BSE Management Discussions


1. ECONOMIC OUTLOOK

A. ECONOMIC ENVIRONMENT

As per the World Economic Outlook April 2023, global growth is expected to be at 2.8% in 2023 before rising modestly to 3% in 2024. Global inflation will decrease, although more slowly than initially anticipated, from 8.7% in 2022 to 7% this year and 4.9% in 2024. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7% in 2022 to 1.3% in 2023. In a plausible alternative scenario with further financial sector stress, global growth is expected to decline to ~2.5% in 2023-the weakest growth since the global downturn of 2001, barring the initial COVID-19 crisis in 2020 and during the global financial crisis in 2009—with advanced economy growth falling below 1%.

Although inflation has declined as central banks have raised interest rates and food and energy prices have come down, underlying price pressures are rising, with labor markets tight in several economies. Side effects from the fast rise in policy rates are becoming apparent, as banking sector vulnerabilities have come into focus and fears of contagion have risen across the broader financial sector, including nonbank financial institutions. Policymakers have taken forceful actions to stabilize the banking system.

In parallel, the other major forces that shaped the world economy in 2022 seem set to continue into this year, but with changed intensities. Debt levels remain high, limiting the ability of fiscal policymakers to respond to new challenges. Commodity prices that rose sharply following Russias invasion of Ukraine have moderated, but the war continues, and geopolitical tensions are high. Infectious COVID-19 strains caused widespread outbreaks last year, but economies that were hit hard, most notably China, appear to be recovering, easing supply-chain disruptions. Despite the incentives from lower food and energy prices and improved supply-chain functioning, risks are firmly to the downside with the increased uncertainty from the recent financial sector turmoil.

Risks to the outlook are heavily skewed downside, as financial sector stress could amplify, and contagion could take hold, weakening the real economy through a sharp deterioration in financing conditions and compelling central banks to reconsider their policy paths. The war in Ukraine could intensify and lead to more food and energy price spikes, pushing inflation up. Core inflation could turn out more persistent than anticipated, requiring even more monetary tightening to tame. Central banks are expected to remain steady with their tighter anti-inflation stance, but also be ready to adjust to address financial stability concerns as developments demand.

• Inflation, although declining, Remains Elevated

Global headline inflation has been declining since mid-2022 at a three- month seasonally adjusted annualized rate. A fall in fuel and energy commodity prices, particularly for the United States, Euro Area, and Latin

America, has contributed to this decline. To dampen demand and reduce underlying (core) inflation, the lions share of central banks around the world have been raising interest rates since 2021.

As of early 2023, however, financial markets anticipated that less policy tightening would be needed than central banks suggested, leading to a divergence that raised the risks for a significant market repricing.

• High Debt - Public and Private

As a result of the pandemic and economic upheaval over the past three years, private and public debt have reached levels not seen in decades in most economies and remained high, despite their fall in 2021-22 on the back of the economic rebound from COVID-19 and the rise in inflation. Monetary policy tightening has led to sharp increases in borrowing costs, raising concerns about the sustainability of some economies debts. Among the group of emerging market and developing economies, the average level and distribution of sovereign spreads increased markedly in the summer of 2022, before coming down in early 2023. The effects of the latest financial market turmoil on emerging market and developing economy sovereign spreads have been limited so far, but there is a tangible risk of a surprise increase in coming months should global financial conditions tighten further. The share of economies at high risk of debt distress remains high in historical context, leaving many of them susceptible to unfavorable fiscal shocks in the absence of policy actions.

• Unwinding Commodity Shocks

The shock of Russias invasion of Ukraine in February 2022 continues to resonate around the world. Economic activity in Europe in 2022 was more resilient than expected given the large negative terms-of-trade fallout from the war and associated economic sanctions. Large budgetary support measures for households and firms in the European Union were deployed to help them weather the energy crisis. Oil and gas prices also began trending downward from their peaks in mid-2022. Together, these actions and channels have dampened the negative effects of the energy crisis in Europe, with better-than-expected levels of consumption and investment in the Q3 of 2022. Beyond Europe, a broad decline in food and energy prices in the Q4 of 2022, although prices were high, has brought some relief to consumers and commodity importers, contributing to the fall in headline inflation. Sustaining lower prices this year will depend on the absence of further negative supply shocks.

• Chinas reopening economy

The evolution of especially contagious SARS-CoV-2 variants kindled a surge in COVID-19 around the world in 2022. Eventually, these variants made their way to China, which had hitherto escaped much of the diseases spread, partly through strict containment measures. As the countrys COVID restrictions were ultimately lifted, multiple large outbreaks led to declines in mobility and economic activity in the Q4 of 2022 due to the diseases direct effects on human health and heightened fears of contagion. Supply disruptions also returned to the fore, even if temporarily, leading to a rise in supplier delivery times. The surge in infections compounded the headwinds from property market stresses in China. The Chinese authorities have responded with a variety of measures, including additional monetary easing, tax relief for firms, new vaccination targets for the elderly, and measures to encourage the completion and delivery of unfinished real estate projects. As COVID-19 waves subsided in January of this year, mobility normalized, and high-frequency economic indicators, such as retail sales and travel bookings, started picking up. With China absorbing about a quarter of exports from Asia and between 5-10% from other geographic regions, the reopening and growth of its economy will likely generate positive spillovers, with even greater spillovers for countries with stronger trade links and reliance on Chinese tourism.

A Challenging Outlook for 2023

A return of the world economy to the pace of economic growth that prevailed before the bevy of shocks in 2022 and the recent financial sector turmoil is increasingly elusive. More than a year after Russias invasion of Ukraine and the outbreak of more contagious COVID-19 variants, many economies are still absorbing the shocks. The recent tightening in global financial conditions is also hampering the recovery. As a result, many economies are likely to experience slower growth in incomes in 2023, amid rising joblessness. Moreover, even with central banks having driven up interest rates to reduce inflation, the road back to price stability could be long. Over the medium term, the prospects for growth now seem dimmer than in decades.

• A severe tightening in global financial conditions

In many countries, the financial sector will remain highly vulnerable to the realized rise in real interest rates in the coming months, both in banks and in non bank financial institutions. In a severe downside scenario in which risks stemming from bank balance sheet fragilities materialize, bank lending in the United States and other advanced economies could sharply decline, with macroeconomic effects amplified by several channels. Household and business confidence would deteriorate, leading to higher household precautionary saving and lower investment. Depressed activity in the most affected economies would spill over to the rest of the world through lower demand for imports and lower commodity prices. As in past episodes of global financial stress, a broad-based outflow of capital from emerging market and developing economies could occur, causing further dollar appreciation, which would worsen vulnerabilities in economies with dollar-denominated external debt. The dollar appreciation would further depress global trade, as many products are invoiced in dollars. In an environment of elevated financial fragility, contagion could occur, with a sharp loss of investor appetite spreading across geographic regions and asset types. The market for safe assets (such as US or German government bonds) could also seize up, with reduced ease of trading amid a rush out of riskier assets.

• Sharper monetary policy impact amid high debt:

The interaction between rising real interest rates and historically elevated corporate and household debt is another source of downside risk, as debt servicing costs rise amid weaker income growth. This can lead to debt overhang, with lower-than-expected investment and consumption, higher unemployment, and widespread bankruptcies, especially in economies with elevated house prices and high levels of household debt issued at floating rates.

• Stickier inflation:

With labor markets remaining exceptionally tight in many countries, the incipient decline in headline and core inflation could stall before reaching target levels, amid stronger-than-expected wage growth. An even-stronger-than-predicted economic rebound in China could, with an escalation of the war in Ukraine, reverse the expected decline in commodity prices, raise headline inflation, and pass through into core inflation and inflation expectations. Such conditions could prompt central banks in major economies to tighten policies further and keep a restrictive stance for longer, with adverse effects on growth and financial stability.

• Systemic sovereign debt distress:

Several emerging market and developing economies still face sovereign credit spreads above 1,000 basis points. The easing in spreads since October 2022, which partly reflects the depreciation of the US dollar and lower import bills from declining commodity prices, has provided some relief. About 56% of low-income developing countries are estimated to be either already in debt distress or at high risk of it, and ~25% of emerging market economies are also estimated to be at high risk. While the level of external debt as a share of gross national income is on average one-third lower today than in the 1980s and 1990s, some vulnerabilities are more acute. A higher share of external debt is now issued at variable interest rates and in US dollars, implying greater exposure to monetary tightening in advanced economies.

• Faltering growth in China:

With a substantial share of economies exports absorbed by China, a weaker-than-expected recovery in China would have significant crossborder effects, especially for commodity exporters and tourism-dependent economies. Risks to the outlook include the ongoing weakness in the Chinese real estate market, which could pose a larger-than-expected drag on growth and potentially lead to financial stability risks.

• Escalation of the war in Ukraine:

An escalation of Russias war in Ukraine, now in its second year, could trigger a renewed energy crisis in Europe and exacerbate food insecurity in low-income countries. For the winter of 2022-23, a gas crisis was averted, with ample storage at European facilities thanks to higher liquefied natural gas imports, lower gas demand amid high prices, and atypically mild weather. The risks of price spikes, however, remain for next winter. A possible increase in food prices from a failed extension of the Black Sea Grain Initiative would weigh further on food importers, particularly those that lack fiscal space to cushion the impact on households and businesses. Amid elevated food and fuel prices, social unrest might increase.

• Fragmentation:

Barriers to trade are steadily increasing. They range from the imposition of export bans on food and fertilizers in response to the commodity price spike following Russias invasion of Ukraine to restrictions on trade in microchips and semiconductors and on green investment that are aimed at preventing the transfer of technology and include local-content requirements. Further geoeconomic fragmentation risks not only lower cross-border flows of labor, goods, and capital but also reduced international action on vital global public goods, such as climate change mitigation and pandemic resilience. Some countries may benefit from an associated rearrangement in global production, but the overall impact on economic well-being would likely be negative, with costs particularly high in the short term, as replacing disrupted flows takes time.

B. INDIAN ECONOMIC OUTLOOK

I. Economic Performance in FY 2022-23

The economy is estimated to have grown by 6.8% in fiscal year 2023. Despite global headwinds, expansion benefited from strong growth in private consumption by an estimated 7.3%, and in investment, up by an estimated 11.2%. On the supply side, GDP growth was supported by agriculture, up by 3.3%, and services, up by 8.8%. Trade, hotels, transport, and communication grew robustly by an estimated 14.0%. Manufacturing growth moderated yet remained positive at 0.6%, reflecting a slowdown in global growth and high input costs.

