Financial Technologies (India) Ltd

MACRO TRENDS

GLOBAL MARKETS REVIEW

The world is changing more rapidly than ever as globalization continues its march. Theeconomic differentiators between the developed and the emerging countries are disappearingvery fast. The criticality of regulatory reforms and surveillance for the well being ofeconomy is realized now more than in the previous decades. The financial crisis left inits trail unique challenges and opportunities for the global financial markets, itsparticipants, regulators and governments.

The advent of a rising middle class, a rich supply of commodities, political anddemographic changes, and technology developments serve to accelerate this shift. With MNCsoriginating from emerging markets exporting their brand of capitalism to the rest of theworld, globalization has entered a new phase.

Capital markets are becoming increasingly globalized, as evidenced by the world'sforeign direct investment (FDI) flows standing at over US$ 1.8 trillion in 2007, and 25%of global equities being owned by foreign investors. Asian sovereign and petro-dollarinvestors (often using sovereign wealth funds) have moved the balance of the world economyfurther to the emerging economies, while private equity (PE) and hedge funds have servedto re-define financing and leverage. The necessity to have a consistent global regulatorysystem that can keep fraudulent behavior under check and prevent excessive risk-assumptionis on a rise. Such a system should promote growth, while simultaneously meeting bothglobal standards and respecting local / national requirements. Technology developments aredriving change for both businesses and consumers. The ubiquity of the internet and mobilecommunications, the resultant massive processing power, and almost unlimited bandwidth anddata storage creates opportunities to enhance the reach of the financial markets, as wellas that of all businesses across the globe. Technology will be an important factor inenabling financial inclusion which facilitates more people to direct their savings intoproductive investments The importance of financial markets as the most transparent andefficient mediums of price discovery and value creation is being increasing realized bythe economies world over. If there was ever a time apt for operating in this domain to aidfinancial inclusion and equitable growth, it is now. And your Company is an establishedplayer in this very arena.

OVERVIEW OF THE INDIAN FINANCIAL MARKETS

The Indian financial markets have grown manifold in the last 10 years, and have helpedchannel domestic and foreign savings towards financial markets. Growth has been driven byregulatory reforms, widespread entrepreneurial spirit, technology and liberalization thedeveloping economies.

During the fiscal 2010, asset prices in India rose sharply. Domestic equity marketsregistered a phenomenal increase of 81% in prices, outperforming many other emergingeconomies. The slow-down in the growth of bank credit to the industry in fiscal 2010 wasdwarfed to a large extent by a higher mobilization of resources through IPOs, privateplacements and mutual funds. Stock prices displayed a continuous upward momentumthroughout the year, except for corrections caused by global events such as Dubai Worlddefault and Greek sovereign debt concerns.

The year also saw a number of reforms, such as the extension of trading hours in theequity markets and the setting up of trading platforms by recognized exchanges possessingnationwide trading terminals for SMEs. In the currency markets, futures contracts in threenew currency pairs namely GBP/INR, YEN/INR, and EUR/INR were introduced. However, inspiteof the various achievements of the Indian capital market the following are the glaringchallenges that are likely to impede their growth.

Of the total equity ownership in India, the retail segments' contribution is only about10%. This is, far less than the developed markets of the world such as the United Statesand the United Kingdom. The costs per transaction and the market impact on price aresignificantly higher in India. While in other markets, there is a diversified mix ofinterest rate futures, forex futures and corporate bonds, the Indian exchanges are largelyundiversified with equities and commodities comprising nearly 90% of trading volume.

The Indian capital markets are not spread across the length and breadth of the country.The dominance of four cities: Mumbai, Delhi, Ahmedabad and Kolkata, which account for 85%of cash trading volumes stands testimony to this fact. The top-10 cities (Tier-I)contribute 90% of the total trading volume and 78% of mutual fund ownership, whichaccounts for only 37% of the total urban income pool. Given the lack of participation ofthe other urban centres based in the Tier-II and Tier-III cities, there is a hugeopportunity to deepen the retail investor base in India. Increasing domestic participationis the need of the day for deepening and strengthening India’s financial markets.

Presently, the Indian financial markets are over-dependent on inflows from foreigninstitutional investors (FIIs), who contribute more than 50% of Equity Capital Markets(ECM) volumes and around 70% of trading volumes. The share of the domestic institutionalinvestors (DII) could be encouraged by allowing higher investments through pension fundsin equities. The corpus of the pension funds is of the order of Rs. 6.4 trillion; one canimagine the scope for flow into the equity markets, either directly or via the MF route ifthe restrictions on this count (which currently limits participation to 10% of theircapital) are relaxed.

Reforms need to be considered to deepen India’s product markets, especially thoseof corporate bonds, warrants and interest-rate futures. It is also necessary to streamlinesecurities lending and borrowing. A dedicated SME exchange with easier listing normsshould be set up to enable Indian SMEs to raise funds at a lower cost, without adverselyimpacting investor-protection. Alongside product innovations, reduction in the complexityand cost of opening dematerialised accounts to encourage greater participation isrequired. Efforts towards investor education and awareness in urban and semi-urban centresneed to be enhanced as well, in order to motivate further capital market participation.

Thus, to make the Indian financial markets globally competitive there is a need todirect the reforms towards increasing its retail customer base, introducing products andinstruments beyond equities for better risk management and reducing the cost forcustomers.

Technology Vertical

Exchange Solutions: Your Company has released new versions of the trading systemsoftware of our flagship product suite DOME (Distributed Order Matching Engine) andclearing and settlement solution - CnS for exchange solutions with enhanced performanceand functionalities. The upgraded DOME application was deployed at MCX and installed atMCX-SX and NSEL. DOME and CnS was implemented at the SMX, GBOT and BFX. As part of theexchange suite, new solutions like FIX Engine, Exchange Direct and eXchange weresuccessfully launched at various exchanges.

Brokerage and Messaging

Solutions: Your Company is one of the leading providers of end-to-end STP technologysolutions for exchanges and related constituents. It is constantly upgrading its existingsolutions and developing innovative technology products to ensure seamless operations.

