Dear Shareholders,
During the last year, MCX continued its successful journey, in the face of
unprecedented challenges posed by the fallout of the COVID-19 pandemic. The restrictions
imposed on the movement of persons and goods, to contain the spread of the virus,
disrupted normal activities in almost all sectors of the economy. As a result of the
controls enforced in almost all countries around the globe, the world Gross Domestic
Product (GDP) contracted by about 3.2% in the calendar year 2020 (as per estimates of the
International Monetary Fund), while India's GDP shrank by about 7.3% in the financial year
(FY) 2020- 21 (as per provisional estimates of the Central Statistical Organization,
Government of India).
The performance of MCX has to be viewed in this context. As a result of timely action
taken by the management, the impact on your Company's performance was less than
anticipated. The single side Average Daily Turnover (ADT) of futures traded on MCX
registered a marginal decline of about 2.9% to 31,595 crore in the year 2020-21, compared
to the ADT of 32,550 crore in the year 2019-20. In the options segment, the average daily
notional turnover moderated to 943 crore in financial year 2020-21 compared to 1,131
crore in the previous year. During the last financial year, your Company's total income
stood at 494.34 crore, a decline of 1.7%, from 503.11 crore in the previous year. As a
result, Net Profit during the year was 225.22 crore, which was about 5% less than the
Net Profit earned by the Company during the previous year.
You would be happy to note that your Company, maintained its pole position among its
peers. MCX continued to remain the market leader among the domestic exchanges in the
commodity derivatives segment, accounting for about 96% of total traded value of commodity
futures. The Exchange also retained its position as world's 7th largest
commodity futures exchange in the calendar year 2020, with more than 218 million commodity
futures contracts traded during the year (as per data released by the Futures Industry
Association viz. FIA).
The pandemic notwithstanding, your Company introduced several new products during the
year. Futures contracts on MCX iCOMDEX Bullion Index (BULLDEX) and Base Metal Index
(METLDEX), were launched in August 2020 and October 2020 respectively. In addition, your
Company launched the Rubber Futures contract during financial year 2020-21. It is
noteworthy, that MCX BULLDEX futures contract became the world's third most traded
commodity index futures contract in the year 2020, (as per data released by FIA), within a
short period of its launch in August 2020.
MCX continued to introduce innovations in its products and processes. During the FY
2020-21, the Exchange prescribed detailed guidelines on ‘MCX Good Delivery Norms for
BIS-Standard Gold/Silver'. This initiative facilitated the entry of local Gold refiners
into the Exchange's delivery process, thereby contributing towards the goal of Atmanirbhar
Bharat. In pursuance of this objective, Qualified Indian Gold refiners have, been
empaneled in conformity with the guidelines. There are plans to empanel Indian producers
in other commodities too, especially in Base Metals. This would bring local stakeholders
of the commodity value chain into the Exchange's delivery mechanism.
In order to further align the Exchange's products with the physical markets'
requirements, the primary delivery centre of the Aluminium Futures contract was shifted to
Raipur district (Chhattisgarh), while retaining Thane district (Maharashtra) as the
additional delivery centre. Delivery centres at different locations for all other Base
Metals are also being progressively opened, in order to strengthen the linkage between the
physical and derivatives markets and enhance the footprint of the Base Metals derivatives
market across the country.
In another initiative directed at addressing the needs of the participants, the
Exchange's trading system was successfully upgraded during the year, to accept negative
and zero price quotations in unusual scenarios.
Looking ahead, your Company shall continue to explore new opportunities for growth by
expanding the products basket, facilitating entry of new participants and developing
partnerships in existing and new areas. Launch of innovative products and introduction of
derivatives in new commodities and indices are examples of such opportunities under
consideration.
We are optimistic that the worst is behind us and that the Indian economy would witness
a high rate of growth during the current financial year and in the years ahead. India's
GDP is expected to grow by 9.5% in the FY 2021-22 (as per estimates of the Reserve Bank of
India). It is expected that the demand for commodities will mirror the growth of the
Indian economy. The rising demand for commodities would require a mechanism for efficient
price discovery and instruments for risk management. As mentioned earlier, MCX looks
forward to availing such opportunities through introduction of innovative and new
derivative products, thereby benefitting stakeholders in both agricultural and
non-agricultural commodities.
Although there exists a threat to the growth in the form of new waves of COVID-19
pandemic, we believe that stakeholders in the commodity market are now better prepared to
deal with such threats. Adoption of COVID-compatible operational models, gives us the
confidence that the adverse effects, caused by new waves of the pandemic, would be
successfully mitigated and your company will retain its dominant position in the
commodities market.
I would be failing in my duty, if before concluding, I on behalf of MCX, do not place
on record appreciation for the continuing support received from the Regulator, Members,
other stakeholders and most importantly, our Shareholders, which has contributed
significantly towards our achievements during the year.