Headline inflation exceeded the inflation target range of 2%-6%, averaging 6.8% in the first 10 months of FY2022. At its highest, it reached 7.8% in April 2022. Global prices for oilseed, fertilizer, and fuel were elevated by the Russian invasion of Ukraine, an Indonesian ban on palm oil exports, a shortfall in global production of edible oil, and such domestic factors as disappointing wheat production and an unseasonably hot March spiking vegetable prices. These factors pushed food inflation to an average of 6.9% in the first 10 months of FY2022, while fuel inflation remained in double digits, averaging 10.6%. Inflation in both rural and urban areas was high in January 2023.

The government and the Reserve Bank of India undertook several measures to control inflation and its impact. The government banned exports of wheat and broken rice in 2022 to tamp down domestic price fluctuation and ensure food security. The ban on exports of broken rice was lifted in November 2022 but the ban on wheat remains. Further, the government increased fertilizer subsidies by about half to INR 2.25 trillion, the highest ever from the central government. The central bank has tightened monetary policy in a series of hikes since April 2022, raising its policy rate by 250 basis points to 6.50% in February 2023, higher than the pre-pandemic rate of 5.15%. As a result, the lending rate for fresh rupee loans increased by 137 basis points from April 2022 to reach 9.00% in January 2023.

Bank credit growth nevertheless picked up in 2022. Excluding public sector loans for buying crops from farmers, growth in bank credit almost doubled from 8.7% year on year in March 2022 to 16.7% in January 2023, exceeding expected nominal GDP growth at 15.2%. Bank credit for agriculture and allied activities grew by 14.4% and for services by 21.5%, but for industry by only 8.7%. Personal loans grew by 20.4%, pushing up growth in consumption. However, continued double-digit contraction of export credit reflected weakening exports.

Nonperforming loans (NPLs) declined to a 7-year low of 5.0% of all loans and advances at the end of September 2022. The decline is attributed to earlier regulatory reform undertaken by the government: enacting and implementing the Insolvency and Bankruptcy Code in 2016 and reforming public sector banks starting in 2018. A publicly owned asset-reconstruction company set up in 2021 aims to reduce NPLs on banks balance sheets by acquiring stressed assets from banks and speeding their resolution. High nominal GDP growth helped reduce corporate debt stress by accelerating growth in corporate revenue and thus making it easier for them to service debt.

The central government fiscal deficit shrank from the equivalent of 6.8% of GDP in FY2021 to an estimated 6.4%. Expenditure cuts in areas other than energy, transport, and rural development left the governments fiscal position better than what was budgeted. Gross tax revenue is expected to greatly surpass the budget target of 2% with growth at 12.3%, which is still lower than nominal GDP growth. The current account deficit is expected to equal 2.9% of GDP in FY2022, its widest since FY2012. The main reasons are rising oil prices and a slowdown in global demand.

Despite weaker capital inflow, foreign exchange reserves remain comfortable. Foreign direct investment inflow declined from $43.17 billion in the first 9 months of FY2021 to $36.7 billion a year later as financial conditions tightened. Foreign portfolio investment outflow in FY2022 reflected higher policy interest rates in the US and rising global tensions. The Indian rupee had depreciated by 7.4% Y/Y at the end of January 2023, reaching a record low of INR 83.2 per dollar in October 2022. To keep the rupee from depreciating further, the central bank sold $30.5 billion in international reserves. As of end of January 2023, foreign exchange reserves worth $575.3 billion provided cover for an estimated 9.2 months of imports.

II. Economic Prospects for FY 2023-24

According to Asian Development Outlook (ADO) - April 2023 Update, India is expected by 6.8% in FY2024. Despite global headwinds, expansion benefited from strong growth in private consumption by an estimated 7.3%, and in investment, up by an estimated 11.2%. On the supply side, GDP growth was supported by agriculture, up by 3.3%, and services, up by 8.8%. Trade, hotels, transport, and communication grew robustly by an estimated 14.0%. Manufacturing growth moderated yet remained positive at 0.6%, reflecting a slowdown in global growth and high input costs.

Private consumption will be the main driver of growth. Indias large domestic consumption base will mitigate the impact of a global growth slowdown.

A robust labor market and rising consumer confidence are indicators of relatively strong growth in consumption in FY2024 and FY2025. Further, a higher tax rebate and a raised income threshold for tax exemption, announced in the most recent budget, may increase disposable income for the middle class, also boosting private consumption.

However, public consumption is likely to grow slowly, as central government expenditure shifts toward investment. Private investment growth is likely to be lower in FY2024 given tightened monetary policy, high lending rates, global uncertainty, and moderating optimism on business conditions. However, FY2025 should bring fast growth in investment because of strong macroeconomic fundamentals; lower non performing loans in banks than in recent years, which supports banks ability to lend; and significant corporate deleveraging, which has improved corporations ability to borrow. Several government policies aiming to improve transport infrastructure, logistics, and the business ecosystem will induce greater private investment. However, the contribution of net exports to growth will be small as growth in both exports and imports of goods moderates in tandem with a slowing global economy, even as Indias service exports remain relatively robust.

Manufacturing growth will be slow in FY2024 but pick up in FY2025 due to weak global demand but is expected to benefit as input price inflation moderates while relatively high prices persist for outputs. Production incentives introduced in April 2021 to boost manufacturing productivity and export competitiveness have attracted investment amounting to US$ 5.6 billion. Electronics was one of the first industries covered by these schemes and is likely to see increased production and exports this fiscal year. However, other beneficiary industries may not see significant impact on output as early as FY2024. Manufacturing growth will likely be tepid in FY2024, given the global growth slowdown, but it is seen picking up in FY2025 as expected improvement in global economic conditions lifts private investment.

Services will strongly grow this fiscal year as business outlook remains positive and will be helped by recovery in tourism and other contact services as COVID-19 impact dissipate. Further, relatively resilient service exports despite the global slowdown will continue to boost growth in the sector. The value of transactions through the Unified Payments Interface, the public digital retail payment system, grew by 68% in FY2023 to February 2023, further driving service growth. Indias introduction of a central bank digital currency is likely to accelerate the adoption of digital payment. Nevertheless, the contribution of services to GDP growth will be lower than in FY2022 as the high base effect from normalization after COVID-19 dissipates.

Inflation

Consumer inflation is forecast to moderate to 5% in FY2024, assuming moderation in oil and food prices. This will bring the rate back within the monetary policy target of 2%-6%. Inflation in FY2025 is expected to slow further to 4.5% as inflationary expectations are tamped down and global inflationary pressures subside. Monetary policy in FY2024 is expected to become progressively less accommodative as core inflation, which excludes fuel and food prices, persists because of high inflation expectations and high input costs. Policy will become more accommodative in FY2025 in tandem with expected actions by the US Federal Reserve.

Fiscal Deficit

Fiscal policy will remain supportive of growth even as fiscal consolidation continues. The budget targets narrowing the central governments fiscal deficit to the equivalent of 6.4% of GDP in FY2023 and 5.9% in FY2024. The central government has reiterated that it is committed to bringing its fiscal deficit below 4.5% by FY2026. The projected deficit for general government, combining central and state governments, under the current fiscal consolidation plan is 7.5% of GDP by 2026, down from 10.4% in 2022.

Indias public debt is on a sustainable path. After general government debt increased from 75% of GDP in 2020 to 89% in 2021 as the authorities responded to the pandemic, it declined to 84% in FY2023 and is expected to continue to decline gradually over the medium term. As it undertakes fiscal consolidation, the central government will still increase capital spending to support growth. This is important because capital spending is especially effective in India at spurring overall demand. Increased capital spending by the states is also important to garner more growth from public capital expenditure. However, the ability of states to contribute may be stymied unless their financial vulnerabilities are addressed.

Risks to Growth:

Risks to the growth outlook arise from both global and domestic factors. If global conditions do not deteriorate as much as anticipated, higher global demand will likely spur growth in India. However, any worsening of geopolitical tensions is likely to exert further downward pressure on global demand and increase uncertainty, tamping down Indias growth rate and pushing up inflation. Domestically, weather shocks to agricultural production, including abnormal rainfall or higher temperatures, could spur food inflation, thereby putting further pressure on the central bank to raise interest rates.

2. INDUSTRY STRUCTURE AND DEVELOPMENTS

A. CAPITAL MARKET

Fiscal 2022-2023 was a volatile year for Indian equity markets. It had a poor performance in the first half of the fiscal 2022-23, gained momentum in the second half and remained volatile due to allegations on large Indian conglomerate.

Exchanges are organized markets designed to provide centralized facilities for the listing and trading of financial instruments, including securities issued by companies, sovereigns, and other entities to raise capital. Exchanges are crucial market intermediaries and are supervised by the SEBI. In certain cases, exchanges may also act as a self-regulatory organization responsible for supervising their members, corporates, and market participants. To give an overview of the dimension of the capital markets in India, as of FY 2021-22 there were 3 Stock Exchanges in the

Equity Cash, Equity derivatives and Currency Derivatives Segment and 4 in the Commodities Derivatives Segment, 4 clearing corporations, 2 depositories, 11,081 Foreign Portfolio Investors (FPIs), and 17 custodians, with a market capitalization of all listed companies at 258 trillion.

A stock exchange is a catalyst for nation building and not just a trading platform. A vibrant capital market is a large job creator with the number of intermediaries required to support each trade. The Exchange ecosystem supports various intermediaries including brokers, sub brokers, corporates, banks, depositories, depository participants, custodians, and investors. The Stock Exchange industry in India has evolved rapidly in the past few years and spans multi asset classes - equities, equity derivatives, currency derivatives, commodity derivatives, ETF, mutual funds, debt, interest rate derivatives and power trading.

B. MAJOR POLICY DEVELOPMENTS FOR FY 2022-23

In the last year, SEBI has come out with major reforms like pledge - re-pledge to make sure that the security given for margin remains in client accounts, upfront margin requirements for all trades, Peak margin system to avoid over leverage, and segregation of client funds and securities. SEBI has been proactive in introducing several regulatory reforms in 2022, namely easing the norms for preferential allotment, bringing in mutual funds under the radar of insider trading, notifying rules for social stock exchanges, bringing in guidelines for online bond platforms, etc. The regulator ended FY 2023 by approving the new buyback norms, a governance framework for market infrastructure institutions, and empowering debenture holders. A series of regulatory changes introduced in relation to access to client funds has boosted transparency and improved risk management for the stock market ecosystem. Some of the Key regulations include the T+1 Settlement, Margin Pledge System, Block Mechanism in the DEMAT Account and Settlement of running account.