An advanced functionality was introduced in ODINTM TWS and ODINTM Diet applications,which provides customized alerts on regular and advanced collections of technicalindicators to support the trading decision process. A low bandwidth of Net.net was alsodeveloped, which allows users to trade on low bandwidth internet connections like datacards, GPRS Connections etc. at a faster speed.

ODINTM ATLAS, a special trading application, with functionalities EzJobber and EzTraderwas created. While EzJobber enables jobbers to effectively and efficiently execute ordersin various market segments, EzTrader enables traders to program their execution to capturea favorable price movement in underlying stocks / contracts, effectively based on thepredefined progression parameters.

ODINTM ATS, an automated trading application with an EzTrackerfunctionality, which allows users to create and reverse positions in the selectedunderlying stock / contract automatically based on the pre-set parameters, was alsointroduced.

This year saw the launch of a new optimized version of STP-Gate for handling volumes,along with speed and upgraded hardware / software at the backend. The enhanced version ofthe STP-Gate product suite vouches superior connectivity, operational efficiency andcomplete automation.

Through ESG (Enterprise Solutions Group) your Company has started a new service whichoffers our clients co-location along with FMS. For this service, called EQS (EnterpriseQuality Services), it has tied up with Netmagic to provide the datacenter facilities.

Your Company joined the STAC Benchmark Council to help define industry-standardperformance metrics for trading technology solutions. The STAC Benchmark Council is aglobal industry body consisting of leading trading organizations and vendors, facilitatedby the Securities Technology Analysis Center (STACR). The Council develops standardbenchmarks for technology used in the capital markets. End-user firms such as brokers,hedge funds, exchanges, and alternative trading systems control the STAC Benchmarksthrough their votes, keeping the benchmarks tied to real business needs.

Your Company constantly pursues opportunities to enhance its existing productportfolio, so as to deliver value-added solutions appropriate to the changing businessenvironment.

Exchange and Ecosystem Vertical

Your Company has maintained a leadership position through its exchanges and ecosystems.Through its exchanges, it has established itself as the creator and operator of moderntech-centric exchanges across the fastest growing economies of Asia, Middle East andAfrica. Through its ecosystem vertical, your Company addresses upstream and downstreamopportunities around exchanges including warehousing, collateral management, informationvending, and payment gateways, among others.

In the pages 69-81, we review the operations of our exchanges including - MultiCommodity Exchange (MCX), MCX Stock Exchange (MCX-SX)*, National Spot Exchange (NSEL),Indian Energy Exchange (IEX), Singapore Mercantile Exchange (SMX), Global Board of Trade(GBOT), Bahrain Financial Exchange (BFX), Bourse Africa and ecosystem vertical including -National Bulk Handling Corporation (NBHC), atom technologies and TickerPlant.

• Niche business area

Our position as a technology solutions provider for the financial markets domain inIndia which sets up next-generation tech-centric exchanges remains largely unchallenged.

• Pioneer in exchange creation in high-growth economies

Your Company is a pioneer in leveraging its technology expertise to create tech-centricexchanges in the high-growth (over 6% consistently) economies of Africa, Middle East andAsia, including India, and remains the only player to do so. It is well-poised to tap thisopportunity and grow.

• Comprehensive coverage of Financial Markets

Be it asset classes or geographies, or innovations such as Islamic Finance, yourCompany has its presence through its exchanges; so there is a direct co-relation betweenthe high growth rate of your Company with the advancements in the financial markets andthe growth of emerging economies.

• Replicating the India Success Story

Your Company has a proven track record in the technology solutions and exchangecreation space in India. With the commencement of trading on three of its internationalexchange ventures viz. SMX Singapore, GBOT, Mauritius and BFX, Bahrain, the company is allset to globalize its success stories such as MCX, on a much larger scale catering to alarger constituent base in the emerging economies from Africa to Asia and the Middle East.

• Augmenting Technology Business

Your Company’s new exchange ventures will be powered by its exchange solutions;the multi-asset brokerage solutions will facilitate brokers' operations. These willaugment the technology business significantly.

• Financial Markets Ecosystem in Emerging Economies

Your Company operates greenfield exchanges connecting fast-growing economies of Africa,Middle East, India and South East Asia. Your Company, through its ecosystem vertical,addresses upstream and downstream opportunities around exchanges, including clearing,depository, information vending, and payment gateway among others. In effect, it createsan efficient financial markets ecosystem. As it goes live with its exchanges in emergingeconomies, there are opportunities around them for ecosystem creation expertise.

RISK AND RISK MANAGEMENT

Your Company has instituted a Risk Management policy to ensure that key operationalrisks are effectively mitigated. For further details, see Directors' Report on Page 53 ofthe Annual Report

• Macro Economic Trend

Your Company’s performance and growth is dependent on the health of the Indianeconomy. The economy could be adversely affected by various factors such as political orregulatory action, including adverse changes in liberalization policies, socialdisturbances, terrorist attacks and other acts of violence or war, natural calamities,interest rates, commodity and energy prices and various other factors. Any slowdown in theIndian economy may impact your Company’s business and financial performance and theprice of the Shares. The Company regularly keeps track of the emerging global scenario soas to realign its business strategy as may be called for.

• Competition

Your Company operates in a very competitive environment and its ability to grow dependson its ability to compete effectively. The Indian financial technology services,commodities and financial securities industry are very competitive. Additional competitionfrom new entrants to your Company’s markets could negatively impact its tradingvolumes, ability to attract new customers / members and / or retain existing customers /members and profitability. Maintaining or increasing our market share will depend on theability to anticipate and respond to various competitive factors, including the ability toprovide innovative products and services, introducing new products, responding to changesin technology and entering into alliances. The Company tries to mitigate the competitionby continuously improving upon product, technology and process benchmarks of Internationalmajors, introducing new product variants, focused customer approach and differentiating onquality.

