share for cash to the existing equity shareholders on November 14, 2009. Bonus Issue During the year the Company has issued 25,887,174 equity shares of Re.10 each utilizing securities premium Rs. 258,871,740 to the existing equity shareholders on October 6, 2009 (2,808,660 equity shares) and March 10, 2010 (23,078,514 equity shares).

6. Related Parties Related party disclosures, as required by Accounting Standard 18, “Related Party Disclosures” issued by the Institute of Chartered Accountants of India are given below: -

A. Related parties where control exists

Nature of Relationship Related Party

Investing party

Kotak Mahindra Bank Limited (KMBL)

Kotak Mahindra Prime Limited (KMP)

KOMAF Financial Services Limited

Enterprises over which Key Management Personnel/Relatives thereof are having Significant Influence

Kotak Securities Limited

B. Key management personnel 1. Mr. Narayan S. A., Director (From August 4, 2009) 2. Mr. Pravinbhai Thakkar, President (Upto August 4, 2009) 3. Mr. Kaushikbhsai Shah, Vice President (Upto September 30, 2009)

For transactions with related parties refer Annexure 2.

7. Lease

Operating Lease

During the year the Company has taken an office premise from an associate Company under cancellable leave and license agreements for a period of 10 months. The lease rental is Rs.1,95,500 (net of service tax Rs. 20,137) per month. Total lease rental of Rs.1,022,255 is recognised in the Profit and Loss Account under the head „Rent‟ in Schedule 16.

8. Capital Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for as at March 31, 2010: Commitments for acquisition of Purchase of Software/Functional Testing of Software/Networking Cost- Rs. 134,944,834, (Previous Year: NIL).

9. Contingent Liabilities:

Fixed Deposits placed with scheduled banks against guarantee of Rs. 5,000,000 given in favour of Forward Market Commission. (Previous Year Rs. NIL)


10. Gratuity and other post-employment benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five

years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for

each completed year of service. These benefits are unfunded.

The principal actuarial assumptions used in determining gratuity obligations for the Company‟s plans are shown below:

Particulars 2010 2009

Discount Rate 8% NIL

Future Salary Rise 5% NIL

The estimates of future salary increases, considered in actuarial valuation, take account of inflation and salary rise.

11. Expenditure in Foreign Currency

Capital Advance for Purchase of Software- Rs.1,71,65,925/- (Previous Year: NIL)

12. The Company has initiated the process of identification of suppliers registered under the “The

Micro, Small and Medium Enterprises Development („MSMED‟) Act, 2006” by obtaining confirmations from suppliers. Based on the intimation received by the Company, none of the suppliers have confirmed to be registered under MSMED Act, 2006. Accordingly, no disclosures relating to amounts unpaid as at the year end together with interest paid/ payable are required to be furnished.

13. Earnings per Share

Particulars For the year ended March 31, 2010

(Rupees)

Profit / (Loss) after tax attributable to equity shareholders (25,675,626)

Number of equity shares of Rs. 10/- each issued and outstanding

-At the end of the year 48,721,308

-Weighted average number of equity outstanding 24,774,748

Basic earnings per share (1.04)

Nominal value of equity shares Rs,10

*Since in the previous year the Company was a Company limited by guarantee, no EPS for the

previous year have been reported.

14. Conversion to Company limited by shares:

As a part of the process of upgrading and transforming itself into a nationwide multi commodity exchange, the Company had made an application to the Registrar of Companies, Gujarat, Ahmedabad (ROC Ahmedabad) to convert itself into Company limited by shares from the Company limited by guarantee. Effective July 27, 2009 the Company has been incorporated as a public company limited by shares vide„re-registration certificate‟ numbered U67100GJ1956PLC000597 issued by ROC Ahmedabad.


15. The Company is a Small and Medium Sized Company (SMC) as defined in the General Instructions in respect of Accounting Standards notified under the Companies Act, 1956. Accordingly, the Company has complied with the Accounting Standards as applicable to a Small and Medium Sized Company.

Previous Year Comparatives

The figures of the previous year were audited by a firm of Chartered accountants other than

S.V. Ghatalia & Associates.

Previous year‟s figures have been regrouped where necessary to conform to this year‟s classification.

As per our report of even date For S.V. Ghatalia & Associates Firm registration number: 103162W Chartered Accountants

For and on behalf of the Board of Directors of Ahmedabad Commodity Exchange Limited

per Amit Kabra Partner Director Director Company Membership No.: 094533 Secretary Place: Mumbai Date:April 27, 2010

Manager

Annexure 1

Units and Value of Mutual Fund Purchased and Sold during the year.

Purchased Sold

(Units) (Units)

Kotak Liquid (Institutional

Premium) - Growth

10 13,553,928.6219 250,600,000 13,553,928.6219 250,712,087

Kotak Floater Long Term-

Growth

10 17,329,107.811 250,712,087 NIL NIL

Templeton Floating Rate

Income Fund Long Term

Plan Super Institutional-

Growth

10 9,615,927.59 119,200,000 NIL NIL

ICICI Prudential

Institutional Liquid Super

Institutional Plan- Growth

100 895,462.245 120,000,000 441,808.92 60,147,066

Mutual Fund Schemes Face Value Value (Rs) Value (Rs)

HDFC Liquid Fund -

Premium Plan - Growth

10 6,600,405.925 120,000,000 6,600,405.925 120,214,943

Annexure 2

Following transactions were carried out with related parties in the ordinary course of business

Nature of Transactions Name of the Related Party

Current Year Previous

Year

Current

Year

Previous

Year

Current Year Previous

Year

FINANCE

Equity Share Capital (including share premium Rs. 7086195)

Kotak Mahindra Prime Limited 100,061,055 - - 100,061,055 -


Kotak Mahindra Bank Limited 156,655,096 - - 156,655,096 -


KOMAF Financial Services Limited 137,364,273 - - 137,364,273 -

OUTSTANDINGSDeposits Given Kotak Securities Limited - 586,500 - 586,500 -

FIXED ASSETS PURCHASED Kotak Securities Limited - 1,810,566 - 1,810,566 -

OTHER OUTSTANDINGS

Sundry Creditors - Others Kotak Securities Limited - 7,199,236 - 7,199,236 -

Sundry Creditors - Others Kotak Mahindra Bank Limited 2,674,594 - 2,674,594 -

Expense Account

Rent Paid (including Service Tax) Kotak Securities Limited - 862,546 - 862,546 -

Expense Reimbursement to other Companies (incuding

Service Tax) Kotak Mahindra Bank Limited 2,995,642 - 2,995,642 -

Kotak Securities Limited - 7,548,802 - 7,548,802 -

Expense Reimbursement from other Companies Kotak Securities Limited - 1,653,693 - 1,653,693 -

Kotak Mahindra Bank Limited 21,484 21,484 -

Holding Company or

group of individuals

having control or

significant influence over

the Company and

relatives of such

individuals

Enterprises over which

Key Management

Personnel/Relatives

thereof are having

Significant Influence

Total

ace derivatives commodity exchange limited · ace derivatives & commodity exchange limited ......

Documents