Guidelines relating to brokers from using one clients collateral to fund anothers margins: With effect from May 2, 2022, brokers have to segregate and report collateral at client level, failing which they will be slapped with heavy penalties. This is a follow on step from September 2020, when the regulator replaced the erstwhile power of attorney (PoA) system with the margin pledge and re-pledge mechanism. The move followed widespread misuse of client funds by brokers. In October 2021, SEBI directed exchanges, clearing corporations, and brokers to disclose cash collateral of clients on T+1 (trading day plus one day) basis. The regulatory guidelines of collateral segregation framework have been designed with the intent and aim of providing transparency and traceability of collateral to the investors, providing individual collateral segregation and protection for all investors; and improving portability and quick return of collateral.

Block mechanism in the DEMAT account: On 16 July 2022, SEBI introduced a block mechanism in the DEMAT account of the clients who are undertaking sale transactions. The concept was introduced to ease the clearing corporations operations of the Early Pay-in mechanism and the process of movement of shares back to the clients demat account in case the trade is not executed. The facility of the block mechanism shall be mandatorily applied to all the Early Pay-in transactions. As the shares stay in demat account till the payin date, unlike in earlier cases, where they will be moved from demat to pool account well before payin date, all corporate action benefits, if any, will be directly credited to your bank / demat account.

Settlement of running accounts of clients funds: SEBI also came out with new guidelines on settlement of running accounts of clients funds lying with stockbrokers, which were applicable from October 1, 2022. Under the guidelines, the settlement of the running account of funds of the client will be done by the trading member after considering the End of the day (EOD) obligation of funds as on the date of settlement across all the exchanges on the first Friday of the quarter for all the clients. Earlier, brokers settled the clients unused funds lying in the trading accounts at least once in 90 days (every quarter) or 30 days. This was referred to as ‘running account settlement where the aim was to prevent misuse of excess cash by brokers. The new norms bring uniformity and ensure that the entire industry has one single day to work towards the settlement process. The intent of the online system is to discourage trading members from retaining excess funds of clients after settlement of running account, by considering all the client obligations across exchanges. SEBI has also floated a consultation paper for the public on strengthening safeguards to customer funds with various stockbrokers and clearing members.

T+1 settlement: A revolutionary move which changed the settlement cycle to ‘T+1 from ‘T+2 settlement. The move to shift to T+1 settlement came after two decades. Most major developed markets around the world still follow the T+2 system, with India taking the lead and setting the trend. With the UPI gateway functioning seamlessly on real-time basis, there should not be any problem in fund transfer from brokers to clients, and vice-versa. Reducing the number of days for settlement will help provide better liquidity to investors and thereby enhance trade and participation. This will also help investors in reducing the overall capital requirements with the margins getting released on T+1 day and thereby boosting operational efficiency as the rolling of funds and stocks will be quicker. Quick settlement could help avert the default risk of pay-in/pay-out for such voluminous transactions.

Major Announcements by SEBI:

Date Title
29-Mar-23 Cyber Security and Cyber Resilience framework for Portfolio Managers
29-Mar-23 Review of time limit for disclosure of NAV of Mutual fund schemes investing overseas
27-Mar-23 Streamlining the onboarding process of FPIs
23-Mar-23 E-wallet investments in Mutual Funds
16-Mar-23 Common and simplified norms for processing investors service requests by RTAs and norms for furnishing PAN, KYC details and Nomination
6-Mar-23 Framework for Adoption of Cloud Services by SEBI Regulated Entities (REs)
Date Title
15-Feb-23 Maintenance of a website by stockbrokers and depository participants
15-Feb-23 Introduction of Issue Summary Document (ISD) and dissemination of issue advertisements
8-Feb-23 Entities allowed to use e-KYC Aadhaar Authentication services of UIDAI in Securities Market as sub-KUA
3-Feb-23 Manner of achieving minimum public shareholding
1-Feb-23 Transaction in Corporate Bonds through Request for Quote (RFQ) platform by Alternative Investment Funds (AIFs)
12-Jan-23 Participation of AIFs in Credit Default Swaps
11-Jan-23 Allowing stock exchanges to launch multiple contracts on the same commodity in commodity derivatives segment
10-Jan-23 Introduction of future contracts on Corporate Bond Indices
10-Jan-23 Change in control of Portfolio Managers providing Coinvestment services
10-Jan-23 Comprehensive Framework on Offer for Sale (OFS) of Shares through Stock Exchange Mechanism
9-Jan-23 Standard Operating Procedure for handling of Stock Exchange Outage and extension of trading hours thereof
9-Jan-23 Mode of settlement for trades executed on the Request for Quote (RFQ) platform
30-Dec-22 Introduction of Investor Risk Reduction Access (IRRA) platform in case of disruption of trading services provided by the Trading Member (TM)
9-Dec-22 Foreign investment in Alternative Investment Funds (AIFs)
30-Nov-22 Inclusion of Equity Exchange Traded Funds as list of eligible securities under Margin Trading Facility
29-Nov-22 Introduction of credit risk based single issuer limit for investment by mutual fund schemes in debt and money market instruments
25-Nov-22 Framework to address the ‘technical glitches in Stockbrokers Electronic Trading Systems
14-Nov-22 Registration and regulatory framework for Online Bond Platform Providers
28-Oct-22 Reduction in denomination for debt securities and nonconvertible redeemable preference shares
19-Oct-22 Request for Quote (RFQ) platform for trade execution and settlement of trades in listed Non-convertible Securities, Securitised Debt Instruments, Municipal Debt Securities and Commercial Paper
13-Oct-22 Governing Council for Social Stock Exchange ("SSE")
Date Title
30-Sep-22 Two-Factor Authentication for transactions in units of Mutual Funds
22-Sep-22 Issue and listing of Commercial Paper by listed REITs
22-Sep-22 Issue and listing of Commercial Paper by listed InvITs
19-Sep-22 Framework on Social Stock Exchange
19-Aug-22 Participation as Financial Information Providers in Account Aggregator framework
18-Aug-22 Block Mechanism in demat account of clients undertaking sale transactions
17-Aug-22 Guidelines for overseas investment by Alternative Investment Funds (AIFs) / Venture Capital Funds (VCFs)
4-Aug-22 Enhanced guidelines for debenture trustees and listed issuer companies on security creation and initial due diligence
29-Jul-22 Framework for automated deactivation of trading and demat accounts in cases of inadequate KYCs
27-Jul-22 Settlement of Running Account of Clients Funds lying with Trading Member (TM)
24-Jun-22 Introduction of Unified Payments Interface (UPI) mechanism for Infrastructure Investment Trusts (InvITs)
24-Jun-22 Introduction of Unified Payments Interface (UPI) mechanism for Real Estate Investment Trusts (REITs)
30-May-22 Processing of ASBA applications in Public Issue of Equity Shares and Convertibles

C. INDIAN CAPITAL MARKETS PERFORMANCE AND OUTLOOK

The Indian equity market was muted due to decadal high inflation, aggressive monetary policy stance by global central banks and Russia- Ukraine crisis, saw the Indian equity markets remain muted. In the year under review, the S&P BSE Sensex gained 0.72%.

The biggest macro factors influencing the markets include the shift in the power dynamics fueled by Chinas aggression towards Taiwan, ongoing U.S.-China conflict for supremacy, the continuing Russia-Ukraine war, the U.S. banking crisis and a looming recession. The impact of macro factors are expected to be mitigated by positive domestic factors acting as tailwinds for investors including the near completion of the earnings cycle, lower-than-expected inflation, and a pause on rate hikes by the Reserve Bank of India.

Private weather forecasting agency Skymet has predicted below-average rainfall, while the India Meteorological Department (IMD) has predicted 2023 rainfall at 96% of the long-period average, with a model error of ?5%. This prediction is considered a "normal" year based on early estimates, with a threat of El Nino making an impact. While it is highly unlikely India will witness the El Nino effect which is predicted to form by June, if it does, it could have a severe impact on Indias food grain production. The market is expected to closely monitor El Nino as it could have an impact on various fronts such as inflation, interest rates, low industrial production (due to water availability), and lower tax collections, which could impact the markets.

Going into FY 2024, corporate earnings would be key among the many factors that will decide the market mood. Other major factors to impact Indian capital markets in the coming year include resurrection in consumption demand, growth led by policy reforms, move towards digitization and monetary stance of central banks of major economies, and economic and trade policies. Coupled with strong demographic dividend and economic growth, consumer demand conditions in the country will remain strong for a long period. Additionally, stable fiscal situation, moderate inflation rate, exports growth, rising FDI inflows point towards fundamental stability in the economy, which augurs well for the capital markets.

It is widely expected that the equity markets to remain vibrant as the country remains one among the top investment destinations. Among financial assets, majority of household savings in India are still concentrated in the form of cash deposits, gold, and real estate. This is in sharp contrast to developed economies where households rely on a mix of equities, pension products, insurance, and other financial products. As financial literacy levels improve and per capita savings increase, the allocation of savings into more financial products such as insurance, mutual funds and equities is expected to further increase.

3. CAPITAL MARKETS

A. OVERVIEW

BSE is the worlds fastest Stock Exchange and the largest stock exchange in terms of number of companies listed. As of March 31, 2023, BSE is ranked #7 by market capitalization among global stock exchanges, and the largest in India. As of March 31,2022, BSE was ranked #8 globally.

B. PRIMARY MARKET

The total number of companies listed on BSE as on March 31, 2023 was 5433 as compared to 5,350 as on March 31,2022.

In FY 2022-23, Indian Investors showed faith in investing funds in Indian corporate sector primarily via the BSE fund raising platforms. 14.83 lakh crores (USD 180.83 bn) worth of funds was mobilized through listing of Equity, Bonds, REITs, InvITs and Commercial Papers,

During FY 2022-23, 40 companies tapped the market through the IPO process to get listed on the Mainboard of BSE. The amount raised through Mainboard IPOs in FY 2022-23 was 56,740 crore as against 1,11,610 crore in FY 2021-22.

In addition to 40 IPOs on the Mainboard, 63 companies raised 1002.47 crore through BSE SME platform in FY 2022-23 Two companies also raised 20,245 crore through InVITs in FY 2022-23.

With respect to debt capital the total amount mobilized through Privately Placed Debt Instruments ("PPDI") at BSE in FY 2022-23 was 5,31,139 crore as against 3,88,020 crore in FY 2021-22. During FY 2022-23, there were 35 public issues of bonds, which mobilized 9,462 crore as against 11,589 crore in the FY 2021-22. Out of these 35 public issues, 20 issues (58%) were exclusively listed on BSE and the average bids garnered through BSEs Internet based Book Building Software ("iBBS") platform for these debt public issuances was 93%.