• Employee Retention

Your Company depends on the experience and skills of its management team and keyemployees and the inability to retain them could adversely affect its business. Most ofyour Company’s key management personnel have been there since its inception and willcontinue to be integral to its further growth and development. Your Company has anemployee base which possesses extensive experience in the trading technologies,commodities, foreign exchange trading industry and in the securities markets andcontributes immensely to its growth. Your Company’s success is largely dependent onthe management team and key employees, who ensures efficient implementation of itsstrategy. The Company has undertaken a number of initiatives like providing career growthby regularly upgrading the skills of its employees through enrichment programmes. This hasresulted in enhancement of the technical and leadership skills and has helped create awork culture which enables to develop and retain its core strength, the IntellectualCapital.

• Gestation period for international exchange ventures

The gestation period for exchanges may be comparatively longer in international than indomestic exchange ventures.

• Advanced trading technologies

New and innovative trading technologies such as DMA and Algorithmic trading etc. arecomparable to the R&D of businesses and can impact revenues for the segment to whichit belongs; however, the resultant advancements in the financial markets present newbusiness avenues and opportunity for IPR to create more robust solutions.

• Incubation phase for various ventures

There are some ventures (exchange as well as ecosystem) which are in the incubationphase implying continued investments which would see returns later in time.

• Foreign Currency Exchange Rate Risk

During the year there has been volatility in US$: Re for more than 8.51%. Withincreasing export activity over the last two years, the Company has been subjected tosignificant foreign exchange fluctuations. The Company has also outstanding US$denominated debt. Due to natural hedging the Company’s risk is largely mitigated.

INTERNAL AUDIT AND CONTROLS

Your Company has appointed M/s. V. Sankar Aiyar & Co. as its internal auditor.During the year, your Company continued to implement their recommendations to improveinternal controls. Internal auditors' findings are discussed with the respective processowners and suitable corrective actions are taken according to the directions of AuditCommittee on an on-going basis to improve efficiency in operations.

OUTLOOK

Your Company has been instrumental in transforming financial markets by providingstrong technology platforms across various geographies. For further details, seeDirectors' Report on Page 54 of this Annual Report.

Shareholder's Equity

Your Company's authorised share capital is Rs. 300 million, divided into 150 millionequity shares of Rs. 2/- each. During the year under review, the paid up share capital ofyour Company increased from Rs. 91.77 million to Rs. 92.16 million on account of allotmentof 194,900 equity shares of Rs. 2/- each, issued under Employee Stock Option Plan - 2005.

Reserves & Surplus

During the year, your Company's total reserves and surplus position improved by 17% toRs. 20,324.47 million from Rs. 17,405.22 million for the financial year 2008-09 largely onaccount of operating profit & other income. Securities premium account as at 31stMarch, 2010 stood at Rs. 4,885.03 million as compared to Rs. 4,977.28 million in theprevious year mainly on account of receipt of premium under ESOP to the tune of Rs. 190.92million and adjusted on account of provision of Rs. 283.17 million (net of taxes) forpremium payable on redemption of ZCCB in accordance with section 78 of the Companies Act1956.

As per the requirements of Companies Act, 1956 your Company has transferred Rs. 350.00million i.e. 10.16% of the net profit of the current year to General Reserve and thebalance amount of Rs. 13,759.28 million has been retained in the Profit and loss account.

Shareholders' Fund

Total shareholder funds stood at Rs. 20,416.63 million as on 31st March, 2010 asagainst Rs. 17,496.99 million as on 31st March, 2009, an increase by 17%.

Loan Funds

As on 31st March, 2010, the outstanding value of ZCCBs in books stood at Rs. 4,085.17million (US$ 90.5 million) as compared to Rs. 4,610.98 million (US$ 90.5 million) in theprevious year, the change in the amount is on account of USD:INR exchange rate movementduring the year.

Deferred Tax Liability

During the year, your Company has reported accrual of total net deferred tax liabilityof Rs. 87.98 million compared to Rs. 166.70 million in the previous year. Deferred taxassets and liabilities are recognised for future tax consequence attributable to timingdifference between taxable income and accounting income that are capable of reversing inone or more subsequent periods and are measured at substantively enacted tax rates.

Investments

During the year, your Company's Investment was at Rs. 20,019.48 million, as compared toRs. 14,444.65 million in the previous year. The total Investments comprised of investmentin mutual funds, subsidiaries, joint venture and associate companies. The Investments insubsidiaries / JV’s / associates are a part of the Company’s core businessstrategy to promote and invest in new 'Exchange', 'Technology' and 'Ecosystem' venturesthat utilize its technological capabilities and domain expertise towards creating worldclass enterprises and therefore create a captive market for its technology business, andto unlock value by divesting our Company’s investment in these ventures, after thesethey have reached certain critical operating levels and redeploy the capital in newmarkets.

Fixed Assets

In Rs. million

The Company has been investing and building necessary infrastructure to meet growingrequirements of the business. During the year, the additions to gross block of fixedassets were at Rs. 363.68 million. The increase was mainly on account of capitalization ofFreehold land purchased for development of the state-of-the-art technology developmentcenter situated at Andheri (East), Mumbai - 400 093. There was also a marginal increase inoffice equipment and furniture and fittings for day to day operations.

Capital work-in-progress has decreased to Rs. 1,865.27 million from Rs. 2,309.43million mainly on account of capitalization of land for its development centre to fixedassets. the company expects the development centre to be fully operational in fiscal 2011.

Current Assets, Loans & Advances

During the year, your Company’s total current assets, loans and advances were atRs. 4,356.15 million as compared to Rs. 6,438.76 million in the previous year. Thedecrease is mainly attributable to decrease in Cash and bank balances, which reduced byRs. 2,316.76 million during the year which has been deployed partly as investments insubsidiary / Group companies and partly in mutual funds. During the year,

a) Sundry Debtors has reduced to Rs. 604.26 million (net of provisions) compared to Rs.840.14 million in the previous year due to better realization. These debtors outstandingare considered good and realizable

b) Other current assets stood at Rs. 39.30 million as against of Rs. 105.05 million inprevious year. The interest realized on FDR in current year has been invested in mutualfunds for better returns, hence decrease in current year.

c) Loans and advances (net of provision) amounted to Rs. 1,621.66 million as againstRs. 1,085.88 million in the previous year; the Increase was mainly due to loans andadvances to subsidiary companies, and advance payment of income taxes.

Current liabilities and provisions

During the year, your Company's current liabilities stood at Rs. 959.81 millioncompared to Rs. 734.13 million in the previous year mainly on account of increase in tradecreditors which includes advance amount received on account of sale of land & advancereceipt of revenue.

During the year, Provisions were at Rs. 1,513.11 million compared to Rs. 1,068.31million in the previous year. Provisions mainly include provision for premium onredemption of ZCCBs which stood at Rs. 1,316.83 million as compared to Rs. 887.84 millionin the previous year. It also consists of provision for taxation, employee retirementbenefits, proposed dividend to equity shareholders and the dividend tax thereof.

Revenue Analysis

During the year, revenue from operations stood at Rs. 3,069.87 million (net of exciseduty) compared to Rs. 3,343.22 million in the previous year, a decrease of 8.18%. TheCompany mainly derived revenues from sale of IPR licenses, annual maintenance charges, andproject based services including software customization.

Other Income

During the year, other income (excluding profit on sale of shares in subsidiaries,joint ventures and associates) was at Rs. 1,043.63 million compared to Rs. 1,650.90million in the previous year, a decrease of 36.80%. During the previous year, other incomeincludes foreign exchange gains of Rs. 513.22 million. Other Income also includes dividendfrom investments, interest on deposits, Profit on sale of Investments, Shared Businesssupport Services and Miscellaneous income. During the year, your Company sold partialinvestment held in a group company resulting net profit of Rs. 2,368.28 million (net ofexpenses) which has been shown under 'Profit on sale of Investments' in Other Income.

Expense Review

During the year, the operating and other expenses were at Rs. 1,904.60 million ascompared to Rs. 2,252.98 million in previous year, a decrease of 15.46% largely on accountof (a) during the previous year, operating and other expenses included provision fordiminution in the value of long term investments of Rs. 637.63 million as against 'Nil'during the year and (b) during current year, the operating expenses includes foreignexchange loss of Rs. 285.35 million as compared to a gain of Rs. 513.22 million includedin other income in the previous year as mentioned herein above. Other operating expensesare in alignment with the business operations.

During the year,

• Profit before interest, depreciation and tax decreased by 18.54% to Rs. 2,162.53million from Rs. 2,654.69 million in previous year.

• Profit before tax decreased by 18.50% to Rs. 2,103.45 million from Rs. 2,580.91million in previous year.

• Profit after tax decreased by 8.92% to Rs. 1,880.36 million from Rs. 2,064.54million in previous year.

During the year,

• Profit before interest, depreciation and tax decreased by 4.05% to Rs. 4,530.81million from Rs. 4,721.97 million in previous year.

• Profit before tax decreased by 3.80% to Rs. 4,471.73 million from Rs. 4,648.19million in previous year.

• Profit after tax decreased by 6.57% to Rs. 3,443.66 million from Rs. 3,685.96million in previous year.

Cautionary Statements

This report may contain forward-looking statements about Financial Technologies (India)Ltd. and its group companies, including their business operations, strategy and expectedfinancial performance and condition. Forward-looking statements include statements thatare predictive in nature, depend upon or refer to future events or conditions, or concernfuture financial performance (including revenues, earnings or growth rates), possiblefuture Company plans and action. Forward-looking statements are based on currentexpectations and understanding about future events. They are inherently subject to, amongother things, risks, uncertainties and assumptions about the Company, economic factors andthe industry in general. The Company’s actual performance and events could differmaterially from those expressed or implied by forward-looking statements made by theCompany due to, but not limited to, important factors such as general economic, politicaland market factors in India and internationally, competition, technological change andchanges in Government regulations.

BUSINESS OVERVIEW

• 6th largest commodity futures bourse globally in terms of trading volumes in2009*

MCX commodities futures global ranking in 2009:

- 1st in silver*

- 2nd in gold, copper andnatural gas*

- 3rd in crude oil*

• Total value traded during FY 10 - Rs. 6,393,302 crore

• Average Daily turnover of Rs. 20,962 crore has been recorded for FY 10 (~40%increase Y-o-Y)

• Highest turnover of Rs. 51,627 crore was recorded on 27th November, 2009

• Established 117,124 terminals (including CTCL and IBT terminals**) and amembership base of 2,070 as on 31st March, 2010

IBT - Internet Based Trading

STRATEGIC VISION

Multi Commodity Exchange (MCX) is committed to creating a nationwide market forcommodities together with associated support services and institutions to make marketsmore accessible and to bridge the rural-urban, technology and economic divide throughmodern market mechanisms. It aims to empower market participants at the national level andmake them globally efficient in pricing their commodities.

PRODUCTS / SERVICES

As on 31st March, 2010, futures contracts traded on MCX included 42 commodities fromvarious market segments including bullion, energy, ferrous and nonferrous metals, oils andoil seeds, cereals, pulses, plantations, spices and fibers

Domestic Alliances

• Bombay Metal Exchange

• Dall & Besan Millers Association

• Pulses Importers Association

• Solvent Extractors Association of India

International Alliances

• Baltic Exchange Ltd.

• LIFFE Administration & Management

• New York Mercantile Exchange (NYMEX)

• Shanghai Futures Exchange (SHFE)

• The London Metal Exchange Ltd. (LME)

CERTIFICATIONS

• MCX has been certified under ISO 9001 since August 2004 and ISO/IEC 27001 sinceApril 2007 by Bureau Veritas Certifications India Pvt. Ltd.