The total amount mobilized through Commercial Paper ("CP") at BSE in FY 2022-23 was 7,88,731 crore.

I. Mutual Fund Segment

The BSE StAR MF platform continues to be Indias largest mutual fund distribution Infrastructure with 87% of market share amongst exchange- based platforms in mutual fund Industry. In FY 2022-23, BSE StAR MF crossed 26.45 Crore transactions witnessing 43% growth as compared to 18.47 Crore transactions in FY 2021-22. The platform also registered 2478 new members on a platform, taking the total network to over 74,700 distributors in India. BSE StAR MF App (StAR MF Mobility) has processed over 51.79 lakh transactions, amounting to 7,207 crore in FY 2022-23.

SIP Book Size:

• In FY 2022-23, BSE StAR MF registered 1.25 crore new SIPs.

• For March 2023 the platform registered 12.36 lakh new SIPs amounting to 286 crore

Mutual Fund Industry pay a service charge on a per transaction basis, processed at BSEs StAR MF platform. This enables BSE to provide even better services to all investors in mutual funds bringing in further automation and certainty to the mutual funds investment process in India.

Innovations and unique features of BSE StAR MF

• The technology Infrastructure provided by BSE has created a super highway, which has boosted the mutual funds distribution for traditional distributors as well as new age e-commerce network of MFDs, Banks, Fintech platforms, brokers, broker branches and associates across India.

• BSE StAR MF supports all modes and type such as: Regular as well as Direct mutual funds schemes, Demat as well as Non demat mode of holding of mutual funds units.

• 24X7 order acceptance is available on BSE StAR MF Platform, along with continuous settlement of orders.

• New Value-added services Offering:

- Portfolio Software Services

- Phygital Initiatives

- EKYC

- SIP Pause

• Overnight Investment framework facilitates BSE StAR MF Registered

Investors:

- To route idle monies as overnight investments, monies can be invested even for single day i.e. overnight.

- Subscription and redemption can happen simultaneously on the same day.

• Only Infrastructure in India that supports 2 modes via Systematic

Investment Plan ("SIPs"), which can be initiated as under:

- Paperless SIP: Wherein the link for payment is created for 1st Instalment as well as subsequent Instalment, only available with BSE.

- X-SIP/ National Automated Clearing House ("NACH" & "eNach") based SIP Facility: Under this product, a single mandate can be used for investing in SIPs across all schemes and all Asset Management Companies ("AMCs") registered with StAR MF. The SIP administration and the cost of administration is borne by BSE and the money is debited to the clients bank account directly instead of debiting the member pool account.

- X-SIP Facility with First order today flexibility: Enabling BSE StAR MF members to start SIP within couple of minutes instead of waiting for a month.

• Systematic Transfer Plan ("STP") and Systematic Switch Plan ("SWP"), with "First order today" facility.

• Completely digital and real time onboarding of investors.

• Connectivity: Multi mode platform access;

- Web - browser with CO-BRANDING facility,

- APIs over leased lines,

- WEB Services - APIs over internet.

- Mobile App for distributors.

II. Municipal Bonds and Green Bonds

No Municipal Bonds were issued at BSE in F.Y. 2022-23.

The total amount mobilized through Municipal Bonds at BSE in FY 202122 was 100 Crore as against 350 Crore in FY 2020-21.

The total amount mobilized through Green Bonds at BSE in FY 2022-23 is 1,045 Crore as against 2,827 Crore in F.Y. 2021-2022.

III. Sovereign Gold Bonds

With Stock Exchanges being allowed to act as a receiving office for Sovereign Gold Bond ("SGB") Scheme, BSE has become a significant platform for accepting retail bids in this product. BSE aggregates application from its vast network of brokers and distributors and channels the same to RBI. Please find below the details on SGB bids received on BSE in the respective Tranches for FY 2022-23.

With Stock Exchanges being allowed to act as a receiving office for Sovereign Gold Bond ("SGB") Scheme, BSE has become a significant platform for accepting retail bids in this product. BSE aggregates application from its vast network of brokers and distributors and channels the same to RBI. During the FY 2022-23 RBI has issued few tranches, BSE has received collection of 1006.00 kgs and value of 520.00 crores for the period mentioned.

C. SECONDARY MARKET

I. Equity Cash Segment ("ECM")

The S&P BSE SENSEX ended FY 2022-23 at 58,991.52 compared to 58,568.51 at year end of FY 2021-22, an increase of 0.72% over the year. The average daily value of equity turnover on BSE in FY 2022-23 was 4,132 Crore, a Y-o-Y Decrease of about 23.4% from 5,396 Crore in FY 2021-22. The total turnover for year stood at 10.3 lakh crore.

II. Equity Derivatives Segment ("EDX")

In EDX, the daily average value was 1,37,813 Crore in FY 2022-23 as compared to 2,66,445 Crore in FY in FY 2021-22. BSE Derivatives has recorded the highest turnover of 2,99,141 crore during the year.

III. Currency Derivatives Segment ("CDX")

In CDX, the daily average turnover was 25,599 Crore for FY 2022-23 as compared to 26,672 Crore for FY in FY 2021-22, a decline of 4 percent. The average daily traded value for the month of September 2022 was 36,901 Crore, which was the highest since October 2018.

IV. Interest Rate Derivatives ("IRD")

In IRD, the daily average turnover was 96 Crore for FY 2022-23 as compared to 178 Crore for FY in FY 2021-22.

V. Commodity Derivatives

In the commodity derivatives segment, the daily average turnover was 32 Crores for FY 2022-23 as compared to 2,969 Crore for FY in FY 2021-22.

VI. BSE SME Platform

The framework for SME Platforms to serve small and medium-sized enterprises on stock exchanges were established by SEBI vide its circular dated May 18, 2010. The BSE SME platform received the final approval of SEBI on September 27, 2011 and was launched on March 13, 2012. BSE SME IPO Index was launched on December 14, 2012 with 100 as the base.

On March 31,2023, the value of this index reached 24,110.49. Additionally, the total market capitalization of all the 430 companies listed on BSE SME Platform reached INR 59,346.31 Crore. During FY 2022-23 the SME platform continued to be a front-runner with a market share of 60%.

During FY 2022-23, 63 companies raised INR 1002.47 Crore from the market.

Migration to Main Board

As Per ICDR Guidelines for SME Platform, the Company may opt to migrate from SME board to the main board once the companys post issue face value capital crosses 10 Crore. The company must compulsorily migrate to Main board in case the post-issue face value capital crosses 25 Crore.

During FY 2022-23, 33 BSE SME companies have migrated to the BSE Main Board.

VII. Debt Market Segment ("DMS")

BSE witnessed reporting of Over the Counter ("OTC") trades in Corporate Bonds on New Debt Segment - Reporting, Settlement and Trading (NDS-RST) platform worth 6,59,827 Crore in FY 2022-23 as against 6,67,730 Crore in FY 2021-22. The Company has maintained the market share of 32% in FY 2022-23 for Corporate Bonds Reporting. In case of Statutory Liquidity Ratio ("SLR") securities i.e. Government Securities and Treasury Bills, trades worth 4,21,327.70 Crore were reported on NDS-RST in FY 2022-23 as against 4,29,103.67 Crore in FY 2021-22. BSE has its market share in reporting of Government securities at 58% in FY 2022-23.

Trading in Non-Convertible Debentures ("NCDs") and Bonds on ‘F group of BSEs equity platform saw volume of 4,730 Crore in FY 2022-23 as against 4,852 Crore in FY 2021-22. BSEs market share has increased to 71% in FY 2022-23 as compared to 67% in FY 2021-22 for the retail trading of Corporate Bonds.

The settlement volume for corporate bonds witnessed business of 2,37,427 Crore in FY 2022-23 as against 1,69,869 Crore in FY 202122. BSEs market share increased to 16% in FY 2022-23 as compared to 10% in FY 2021-22 for corporate bond settlement.

BSE Launched Request for Quote (RFQ) platform for execution and settlement of trades in NDS-RST system after receiving the markets regulator SEBIs approval w.e.f February 3, 2020. Total Volume in RFQ platform of BSE was 4,148 Crores for FY 2022-23 as compared to 8,543.79 Crores for FY 2021-22.

VIII. Non - Competitive Bidding ("NCB-GSec")

BSE has launched Non - Competitive Bidding in Government Securities (G-Sec), State Development Loans (SDL) and Treasury Bills (T-Bills) which allows retail investors to purchase G-Sec, SDL and T-Bills. The Company has received approval from the RBI and SEBI for acting as facilitator for non-competitive bidding (NCB) under RBI Auction in G-Sec, SDL and T-Bills.

BSE also launched a mobile app called "BSE Direct" as well as a Web based platform for Individual Investors to participate directly in the auction of G-Sec, SDL and T-Bill issued by the Government of India.

For the FY 2022-23, BSE has received bids worth 676.379 crore through its various bidding platform while in FY 2021-22, bids worth 467.698 Crore were received.

IX. Exchange Traded Funds ("ETF")

As on March 31, 2023, BSE had 114 ETFs listed on its platform, as compared with 83 as on March 31,2022. During FY 2022-23, the average daily turnover in ETF is 19.68 Crore compared with 33 Crore in FY 2021-22.

X. Offer for Sale ("OFS") & Offer to Buy ("OTB")

Offer for Sale (OFS) is a secondary market mechanism used by existing listed companies wherein existing shareholders tender their shares to public investors on stock exchanges trading window. During FY 20222023, there were 17 OFS issues out of which BSE was appointed as the Designated Stock Exchange in 10 issues (59%). Out of the 17 OFS issues, 8 issues were conducted exclusively on the BSE platform, the total amount raised through OFS issues on BSE platform was approx. INR 5136 Crore.

Similarly Offer to Buy (OTB) is also a secondary market mechanism wherein existing shareholders tender their shares on trading window to the Company in case of Buy-back, Acquirer in case of takeover or to the Promoter in case of delisting of securities. During FY 2022-2023, there were 136 such OTB issues, of which BSE was appointed as the Designated Stock Exchange in 123 issues (91%). Out of the 136 OTB issues, 113 issues were conducted exclusively on BSE platform, the total subscription through OTB issues on BSE Platform was INR 6725 Crores.

XI. Securities Lending & Borrowing ("SLB")

The SLB turnover at ICCL decreased by 28.23% from 6191 Crore in FY 2021-22 to 4443 Crore in FY 2022-23. The lending fees increased by 52.28% from 10.27 Crore to 15.64 Crore during this period.