• MCX has also received the ISO 14001:2004 in the current financial year

MILESTONES

• MCX launched futures trading in almond for the first time in India

• MCX launched futures trading in thermal coal, gasoline and barley

• Launched Exchange of Futures for Physicals (EFP) for the 1st time in India

• MCX, along with PriceWaterhouseCoopers (PWC) jointly released a book oncommodities aimed at giving its reader a rare insight in the commodity markets ecosystem

• MCX won the NASSCOM Social Innovation Honours-2010 for its flagshipCSO (Corporate Social Opportunies) project Gramin Suvidha Kendras (GSKs), the ruralfacilitation centres set up in a joint venture with India Post

EXCHANGE DATA POINTS

*Trader Work Station

MCX STOCK EXCHANGE LTD.^#

BUSINESS OVERVIEW

• MCX Stock Exchange (MCX-SX) was set up as India’s latest National levelStock Exchange recognized under Section 4 of Securities Control Regulation Act, 1956. Itis co-promoted by your Company along with MCX.

• Through deployment of state-of-the-art technology and global best practices forregulatory compliance and investor protection, MCX-SX enables importers, exporters,investors, corporations and banks to hedge their currency risks with greater transparencyand safety. Furthermore, it guarantees settlement of all transactions, through itsclearing corporation (MCX-SX Clearing Corporation Ltd.), which enhances safety byeliminating the counterparty risk

• Currently your Company holds 5% of its equity

STRATEGIC VISION

MCX-SX believes in Systematic development of markets through Information,Innovation, Education and Research. Its constant endeavor, therefore, has been toensure that its nationwide electronic trading platform is used by market participants moreextensively and effectively

PRODUCTS / SERVICES

MCX-SX currently offers currency futures in the following currency pairs:

• US Dollar - Indian Rupee (USD/INR)

• Euro-Indian Rupee (EUR/INR)

• Pound Sterling-Indian Rupee (GBP/INR)

• Japanese Yen-Indian Rupee (JPY/INR)

It is poised to extend the derivatives offerings to*

• Interest Rate Futures (IRF)

• Equities (Cash & F&O)

• Indices and ETF

• Debt

• Small Medium Enterprises

*subject to regulatory approvals

KEY HIGHLIGHTS

• MCX-SX signed co-operation agreement with leading Global Index Provider - FTSEInternational Limited

• MCX-SX and Doordarshan inked a pact for broadcasting programmes on financialmarkets

• MCX-SX launched websites in all important Indian regional languages.

• MCX-SX signed MOUs with Institutes of Chartered Accountants of India (ICAI),Institute of Company Secretaries of India (ICSI) and Institute of Cost and WorksAccountants of India (ICWAI) to jointly promote the cause of financial literacy andcorporate governance.

• MCX-SX is an affiliate member of the International Organization of SecuritiesCommissions (IOSCO)

BUSINESS OVERVIEW

• National Spot Exchange Limited (NSEL) is India’s No.1 spot exchange,established in May 2005. It is a national level institutionalized and demutualised,electronic spot exchange aimed at creating a unified Common Indian Market for variouscommodities.

• The objective of NSEL is to enhance farmers’ price realization and reduceconsumer paid price by reducing cost of intermediation and improving marketing efficiency.

• NSEL is a compulsory delivery based electronic spot market for commodities.While futures trading conducted by MCX provides price discovery and price risk managementfunctions, NSEL provides a delivery based platform to achieve price efficiency. NSEL linksphysical market traders and MCX by providing an effective system for physical deliveries,enhancing the depth of futures markets and creating a better balance between speculative,hedged and delivery based trade.

PRODUCTS / SERVICES

NSEL is operational in 24 commodities with its most active contracts being castor seed,cotton seed wash oil, cotton, barley and maize.

KEY MILESTONES ACHIEVED IN FY 10

• July 2009: Cotton Corporation of India (CCI) becomes member of NSEL to sellcotton bales on NSEL platform on the same terms

• November 2009: Government of Orissa granted license. Commencement of operationin Orissa

• December 2009: Government of Rajasthan granted license.

• March 2010: Food Corporation of India (FCI) the Food Management arm ofGovernment of India, became member of NSEL and commenced sale of wheat through NationalSpot Exchange

EXCHANGE DATA POINTS

BUSINESS OVERVIEW

• Indian Energy Exchange (IEX) is India’s first and No.1 exchange forelectricity trading established with an objective to organize, operate and develop amarket place for power trading in India. IEX commenced operations on 27th June, 2008. IEXis an automated and demutualised bourse with nationwide operations within the regulatoryparameters of the Central Electricity Regulatory Commission (CERC).

• The exchange facilitates equitable, transparent and efficient trading of power,and bridges the demand supply mismatch by bringing buyers and sellers together to buy andsell in an auction-based system, thus providing liquidity to the power markets.

PRODUCTS / SERVICES

IEX focuses on offering spot trading of electricity and offers Day-Ahead Market,Term-Ahead Market (including intra-day, day-ahead contingency, daily and weekly products)and Future Offering (including renewable energy certificate, monthly contract, state levelcontract and white certificate products).

KEY MILESTONES ACHIEVED IN FY 10

• Direct consumer started trading at IEX

• IEX has 29 state utilities, 150 captive power plants and over 75 directconsumers are participating for better managing their energy portfolio

• Shri Sushil Kumar Shinde, Minister of Power, Government of India, and otherdignitaries from power sector participated in 1st anniversary of IEX

• IEX represented india in APEX conference in Boston, USA from 11th-13th October,2009. Mr. Jayant Deo, MD & CEO, IEX, delivered the presentation on Operating Marketsin a Supply Deficit while Attracting New Business

AWARDS & CERTIFICATIONS

Indian Energy Exchange (IEX) was awarded as Best E-Enabled Customer Platform, fordeveloping a robust platform for energy trading, in 2nd India Power Awards 2009, byCouncil of Power Utilities & KW Conferences Pvt. Ltd.

EXCHANGE DATA POINTS

BUSINESS OVERVIEW

• Singapore Mercantile Exchange (SMX) is a pan-Asian global commodity derivativesexchange based out of Singapore and is poised to offer futures and options contracts onprecious metals, base metals, agriculture commodities, energy, currencies and commodityindices.