Segment FY 2022-23 ( Crore) FY 2021-22 ( Crore)
Turnover for the period - 1st Leg of SLB transactions 4443 6191
Lending fees 15.64 10.27

XII. Dissemination Board

SEBI issued a circular in October 2016, requiring all exclusively listed companies of Regional Stock Exchanges which are derecognized and are on Dissemination Boards of Nationwide Stock Exchanges to either list on a nationwide stock exchange or to provide exit to its investors. Following this, BSE has reached out to over 1,500 such companies admitted to BSEs Dissemination Board. BSE is working closely with SEBI to ensure smooth and proper exit to investors in such companies. During FY 2022-23, BSE reversed action initiated against Promoters / Directors of 05 exclusively listed companies, which were found to be compliant with SEBI circular dated October 10, 2016 and August 01, 2017 and consequently these companies were removed from the BSEs Dissemination Board. As on March 31, 2023 there are 676 companies on the Dissemination Board of BSE.

XIII. Startups platform

BSE launched the Startups platform on 22nd December 2018, for companies seeking listing in the sector of IT, ITES, Bio-technology and Life Science, 3D Printing, Space technology, E-Commerce, Hi- Tech Defense, Drones, Nano Technologies, Artificial Intelligence, E-gaming etc. The criteria for listing is:

1. The Company should be registered as start-up with DPIIT. In case the company is not registered as Start-up with DPIIT then the companys paid-up capital should be minimum 1 crore.

2. The Company or the partnership / proprietorship / LLP firm or the firm which have been converted into the company should have a combined track record of at least 2 years at the time of filing the prospectus with BSE. There should be preferably investment by QIB investors (as defined under SEBI ICDR Regulations, 2009) / Angel Investors/ Accredited Investors for a minimum period of 2 years at the time of filing of draft prospectus with BSE.

3. The company should have positive net worth.

During FY 2022-23, no companies raised funds from the market. On March 31, 2023 the total market capitalization of all the 14 companies listed on BSE Startups Platform reached INR 882.01 Crore. During FY 2022-23, the Startups platform continued to be a front-runner with a market share of 100%.

D. INDIA INTERNATIONAL EXCHANGE (IFSC) LIMITED (INDIA INX)

BSE has made strategic investments in India International Exchange (IFSC) Limited (India INX) and India International Clearing Corporation (IFSC) Limited (India ICC). ICICI Bank Limited and State Bank of India have already joined as a strategic partner in these ventures. The total investments made by BSE Limited till date is 145.545 crores in India INX and 80 crores in India ICC. The focus of the government and the regulators is to make IFSC a successful international financial centre in the coming years. Various regulatory measures have been put in place and others are in the pipeline to have a vibrant cash and derivatives markets at GIFT IFSC.

International Financial Services Centres (IFSC) Authority, the unified regulator for IFSC, now regulates all financial services in IFSC, comprising banking, securities, insurance, and pension markets. The IFSC Authority, as a unified regulator, plays a pivotal role in inter-regulatory coordination and harmonizing regulations of various inter-related markets, leading to improvement in the regulatory regime and ease of doing business at IFSC. As a dedicated regulator for the IFSC, headquartered at GIFT City IFSC, Gandhinagar, the authority plays a very significant role in ushering in rapid development and growth of the IFSC as envisioned by the government of India.

India INX continues to position itself as a preferred offshore platform, open 22 hours a day for trading and become the financial gateway of choice for both inbound and outbound investors. The derivatives trading volumes at India INX has grown significantly since inception. The notional trading turnover on INDIA INXs derivatives increased by 28% to USD 3,369.82 billion in FY 2022-23 from USD 2,624.28 billion in the previous financial year FY 2021-22. India INX is poised to achieve further growth in its turnover, and it competes with Singapore Exchange and Dubai Gold & Commodities Exchange in some of the India dedicated products such as index, commodities and currencies. This has laid the foundation for India INX to become the preferred offshore gateway to India through innovative product offerings, cutting edge technology, competitive regulatory framework, attractive tax structure, easy access to markets and outstanding customer service. India INX continues to innovate and place emphasis on reaching out to global investors through its trading members to improve the liquidity and depth of the markets. Depending on regulatory approvals, India INX proposes to introduce new and innovative products in future to compete with other international exchanges and cater to the needs of investors across the globe.

One of the primary goals of India INX is to help companies raise funds from the capital markets which can be deployed for the growth and development needs of the company, leading to employment generation and overall economic development. Keeping this in mind India INX launched the Global Securities Market Platform, which is a pioneering concept in India, offering issuers an efficient and transparent method to raise capital. The platform offers a debt listing framework at par with other global listing venues such as London, Luxembourg, Singapore etc. Till date, Global Securities Market has established around USD 70 billion in MTN programmes and around USD 50 billion of bonds issued. As on date, leading issuers like Asian Development Bank, State Bank of India, EXIM Bank, PFC, ONGC, REC, IRFC, Adani Green Energy UP Ltd., Adani International Container Terminal Private Limited, Adani Ports and Special Economic Zone Limited, Reliance Industries Limited, JSW Infrastructure, HDFC Bank, Axis Bank etc. have established their MTN programmes, alongside drawdowns and/ or standalone issuances, which are a healthy mix of masala, Formosa, dollar denominated, green, social and sustainability-linked bonds. India INX is also the first introducer of the Green Securities Platform for issuance of green bonds. Exim Bank listed its maiden 10 year sustainability bond exclusively on India INX. Further, Cholamandalam Investment & Shriram Finance have exclusively listed their bonds on the Exchange.

India International Exchange (India INX) has memorandum of understanding with Luxembourg Stock Exchange for development and promotion of ESG and green finance in the local market. In November 2021, via this MoU the Exchange and had earlier enabled listing of USD 650 Million Green bonds of State Bank of India on Luxembourg Green Exchange. With a view to strengthen cross-border collaboration in international capital markets and to help reorient capital flows towards sustainable development in June 2022 both the Exchanges signed a cooperation agreement through which the two exchanges will enhance the visibility of listed Indian securities towards international investors by facilitating admission of such securities on LuxSE. Accordingly, PFC, Euro 300 million green bonds were also listed on Luxembourg Green Exchange.

The IFSC would be the venue where various innovations and new initiatives are expected to materialize in the coming years. BSE would be keen to explore these new initiatives and seek investment opportunities in IFSC, such as the International Bullion Exchange wherein BSE has 20% stake, through its two subsidiary companies in IFSC, India INX & India ICC, each having 10% stake.

KEY MILESTONES ACHIEVED, MAJOR EVENTS AND GROWTH STRATEGY OF INDIA INX

Following is a summary of key milestones achieved, major events along with an analysis of the growth strategy during F.Y. 2022-23:

I. MARKETS BUSINESS PERFORMANCE

Growth in the core business segment - India INX Derivatives India INXs core business of Derivatives has achieved remarkable growth since its launch in January 2017.

• During the Financial Year 2022-23, India INX was the largest exchange at GIFT IFSC with an overall market share [1] of 92.47% based on the notional Trading Turnover for Derivatives.

• INDIA INX is the leading Exchange at GIFT IFSC for Equity Index Futures and Options with market share[1] of 92.46% during FY 2022-23.

• India INXs Gold Futures market share[2] as compared to equivalent Gold Futures traded in Dubai was 75.78% during FY 2022-23.

• India INXs INDIA50 Index Futures and Options market share[3] as compared to similar India-based equity index derivatives traded in Singapore was 76.58% during FY 2022-23.

Secondary Markets - India INXs Derivatives Business Performance

India INX delivered an exponentially increasing growth in trading volume and trading turnover during FY 2022-23 as compared to the previous financial year. The notional trading turnover on INDIA INXs derivatives increased by 28% from USD 2,624.28 billion in the previous financial year FY 2021-22 to USD 3,369.82 billion in FY 2022-23. During the same period, trading volume increased from 1,515 lakh contracts (FY 2021-22) to 1,821 lakh contracts (FY 2022-23).

India INXs Primary Market Platform - Global Securities Markets

India INX set up Indias first international primary markets platform, the Global Securities Market to cater to the needs of Indian and foreign issuers to raise funds from global investors. The maiden listing of debt securities on Global Securities Market was on December 22, 2017. Ever since, has emerged as the leading primary markets platform at GIFT IFSC for raising capital through issuance with 100% market share in MTN establishment and 98% market share in listed bonds in GIFT IFSC.

Growth in Listings Business - India INX Global Securities Market

During FY 2022-23, the cumulative MTN established on Global Securities Market increased by 12% to USD 69.57 billion as compared to USD 62.07 billion till financial year FY 2021-22. Similarly, during FY 2022-23, cumulative listing of debt securities increased by 12% to USD 49.94 billion as compared to USD 44.59 billion till financial year FY 2021-22 with the number of issuances increasing by 12% from 115 ISINs to 129 ISINs.

During FY 2022-23, 100% of the ESG funds raised by Indian issuers was listed on India INXs Global Securities Market. In the current fiscal, several esteemed issuers have forayed into GIFT IFSC with listing on India INX such as ICICI Bank Limited, Cholamandalam Investment and Finance Company Limited, Shriram Finance Limited etc. have established / updated MTNs and/or listed debt securities on the Global Securities Market. All the issuances listed in Q4 2022-23, except EXIM Bank, were listed exclusively in IFSC. This reaffirms our belief that the exchange has emerged as a destination of choice for listing of foreign currency issuances for Indian issuers.

For the period April 1, 2022 to March 31, 2023 total value of bond listed on GSM Platform is USD 5,356 against the relevant Established or Updated MTN / Standalone Programme given below:

MTN / Standalone Programme established / updated (USD Million) Debt Securities
Sr. Name of Issuer No. (Bonds) Listed (USD Million) No. of ISINs
1 ICICI Bank Limited 7,500 1,950 5
2 Export-Import Bank of India - 1,000 2
3 State Bank of India 10,000 - -
4 REC Limited 7,000 750 2
5 Power Finance Corporation Limited - 700 2
6 Cholamandalam Investment and Finance Company Limited - 56 1
7 HDFC Bank Limited - 750 1
8 Shriram Finance Limited 3,500 150 1
Total 5,356 14

India INX Global Access (IFSC) Limited ("India INX GA" or "Global Access")

India INX GA is a pioneering venture and a 100% wholly-owned subsidiary India INX, Indias first international exchange located at International Financial Services Centre in the Gujarat International Finance Tec-City (GIFT IFSC) , the first of its kind from India and GIFT IFSC. The entity is regulated by International Financial Services centers Authority (IFSCA)

India INX GAs vision is to become the leading provider of financial services by offering centralized access to international financial markets for the benefit of India INXs members from GIFT IFSC and resident Indians under the LRS route.

Access to International Exchanges

India INX GA, provides a platform for trading in global stocks, including shares from major US-listed companies. It offers stocks from the US, Canada, UK, Europe, Australia, and Japan, covering a significant percent of the investing universe. With access to over 135 exchanges across 33 countries with 23 currencies worldwide covering global exchanges in America, Europe, Asia Pacific and Africa, India INX Global Access is emerging as the preferred platform for India investors to trade in international securities. Some of the exchanges offered are NYSE, Nasdaq, LSE, Canadian Securities Exchange, Toronto Stock Exchange, BATs Europe, Euronext France and Tokyo Stock Exchange.

India INX GA has now tied up with international brokerages viz. Interactive Brokers LLC, KGI Securities & others to provide access to international exchanges. India INX GA had earlier offered access to international

exchanges such as the CME Group of Exchanges, London Metal Exchange (LME), Intercontinental Exchange (ICE) Futures US, ICE Futures Europe, Eurex and Euronext N.V. through Marex Spectron group, which is a Futures Commission Merchant (Clearing Member) of CME Group exchanges.

Further, India INX Global Access has also tied up with ICICI Bank, Kotak Bank & IndusInd Bank to bring down the cost of remittance of funds for resident Indian investors under LRS.

II. KEY REGUALTORY DEVELOPMENTS

i. UNION BUDGET 2023-24

With the Union Budgets thrust to encourage GIFT IFSC to become the preferred destination for international financial services, as the maiden International Financial Services Centre (IFSC) in India, GIFT IFSC is rapidly emerging as the home for leading global financial institutions and other providers of international financial services.

The budget announcements made by the Honble Finance Minister Smt. Nirmala Sitharaman towards delegating powers under the SEZ Act to IFSCA, setting of single window for registration by multiple authorities, permitting acquisition financing by IFSC banking units of foreign banks, establishing a subsidiary of EXIM bank in GIFT IFSC, recognising offshore derivative instruments as valid contracts and other measures will not only lead to ease of doing business in GIFT IFSC but also further accelerate the growth and aid in the enrichment of its ecosystem.

As highlighted in the Economic Survey, the Governments vision for GIFT IFSC surely transcends beyond traditional finance and endeavours to transform GIFT City into a bustling financial hub.

Following proposals were announced by Hon. Finance Minister in the Union Budget:

• Delegating powers under the SEZ Act to IFSCA to avoid dual regulation,

• Setting up a single window IT system for registration and approval from IFSCA, SEZ authorities, GSTN, RBI, SEBI and IRDAI,

• Permitting acquisition financing by IFSC Banking Units of foreign banks,

• Establishing a subsidiary of EXIM Bank for trade re-financing,

• Amending IFSCA Act for statutory provisions for arbitration, ancillary services, and avoiding dual regulation under SEZ Act, and

• Recognizing offshore derivative instruments as valid contracts DATA EMBASSY

For countries looking for digital continuity solutions, GOI shall facilitate setting up of their Data Embassies in GIFT IFSC

IMPROVING GOVERNANCE AND INVESTOR PROTECTION IN BANKING SECTOR

To improve bank governance and enhance investors protection, certain amendments to the Banking Regulation Act, the Banking Companies Act and the Reserve Bank of India Act are proposed.

CAPACITY BUILDING IN SECURITIES MARKET

To build capacity of functionaries and professionals in the securities market, SEBI will be empowered to develop, regulate, maintain and enforce norms and standards for education in the National Institute of Securities Markets and to recognize award of degrees, diplomas and certificates.

CENTRAL DATA PROCESSING CENTRE

A Central Processing Centre will be setup for faster response to companies through centralized handling of various forms filed with field offices under the Companies Act.

ii. INDIA INX SUCCESSFULLY COMPLETES UNANNOUNCED LIVE TRADING SESSION FROM DISASTER RECOVERY SITE

India INX successfully completed unannounced live trading session from the Disaster Recovery Site, running the operations seamlessly for 22 hours on February 17, 2023, the turnover during this session was USD 5.81 Billion. India INX is the first Market Infrastructure Institution (MII) in IFSC to have successfully conducted the unannounced DR live session.

Earlier, on November 16, 2022, IFSCA had released a circular "Guidelines for Business Continuity Plan (BCP) and Disaster Recovery (DR) for Market Infrastructure institutions (MIIs)", wherein it was mentioned that MIIs shall conduct unannounced live operations from the DR Site at least once every six months.

https://ifsca.gov.in/Viewer?Path=Document%2FLegal%2Fguidelin

es-for-bcp-dr-for-miis16112022070946.pdf&Title=Guidelines%20

for%20Business%20Continuitv%20Plan%20%28BCP%29%20

and%20Disaster%20Recovery%20%28DR%29%20

for%20Market%20Infrastructure%20Institutions%20

%28MIIs%29&Date=16%2F11%2F2022

4. BUSINESS OPERATION REVIEW

A. MEMBERSHIP

During FY 2022-2023, 29 Deposit Based Membership ("DBM") applications were received at BSE. Since launch of new DBM scheme in April 2010, BSE has received a total of 1023 DBM applications, as on March 31,2023.

B. CORPORATE SERVICES (LISTING)

The Corporate Services segment of BSE registered revenue growth in FY 2022-23. Annual Listing Fees (equity, debt and MF) increased by 8% to 177 Crore compared to 164 Crore in FY 2021-22. BSE also provides other services to corporates such as book building software, buy-back facilities, reverse book building software, etc. Fees earned from such services were 42 Crore in FY 2022-23 as compared to 53 Crore in FY 2021-22, a decrease of 21% from the previous year on account of IPO, Rights Issues, OTB/OFS issues etc.

C. DATA INFORMATION PRODUCTS

The Company and Deutsche Borse have entered into a partnership in October 2013, under which Deutsche Borse would act as the licensor of the companys market data and information to all international clients. The business for sales and marketing of the companys market data products to international customers by Deutsche Borse commenced from April 2014. Under the co-operation, Deutsche Borse is responsible for sales and marketing of the companys all market data products to customers outside India, while the company continues to serve its domestic clients. Deutsche Borse also shares the joint responsibility along with the company for product development and innovation, which includes extending its existing infrastructure and creation of new market data solutions to support the companys product offerings.

The total revenue from the sale of market data and information products was INR 38.86 Crore in FY 2022-23 as compared to INR 36.00 Crore in FY 2021-22. The increase in revenue was on account of addition of domestic as well as international customers and revision in domestic and international pricing.

D. INDEX

AIPLs Total Revenue increased from INR 4,561 lacs in FY 2021-22 to INR 5,495 lacs in FY 2022-23, which is a growth of 20%. The Profit before Tax increased from INR 1,187 lacs in FY 2021-22 to INR 1,496 lacs in FY 2022-23, which is a growth of 26%.

In 2022-23 we saw an increase in demand for issuance of Market Linked Debentures on the S&P BSE SENSEX, there was also growth in Data Subscription and Passive Product issuances for S&P BSE Indices especially Factor Indices.

5. SIGNIFICANT DEVELOPMENTS

A. EXECUTION OF ‘DEMAT DEBIT AND PLEDGE INSTRUCTION (DDPI) FOR TRANSFER OF SECURITIES TOWARDS DELIVERIES / SETTLEMENT OBLIGATIONS AND PLEDGING / REPLEDGING OF SECURITIES:

Effective from January 27, 2023 , SEBI has mandated compulsory execution of DDPI for transfer of securities towards deliveries and settlements. Under DDPI, clients can explicitly agree to authorise the stock broker and depository participant to access their beneficiary ownership account for the limited purpose of meeting pay-in obligations for settlement of trades executed by them, according to a circular.

The use of DDPI will be limited only for the transfer of securities held in the beneficial owner account of the client towards stock exchange related deliveries or settlement obligations of trades executed by a client and for pledging/re-pledging of securities in favour of the Trading Member (TM)/ Clearing Member (CM) to meet margin requirements.

B. SETTLEMENT OF RUNNING ACCOUNT OF CLIENTS FUNDS LYING WITH TRADING MEMBER (TM)

Single day settlement of running accounts of clients funds lying with stock brokers came in force from October 01,2022. According to the same, the settlement of the running account of funds of the client will be done by the trading member after considering the End of the day (EOD) obligation of funds as on the date of settlement across all the exchanges on the first Friday of the quarter for all the clients. If the first Friday is a trading holiday, then such settlement will happen on the previous trading day. For clients, who have opted for monthly settlement, running accounts will be settled on the first Friday of every month. If the first Friday is a trading holiday, then such settlement will happen on the previous trading day.

The clients, who have not done any transaction in the 30 calendar days, funds will be returned to the client within the next three working days irrespective of the date when the running account was previously settled.

Post implementation of SEBI Circular two such settlements have been carried out on October 7, 2022 and January 6, 2023 during F.Y. 2022-23.

C. INTRODUCTION OF INVESTOR RISK REDUCTION ACCESS (IRRA) PLATFORM IN CASE OF DISRUPTION OF TRADING SERVICES PROVIDED BY THE TRADING MEMBER (TM)

In the event of disruption of trading services provided by a Broker, clients face significant risk if they are unable to square off their open positions and / or cancel orders pending at the stock exchange, particularly when the markets are volatile. To provide such clients a facility to reduce the risk of open positions / pending orders during periods of disruption in services of their broker, stock exchanges have been mandated to introduce an Investor Risk Reduction Access Platform.

Stock exchanges and Clearing Corporations are required to put in place appropriate systems to ensure compliance of the provisions of this circular on or before October 01,2023.

D. MAINTENANCE OF A WEBSITE BY STOCK BROKERS

SEBI has mandated that by August 16, 2023, all stock brokers are required to maintain websites to bring in transparency and helps the investors to keep themselves well informed about the various activities of the Stock broker. Websites are required to mandatorily display basic details of the Stock broker such as Names and contact details such as email ids etc. of all key managerial personnel (KMPs) including compliance officer, Step- by-step procedures for opening an account, filing a complaint on a designated email id, and finding out the status of the complaint, Details of Authorized Persons etc.

E. HANDLING OF CLIENTS SECURITIES BY TRADING MEMBERS (TM)/ CLEARING MEMBER (CM):

As per the regulatory mandate, the securities received in pay-out are required to be transferred to the demat account of the respective clients directly from the pool account of the trading member (TM) or clearing member (CM) within one working day of the pay-out.