• SMX has obtained a final approval to operate as an approved exchange of MonetaryAuthority of Singapore (MAS). SMX will act as a proxy to the Asian economies andfacilitate transparent price discovery and benchmarking in Asian time zone by offering asingle platform for execution of trades, clearing and settlement.

• SMX is a member of Futures Industry Association (FIA), Associations of FuturesMarkets (AFM), and Futures and Options Association (FOA). SMX also provides settlementguarantee as a central counterparty for all trades executed on it through its wholly ownedclearing corporation, Singapore Mercantile Exchange Clearing Corporation Pte Ltd. (SMXCC).

PRODUCTS / SERVICES

SMX will offer multi-asset trading in futures and options contracts for energy,agriculture, precious and base metals, indices, currencies and other products.

WHY SMX?

• Pan-Asian commodity derivatives exchange

• Based in Singapore, but for the Asian region and global market participants

• Received final approval from MAS, to be followed by cross-border regulatoryrecognition in key markets

• An offshore market with a product range aimed at answering Asian region'strading needs

KEY MILESTONES ACHIEVED IN FY 10

BUSINESS OVERVIEW

• Global Board Of Trade (GBOT) was incorporated in the Republic of Mauritius toestablish a multi-asset class electronically operated market, licensed by the FinancialServices Commission (FSC), the regulator for non bank financial services sector inMauritius. Strategically located at the crossroads of Europe, Africa and Asia, GBOT oncommencement of operations, will be amongst the few multi-asset class electronicallyoperated markets in the African continent.

• GBOT provides a comprehensive framework, encompassing electronic exchangetrading and clearing solutions, risk management and online risk-based supervision,membership development, contract specification and structuring. GBOT also provides bankingsystem interfaces leading to real-time settlement, business rules and by-laws, effectivecorporate governance frameworks, investor awareness and knowledge development.

PRODUCTS / SERVICES

GBOT will offer currency and commodities derivatives, with an initial focus on sixmajor currency pairs against the US Dollar as well as on precious metals, base metals,energy and agri-commodities.

KEY MILESTONES ACHIEVED IN FY 10

• Financial Services Commission (FSC), the regulator for non banking financialservices, has approved Rules for commodity and currency derivatives market segment

• GBOT has received the Clearing House License from the FSC for clearing of alltrades taking place on the exchange

• Approval from Bank of Mauritius for banks based in Mauritius to participate incurrency derivative market segment was obtained on 17th June, 2009

• GBOT was invited by the Governors of the Central Bank of Kenya and Uganda tomake presentations on the exchange and extend assistance in securing maximum participantsfor their respective countries.

Local

• Mauritius Chamber of Commerce and Industry (MCCI)

• Mauritius Export Association (MEXA)

• Society of Financial Analysts of Mauritius (SFAM)

Global

• Association of Futures Markets (AFM)

• Defra EU Emissions Trading Scheme (EU ETS)

• Futures and Options Association (FOA)

• Swiss Futures and Options Association (SFOA)

TRAINING PROGRAMS CONDUCTED

• GBOT has conducted training for CEOs, bankers and accountants on trading oncommodity and currency derivatives and on global commodity markets.

• Training for brokers, regulators and management companies was conducted by GBOTon currency risk management, strategic risk management and non linear derivatives.

GBOT: The Future of African Markets

• Multi-asset international exchange for Africa, based in Mauritius

• Will offer trading on commodities and currency pairs in the first phase

• Hedging with visibility on markets from East to West

• GMT +4 time zone location

• GBOT brings Financial Technologies’ next generation trading technology toAfrica

• Offering multi-currency environment and physical delivery in derivatives segment

BUSINESS OVERVIEW

• The Bahrain Financial Exchange BSC Closed (BFX) is a pioneering cross-border andmulti-product exchange in the Middle East and will be internationally accessible to tradecash instruments, derivatives, structured products and Shari’ah-compliant financialinstruments.

• Regulated by the Central Bank of Bahrain (CBB) and underpinned by the BFXClearing and Depository Corporation (BCDC), the BFX is well positioned to become theleading exchange venue in the Middle East to trade, clear and settle the contracts ittrades.

• Access through its electronic trading platform and the BFX plug and tradetrading floor will allow market participants to utilise the Exchange to manage risk andenable investment in a secure environment with central counterparty clearing, settlementand depository.

• Complementing its offerings, the BFX has established the Bahrain FinancialExchange Training Institute (BFX-TI) a training institute of global standards providinginternationally accredited programmes in conventional and Islamic financial training,along with education courses for both individuals and corporate clients.

PRODUCTS / SERVICES

The BFX will focus on offering financial instruments across a wide range of assetclasses in conventional products specific to the region along with Islamic financeproducts.

KEY MILESTONES ACHIEVED IN FY 10

• The year 2009 was year for the BFX in terms of the development and expansion ofits infrastructure, services, training, technical procedures, products and the inceptionof its own Clearing, Settlement and Depository company, the 'BFX Clearing and DepositoryCorporation' (BCDC). The BCDC will act as Central Counterparty for all transactions on theBFX markets.

• The BFX participated in the World Islamic Banking Conference (WIBC) where theBFX was a strategic exchange partner and contributed to the Future of Financial Markets(FOFM) leadership summit in January 2010

• In January the BFX signed an MOU with Bursa Malaysia to partner and providefinancial products to Islamic market participants. Marking the partnership inauguration,they organized a forum to discuss matters related to Islamic liquidity management andfinancing.

• The BFX Training Institute (BFX-TI) received its license to provide learning anddevelopment solutions for both individuals and corporates. The institute provides a 360degree consultative approach to training needs across areas including conventional andIslamic finance, leadership, accounting and tailor-made bespoke packages

• The BFX held a conference in April 2009, in the Kingdom of Bahrain, whichfocused on the benefits of exchange trading while utilising a transparent, well regulatedand liquid exchange to raise capital and manage risk for both the Islamic and conventionalfinancial markets.