From April 1, 2023, for unpaid securities, where client have not met obligation, such securities will be transferred to respective clients demat account by creating an auto-pledge with the reason" unpaid" in favour of a separate demat account titled as "Client Unpaid Securities Pledgee Account" (CUSPA), which would be opened by TM/CM and the same shall not be considered for Margin Obligation.

Pledge can be invoked only against delivery obligation. Pledge which is neither invoked nor released within 07 days, the securities will be auto released and available to the client.

6. SECONDARY MARKET POLICY DEVELOPMENTS

A. DEALING WITH UNSOLICITED MESSAGES AND YOUTUBE VIDEOS

SEBI / the Company noticed that unsolicited messages / YouTube videos are being circulated / sent to investors, via., bulk SMSs, websites and social media platforms like YouTube WhatsApp, Telegram, etc., inducing them to trade in the stocks & equity derivatives, indicating target prices and/ or potentially misleading information. In view of the same, the Company, has been sending advisory messages to the investors on a periodic basis cautioning them to take an informed decision while dealing in stocks & equity derivatives and beware of unsolicited tips/recommendations. Further, based on joint discussions by SEBI with Exchanges, a detailed notices nos. 20221021-12 dated October 21, 2022 and 20230224-38 -dated February 24 , 2023, were issued to the market participants, inter alia, informing details of actions applicable while dealing in stocks & equity derivative under the said framework.

7. REGULATORY

A. SURVEILLANCE & INVESTIGATION

I. Statistics for FY 2022-23

As part of market monitoring activities during FY 2022-2023; 42,496 surveillance alerts were generated, of which 872 alerts were taken up for snap investigations. Subsequently till March 31, 2023, 157 cases were taken up for preliminary/ detailed investigations, of which 89 preliminary/ investigation reports have been forwarded to SEBI.

II. Broker Supervision

Broker Supervision 896 inspections of members were conducted during FY 2022-23, which include 833 routine inspections. Further, 63 out of 896 inspections were jointly conducted with SEBI, other Exchanges and Depositories during FY 2022-23 which was selected by SEBI for joint inspection for the FY 2022-23.

III. Investor Services

The Investor Services Cell provides the following services:

Redressal of complaints against trading members

The Company redresses investor complaints against trading members by taking prompt action upon receiving the complaints. Investor complaints against trading members are received through the SEBI Complaints Redressal System ("SCORES") of SEBI, a web-based system where investors can lodge their complaints online. The Company in turn communicates the complaints to the trading members electronically through the BSE Electronic Filing System ("BEFS"), thereby reducing the communication time resulting in expeditious resolution of investor complaints. The trading members send their reply through "BEFS". The investors can also lodge complaints directly with the Exchange through email, physical document form or through online e-Complaint registration on BSE website (e-Complaint Registration). The complaints against trading members are redressed through conciliation process by Grievances Redressal Committees ("GRC") wherein the GRC is also empowered to decide the claim value.

SEBI, as a part of enhancing investor experience has initiated opening of additional Investor Service Centres across the country by the Exchanges. It is targeted to have in place 50 such Investor Service Centres between the Company and NSE. As a part of this initiative, there shall be only one Investor Service Centre between the two Exchanges at one location, which shall function as the Common Investor Service Centre for both Exchanges as well as SEBI. Accordingly, 13 Investor Service Centres of the Company have been designated as Common Investor Service Centre.

The Company provides GRC as well as arbitration / appellate arbitration services from its Regional Investor Service Centres. The Company also conducts orientation program for Arbitrators and GRC Members in association with NISM. During the year, the Company has conducted 5 such online programs for GRC members and Arbitrators.

Redressal of complaints against listed companies

The Company redresses investor complaints against listed entities by taking prompt action upon receiving the complaints. Investor complaints against listed entities are received through various modes such as through emails, physical documents, online e-Complaint registration on BSE website and through SCORES. The Company takes up the complaint with respective listed entity for resolution.

During the year, Exchanges arbitration mechanism has been extended to the companies and their RTAs, i.e., investors can file arbitration against companies and their RTAs for certain categories of complaints.

B. LISTING COMPLIANCE

I. Corporate Announcement Filing System ("CAFS")

The Company has been making continual efforts to improve on the turnaround time for disseminating critical information received from listed companies to the shareholders and the public at large, on its website, without compromising on the quality and timely dissemination of the information.

Towards this objective, the Exchange introduced the CAFS with effect from March 1, 2017, in beta mode. The system provides for seamless dissemination of filings/ disclosures by listed companies directly on the Exchange website without any pre-verification by the Exchange. This is done using security measures such as Two Factor Authentication ("TFA") and has ensured almost instantaneous dissemination of price sensitive information to the investors.

The system makes companies responsible and accountable for their filings, which leads to much faster, efficient, and informed decisions by investors and the public at large. Auto check has been placed to provide notification that all pdf files are in machine readable format.

During the current year, the system has been periodically enhanced to include additional disclosures under the seamless mode as well as enhancing the security features in line with the regulatory requirements. Various webforms for Annual Reports; Corporate Governance not applicability Certificate; Business Responsibility and Sustainability Reporting (BRSR); Website Links has been added to receive periodic compliances. Category of Corporate Action has been enhanced by adding more descriptions.

Filing through CAFS which was available for Equity listed companies has now been extended to other segments like, debt, mutual funds, and commercial papers as well. In the FY 2022-23, the Exchange has received 14,48,475 filings by companies using the CAFS system.

II. Update on eXtensible Business Reporting Language ("XBRL")

BSE is the first Exchange in India to introduce the globally accepted reporting format XBRL as it is more popularly known, for certain critical disclosures required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ("Listing Regulations"). The Company had earlier enabled XBRL based filing for Shareholding Pattern, Corporate Governance Report, Voting Results, Financial Results, Share Capital Audit report, Disclosure of Insider Trading under Prohibition of Insider Trading, Unit Holding Pattern for Mutual funds, Annual Secretarial Compliance Report, Related Party Transactions, Record Date for Debt Listed Entities and Centralized Database Statement (Credit Rating, Interest Payment, Redemption Payment and Default History Information), Statement of Investor Complaints, Statement of Deviation/Variation Financial Results for Insurance Companies and NBFCs and filing of companies Annual Reports (based on Ministry of Corporate Affairs Taxonomy).

The Committee on Corporate Governance (Kotak Committee) in its report had recommended filing of disclosures to Exchange in XBRL format. Accordingly, SEBI had directed the Exchanges to implement XBRL based filing for the disclosures. Since BSE had made significant progress on this front, it was recommended by SEBI that the other nation-wide Exchanges also adopt the BSE Taxonomy and the same may be the common taxonomy for these regulations, across India. In the previous year, other Exchanges had commenced integration of the BSE XBRL taxonomy for these filings and listed companies are now able to use a common file for filing at all Exchanges.

All new XBRL based developments are now being jointly developed by the exchanges with BSE being largely responsible for the development of Taxonomy and the Excel utility used for filing. During the current year, filing for Business Responsibility and Sustainability Reporting (BRSR), filing of certain disclosures under Regulation 30 of Listing Regulations, Prior intimation of Board Meeting were introduced in XBRL. Further, the Company is working with other MIIs for introducing XBRL facility for receiving filing under various regulations of Listing Regulations in XBRL format.

III. Compulsory Delisting:

Trading in the securities of certain listed companies had been suspended for a long period of time on account of non-compliance with the critical clauses / regulations of the erstwhile Listing Agreement/SEBI(LODR) Regulations.

BSE under the guidance of SEBI, had advised companies that had been under suspension for a period of six months or more, to expedite their filings completion of all formalities for revocation or else be compulsorily delisted from the Exchange, as per the provisions of the SEBI (Delisting of Equity Shares) Regulations, 2009 / 2021.

Under SEBI (Delisting of Equity Shares) Regulations, 2009/2021, the Exchange has delisted 1188 companies from April 1,2016, till March 31, 2023, which have been suspended for a period of more than 6 months for non-compliance with the erstwhile Listing Agreement/ SEBI (LODR) Regulations, 2015 and which have not completed formalities for revocation within the stipulated timelines.

SEBI has included this provision in its circular on Standard Operating Procedure (SOP) for suspension and revocation. The Exchange accordingly sends advisory letters to companies suspended pursuant to the provisions of SEBI SOP circular, informing about the consequences of not initiating formalities for revocation of suspension of trading.

8. COMPETITIVE STRENGTHS AND OPPORTUNITIES A. STRENGTHS

I. Strong brand recognition

Established in 1875, BSE is Asias oldest Stock Exchange and one of the most identifiable brand names in India with high levels of recognition among investors, intermediaries, and the public. In fact, today BSE is the worlds fastest exchange with a speed of 6 microseconds.

The BSE building is a symbol of the Indian growth story and is one of the most recognizable icons of India. It is one of the few structures in India that has been trademarked.

In addition, the benchmark index, the S&P BSE SENSEX, an index based on 30 BSE-listed large, well-established, and financially sound companies across key sectors of the Indian economy, serves as the primary global barometer for Indias financial markets and is comparable in recognition to other global indices such as the S&P 500, the Dow Jones Industrial Average, the FTSE 100, the DAX, and the Hang Seng Index. Since it was first compiled in 1986, the Sensex has come to be known as the market bellwether.

BSE brand is further strengthened due to over four thousand seminars/ education sessions conducted every year. These events are investor awareness programmes that are conducted in association with BSE IPF (Investor Protection Fund), or events organized with industry associations like FICCI, CII, Assocham, PHD Chamber of Commerce & Industry, BSE Brokers Forum etc.

II. Sound corporate governance and regulatory framework

As a Stock Exchange, we are subject to a high level of regulatory oversight. We are committed to working with national and international Regulators, Exchanges, Clearing Corporations, Depositories and Market Participants to ensure an orderly, informed and fair market for the benefit of investors. We are also committed to strong and effective internal governance

and regulation and believe that regulatory integrity benefits investors, strengthens our brand and attracts companies seeking to list securities on our markets.

In furtherance of these goals, we have a dedicated surveillance department to keep a close and daily watch on the price movement of securities, detect potential market manipulation, monitor prices and volumes which are not consistent with normal trading patterns.

III. Technological Prowess

Use of Open-source technologies

The Companys core Trading system and other mission critical systems are based on open-source technologies.

Strategically the Company has been careful in selection of open- source technologies and its applicability. Every year the adoption has been growing, given the fact the opportunity open-source technologies offer both in terms of technology flexibility and cost effectiveness. Use of open-source technologies gives the Company freedom to choose relevant technologies. Application development can be agile and highly customisable. All this provides the Company a competitive edge.