ASSOCIATIONS

• Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI)

• Association of Futures Markets (AFM)

• Futures & Options Association (FOA)

• General Council for Islamic Banks and Financial Institutions (CIBAFI)

• International Islamic Financial Market (IIFM)

Core Benefits

• BFX is a multi-asset exchange offering diversified product range. Users of BFXcan utilise the multi-asset offering by diversifying their investment portfolio thusprotecting the investment from any adverse movements in a single asset class.

• Located in the global centre for the Islamic finance, BFX offers its usersaccess to Islamic finance products and liquidity.

• Drawing from the advantages of 'Business friendly Bahrain' BFX users can gainfrom the free trade benefits like zero taxes, 100% ownership and capital repatriation.

• Arab region hosts some of the fastest growing economies in the world which willcreate further advantages for the BFX.

BUSINESS OVERVIEW

• Bourse Africa is a licensed spot and derivatives demutualised exchange whichwill offer multi-asset class trading to serve markets worldwide from Africa. It willprovide efficient price discovery, and facilitate trade, financing, risk management andinvestment transactions between participants from across African markets, and betweenAfrican and international participants.

• Bourse Africa will operate on a hub and spoke model, a network of linkedexchanges with Botswana as the technology and regulatory hub. The hub exchange in Botswanais licensed as a Self-Regulatory Organisation by the country’s Non-Bank FinancialInstitutions Regulatory Authority and accredited under the Botswana InternationalFinancial Services Centre.

PRODUCTS / SERVICES

Bourse Africa will offer both derivative and spot contracts and introduce options andindex trading later. Segments will include agriculture, metals, minerals, energy andcurrencies before diversifying into other asset classes over time.

The suite of derivative products will cover pan-African commodities with an establishedinternational profile - including cocoa, cotton, crude oil, gold and maize, gold-as wellas futures on currency pairs between African currencies, and between African and hardcurrencies. The spot platform will focus on the unique commodities produced and traded inthe different African countries - to support the domestic trade and the export/importtrade.

KEY MILESTONES ACHIEVED IN FY 10

• Licensed as a Self-Regulatory Organisation (pending ministerial signature)

• Tie-up with third clearing bank

• Partnerships with five certification and collateral management organisations

WHY BOURSE ARICA?

• An emerging geography almost completely untapped at present:

- 53 countries, 4%-5% p.a. growth, emerging middle class, $320 billion annual commoditybase, rapidly integrating with global markets

- No organised commodity futures exchange and no central counterparty clearinghouse(CCP) outside South Africa a significantly underdeveloped exchange, brokerage andinvestment space

• Combined spot and derivative platforms

• Optimal hedging location

• Sound legal jurisdiction and regulatory framework of Botswana

• A CCP backed by Settlement Guarantee Fund, to guarantee trades, and fulfilmentof all obligations arising therefrom

• Integrated ecosystem elements (e.g. warehouse receipts system (WRS), marketinformation system (MIS), broker technology solutions, capacity-building academy)

BUSINESS OVERVIEW

atom technologies, company incorporated in October 2005 provides transaction processingtechnology aimed at mobile phone and wireless device users. It offers secure andconvenient payment solutions across all platforms (IVR / Mobile application / Internet /POS) to banks, merchants and their customers.

atom has created multiple products and services for mobile payments, mobile banking,Interactive Voice Response (IVR) based payments and mobile based service distributionnetwork. The transactions are routed through banks’ payment gateways / core bankinghosts using phones.

Payment Processing

• M-Commerce: Mobile / telephone based payment solutions, involving either IVR ormobile application

• POS Business: Comprehensive merchant acquiring solution covering a range ofproducts and services

• E-Commerce: Internet based payment service focused on broking space and otherkey merchants

Technology solutions and services

• SUGAM: Establishment of distribution network for delivery of multiple servicesincluding prepaid recharge, utility bills, ticketing, banking, etc.

• Application Solutions: Software solutions for MFIs, banks and insurancecompanies

Financial inclusion services

• Banking / FI: Technology enabled banking solutions to the 'unbanked' majority ofIndia through the Business Correspondent route

• Government Projects: Technology enablement for social sector initiatives likesRSBY, NREGS, etc.

KEY MILESTONES ACHIEVED IN FY 10

• atom's M-Commerce transaction volumes grew by ~1300% from 0.06 million in FY 08to 0.85 million in FY 09. The volumes are expected to exceed ~2 million transactions in FY10.

• Started direct debit facility to bank customers who can use atom’s IVRplatform for the purchase of goods / services. The company has already deployed thissolution for various banks such as Axis Bank, Bank of India, Corporation Bank, ICICI Bankand many other banks are expected to follow soon.

• atom has deployed its M-Commerce solution to Vodafone for offering multipleservices to its customers

• atom added more than 1200 merchants within 4 months of starting the operationsin the POS business

• The company has partnered with the government to issue more than 250,000 smartcards for its RSBY initiative by FY 10

BUSINESS OVERVIEW

• Since its inception in April 2005, National Bulk Handling Corporation (NBHC),has steadily and remarkably established itself as the single national-level end-to-endservice provider of commodity management and collateral management solutions.

• NBHC facilitates on a pan-India level, the procurement of agri-produce,warehousing, bulk handling, grading, inspection & assaying, commodity care & pestmanagement, commodity management and the disposal of commodities.

• NBHC endeavors in its mission to deliver comprehensive, customized and uniquesolutions to the entire ecosystem, thus enabling its customers achieve business growth,revenue optimization, risk mitigation and seamless growth on a pan-India platform

• Financial Technologies' innovation and technological prowess is furtherpercolated by NBHC’s infrastructure and outreach to rural India to enable develop amarket base there. Our Company believes that through these applications it can widen itscustomer base across various economic classes and regions in India forming a unique andself-perpetuating paradigm of growth, inclusivity and wealth creation for all sections ofthe population and in-effect the market.

PRODUCTS / SERVICES

Collateral Management (CM) of agri-produce is the key service simultaneously drivingthe underlying mission of facilitating post-harvest credit between banks and farmers inrural India on one side and the same set of users of our technology on the other side. Forinstance through FTIL, NBHC is linked to MCX, thereby enabling it to expand its customerbase including exchange participants, farmers and banks.

Notwithstanding the expanse of its operations, NBHC ensures its fumigation and pestcontrol services are eco-friendly while maintaining the commodity health of theagri-produce which is subject to adverse conditions increasing its vulnerability andperishable nature. 2009-2010 can be marked as the year of consolidation in every segmentof our services, our standards, our proficiency and our systems.

We have reached the penultimate stage of integrating IT / ERP with operations processesthereby achieving excellence and efficiency. The risk recognition, measurement,containment and mitigation have developed further and reached higher levels of proficiencyboth in physical as well as in analytical terms. NBHC’s foray into value-basedstorage and warehousing solution has gained impetus by judicious scrutiny, selection andownership of realty - warehousing space, so as to expand its services to other value-basedasset classes other than agri-bulk - produce. NBHC has retained its unique position withits 33 banks in driving further the banks’ mandate of agri-lending while at the sametime reducing/containing adverse selection with prudent norms and its efficient collateralmanagement services.

KEY MILESTONES ACHIEVED IN FY 10

• Increased the number of banks to 33, with the addition of 3 leading banks forWarehouse Receipt Financing

• Surpassed Rs. 15,000 crores. in cumulative value of storage receipts issuedunder CM arrangements

• Initiated services in the state of Jammu and Kashmir

• Initiated Procurement Trade Facilitation services

• Initiated and gained proficiency in testing of fertilizers and allied products,testing of micro organisms in residual water-content in canned foods, analysis of ghee,etc.

• Initiated container fumigation services for export-bound destination such asAustralia, appointed as nation-wide CCPM providers to large retail-houses

AWARDS & CERTIFICATIONS

In 2007, NBHC was awarded ISO 22000:2005 certification for its warehousing andcommodity management operations, which is an international quality standard for foodsafety management systems. In fiscal 2008, NBHC received the NABL accreditation (ISO17025:2005) for its ProComm (QA) Laboratory at Vashi (New Mumbai) in 3 segments forcommodity chemical testing of:

1. Cereals, Pulses and by-products

2. Oil Seeds and by-products

3. Spices and condiments

The Grain and Feed Trade Association (GAFTA) elected NBHC as its CategoryF membership. This membership / nomination has enabled NBHC ProCommlaboratories to go under proficiency testing and GAFTA accreditation. This will also helpin matters of arbitration of international disputes among GAFTA members. Along with suchmembership, NBHC will be linked with over 1,000 association members from 90 countriesacross the world.

NBHC had, in the last quarter of fiscal 2009, embarked on extending its mandate toownership of warehouses as well, which form a crucial link in its network of warehouses.NBHC is also a member of the National Association of Warehousing Companies(NAWC), an association of government-owned and managed warehousingcorporations.

OPERATIONAL MATRIX

BUSINESS OVERVIEW

• TickerPlant was incorporated in February 2005 as an information disseminationinitiative by Financial Technologies. It commenced operations in April 2007. It is one ofthe leading global content providers in the financial information and market data servicesindustry that integrates and disseminates ultra-low latency data feeds, news andinformation to support investment decisions of professionals and investors.

• TickerPlant disseminates realtime information on financial markets through avariety of delivery channels viz Desktop based applications, browser based applications,Mobile applications and the internet. It has entered into agreements with all leadingdomestic and international exchanges as well as leading data vendors and contentproviders.

• Delivery and display of data and tools are tailor-made to meet specific needs.Resilient data management system and dedicated teams of information and technologyspecialists ensure the highest standards of data security, completeness, quality andauthentication.

PRODUCTS / SERVICES

• MarketView is TickerPlant’s integrated cross asset, market data, news andanalytics platform that offers real-time streaming information on domestic andinternational exchanges. It provides extensive coverage of equities, derivatives,commodities, currencies, debt and mutual funds. Developed using cutting-edge technologies,MarketView offer fast, reliable and comprehensive market data and news updates. Itsreal-time market data platform delivers ultra low latency, tick-by-tick data and featurescompletely customizable screens, advanced charting, comprehensive and advanced technicalanalysis and economic data.

• MarketViewMobile provides real-time streaming quotes of stocks and commoditieson mobile and allows market participants and investors real-time connectivity to the stockcommodity and currency markets.

• MarketView enews is an affordable platform which incorporates news feed fromTickerPlant and from other agencies with multi-screen display options.

• MVXenius is a comprehensive financial information suite on all asset classes.

• Raw Data Feed - TickerPlant delivers custom-built data and content datasets asraw data-feed.

• API feed Adapter for Markets data helps ensure seamless integration on to variedplatforms for data distribution and applications, with minimal effort.

• XML/Web-based services is a highly versatile medium presenting stock andcommodity quotes, news and contents delivered via eXtensible Markup Language(XML) / Web services / Webpages. This flexible solution allows contentintegration onto existing applications to be customized.

• TickerBoard applications - The Company has developed state of the art andscalable applications for dissemination of prices through TickerBoards.

KEY MILESTONES ACHIEVED IN FY 10

• Integration of the FCAST feed of BSE in its digital distribution platform andway ahead of competition.

• Tullet Prebon data feeds integrated into MarketView including a range of moneymarket, interest rate and bond data, spot and forward FX. It will also provide data onnon-deliverable forwards, FX Options, interest rate swaps and Government-issued bonds forIndian and global markets.

• Monthly version upgrades for MarketView and MarketViewMobile

• Breakthroughs into some of the biggest public sector, private sector banks,corporates, brokerage houses in the country for MarketView

• Country wide Ad campaign across all major business dailies successfullyexecuted.

• Launch of MVXenius a comprehensive financial information suite on all assetclasses.