The Company now has its Trading system, Databases, Identity and Access Management, Business Intelligence, Log Management and Analysis, Infrastructure monitoring and several other systems/ applications built on mostly open-source technologies. These systems are highly flexible, robust, and scalable.

Inspiring the capabilities of Big Data

The Company has strengthened its position as a market leader in implementation of Big Data and leveraging the benefits of implementation of RegTech initiatives by use of Artificial Intelligence (AI) and Machine Learning (ML) in certain key areas of surveillance and monitoring.

As part of the Exchange trading and settlement process, tons of data are processed daily, and all of these are time bound activity. AI facilitates ‘thinking and Automation facilitates ‘doing. By processing daily data ‘intelligently with use of AI, it can ease the human element for need to intervene and instead augment decision making process as also help in surveillance.

B. OPPORTUNITIES

I. Gold Spot Exchange - International Zone

The Honble Union Finance Minister Smt. Nirmala Sitharaman said while presenting the Budget for FY 2020-21 proposed to set up an international bullion exchange at IFSC in GIFT City, which will lead to better price discovery of gold, create more jobs and enhance Indias position in such market. "With the approval of the regulator, GIFT City would set up an International Bullion Exchange(s) in GIFT-IFSC as an additional option for trade by global market participants", she said.

Subsequently, the Government of India (GoI) established International Financial Services Centres Authority (IFSCA) on April 27, 2020, to regulate all financial services in International Financial Services Centres (IFSCs) with headquarters in Gandhinagar (Gujarat). The GoI on the recommendations of the IFSCA, had on August 31, 2020, notified the bullion spot delivery contract and bullion depository receipt (with bullion as underlying) as Financial Products and related services as Financial Services under the IFSCA Act, 2019. On October 27, 2020, the board of the IFSCA approved draft bullion exchange regulations, paving the way for setting up the entire ecosystem for bullion trading, including bullion exchange, depository, clearing house and vaults.

In December 2020, the International Financial Services Centres Authority (IFSCA) notified the IFSCA (Bullion Exchange) Regulations, 2020 paving the way for setting up the entire ecosystems for bullion trading, including bullion exchange, depository, clearing house and vaults. In October 2021, the Government of India had notified a Bullion Spot contract and Bullion Depository receipt under the IFSCA Act, 2019.

BSE subsidiary India INX International Exchange and India International Clearing Corporation, National Stock Exchange of India, Multi Commodity Exchange, National Securities Depository and Central Depository Services have joined hands for setting up Market Infrastructure Institutions comprising International Bullion Exchange, Clearing Corporation and Depository at Gujarat International Finance Tec-City (GIFT). This is in accordance with the International Financial Services Centres Authority (Bullion Exchange) Regulations, 2020 and other applicable Laws. India INX and India ICC have invested 6.75 crores each in India International Bullion Holding IFSCA Limited - Holding Company for setting up and operationalizing the International Bullion Exchange, for its 10% stake each. BSEs wholly owned subsidiary - BSE Technologies is the Technology Solutions provider for the International Bullion Exchange at GIFT City.

On July 29, 2022, Indias first International Bullion Exchange IIBX was launched to facilitate efficient price discovery with the assurance of responsible sourcing and quality, apart from giving impetus to the financialization of gold in India. The International Bullion Exchange shall be the Gateway for Bullion Imports into India, wherein all the bullion imports for domestic consumption shall be channelized through the exchange, as per a governments notification.

The exchange ecosystem is expected to bring all the market participants at a common transparent platform for bullion trading and provide an efficient price discovery, assurance in the quality of gold, enable greater integration with other segments of financial markets and help establish Indias position as a dominant trading hub in the World.

In May 2022, the Reserve Bank of India (RBI) came up with norms for facilitating physical import of gold through IIBX or similar authorised exchange by Qualified Jewellers in India. The guidelines were issued in order to enable resident Qualified Jewellers to import gold through IIBX or any other exchange approved by IFSCA and the Directorate General of Foreign Trade (DGFT).

The proposed exchange would present an opportunity for all stakeholders including BSE to expand their scope of business.

II. Gold Spot Exchange - Domestic Zone

The Government of India in the budget 2021-22 announced the setting of a gold spot exchange and that Securities and Exchange Board of India (SEBI) will be the designated regulator for the proposed gold exchanges. Subsequently, SEBI in its board meeting held on 28 September 2021 proposed the framework for Gold Exchange and SEBI (Vault Managers) Regulations, 2021. SEBI further notified that the instrument representing gold will be called ‘Electronic Gold Receipt (EGR) and it will be notified as "securities" under Securities Contracts (Regulation) Act, 1956. The "SEBI Framework for operationalizing the Gold Exchange in India" prescribed that Stock Exchange/s desirous of trading in electronic gold receipts (EGR) may apply to SEBI for approval for trading of EGR in a new segment.

In September 2022, BSE had received final approval from the capital markets regulator Securities and Exchange Board of India (SEBI) for introducing the EGR segment on its platform. On October 24, 2022, during Muhurat trading, BSE launched two new EGR products of 995 and 999 purity and trading will be in multiples of 1 grams and deliveries in multiples of 10 grams and 100 grams thus offering new solutions for investors, Jewellers, and institutions to invest in Gold. EGRs offers the participants a safe and convenient avenue to invest in gold and comes at a critical time to support the bullion industry as it grows in scale. BSE expects greater trade and liquidity in the days ahead as it continues to educate the market and onboard new members.

BSE is confident of playing a transformative role in developing a vibrant gold spot exchange via the trading of EGR by ensuring maximum participation from across the country.

III. Insurance Distribution Platform

India with a population of 1.3 billion people is on the cusp of an explosive growth in the Fintech space since the past 3-4 years. With a population of 300m+ people in the middle class and upper middle class across the 200 odd cities coupled with the fact that a major proportion of the population is young, the demand for innovative Fintech solutions across India is phenomenally high. This has fueled steady development in the Fintech space in financial products like mutual fund and Insurance.

BSE-Ebix Insurance Broking Company Private Limited (BSE-Ebix), a joint venture (JV) between BSE Investments Ltd and Ebix Fincorp, a subsidiary of Ebix Inc, the largest Insurance Exchange in the world, has commenced operations for insurance distribution. BSE Ebix Insurance Broking, a joint venture of BSE and Ebix Fincorp Exchange, is now present in all the three key Insurance verticals - Auto, Health and Life. BSE holds equity stake of 40% through its subsidiary BSE Investments Limited.

BSE-Ebix seeks to widen distribution outlets, wealth management advisors, Point of Sales Persons (PoSPs) to sell life and non-life insurance products.

IV. Power Exchange

Indias power demand is expected to grow with the governments focus of providing "24x7" clean and affordable power for all. Of around 1,200 billion units (bu) of electricity generated in India, the short-term market accounts for around 130-150bu. This trade volume has grown by around 10% annually and is valued at around 22,124 Crore. This short-term power market is serviced by power exchanges, which function on the lines of commodity exchanges and provides a platform for buyers, sellers, and traders of electricity to enter spot contracts that are for the same day, next day, and on a weekly basis. It also provides a payment security mechanism to buyers and sellers. India currently has two operating power exchanges—Power Exchange of India (PXIL) and India Energy Exchange (IEX).

There is a need to deepen existing exchanges through more evolved products, clarity on cross border trading along with institutional mechanisms to deal with forward contracts of varying durations. In this regard, Pranurja Solutions Limited (Consortium of BSE Investments Limited, along with PTC India Limited and ICICI Bank Limited), filed a petition with the power market regulator, CERC (Central Electricity Regulatory Commission) on September 7, 2018, for grant of license for setting up a new power exchange.

CERC has granted registration on 12 May 2021 to Pranurja Solutions Ltd. to establish and operate a power exchange. The Company name was changed from Pranurja Solutions Limited to Hindustan Power Exchange Limited in November 2021, to brand itself as a power exchange.

On 6 July 2022 HPX commenced operations, and steadily increase its product portfolio and provides a wide range of contracts to address the demand of different segments of the electricity market.

BSE has a stake of 22.62% in the proposed power exchange through its wholly owned subsidiary, BSE Investments Limited.

9. THREATS

A. INDUSTRY ACTIVITY LEVELS DECLINE

The Companys performance is dependent upon the volume and value of trades executed on its trading platform, the number of new/ further listings and the amount of capital raised through such issues, the number of active traders in the market, etc. While the Companys efforts can influence these activity levels, many factors that can have an impact on these are beyond the control of the Company. Adverse macro-economic developments and political uncertainty may dampen the sentiments of the capital markets and negatively affect the business.

B. REGULATORY CHANGES IMPACTS OUR ABILITY TO COMPETE

The competitive landscape for the securities transactions business in India continues to be challenging. The Companys ability to compete in this environment and ensure that regulations continue to allow competition on a level playing field, will be a major factor in ensuring sustained growth and profitability. Regulatory decisions relating to the BSE ownership structure, the ownership structure of its subsidiaries and associate companies, compensation policies and restrictions on how Exchanges distribute their profit will continue to impact competitiveness.

C. CYBERSECURITY THREATS

Capital markets have bolstered their defense against cyberattacks, however they always remain a focused target for cybercriminals due to the money involved in the capital sector. Thats why, cyber-attacks cost for capital markets sector is around 300 times more than any other industry. Any successful breach in capital / financial organization can cause business losses in multifold, as such breach impacts the brand image, customer trust, and investors interest in the Company.

The Company is therefore continuously investing in new advanced and niche cybersecurity technologies. Also, a continuous improvement in cybersecurity policies and procedures has been undertaken by the Company.

Some of the types of cyber threats that the Company might face:

• Distributed Denial of Services (DDoS) - Hackers use these techniques to slowdown or completely shut down the Company networks and services by sending more requests than the actual capacity of the Company network and systems, rendering them unreachable to its genuine users / customers.

• Phishing Attack - Phishing is a method of social engineering used to trick people into divulging sensitive or confidential information, often via email. Not always easy to distinguish from genuine messages, these scams can conflict enormous damage to the Company.

• Malware - A type of attack using a file or program intended to harm or disrupt a computer. It includes,

- RATs (Remote Access Trojans) - RATs (remote-access Trojans) are malware that installs backdoors on targeted systems to give remote access and/or administrative control to malicious users.

- Spyware - Spyware is a form of malware used to illicitly monitor a users computer activity and harvest personal information.

- Viruses - A computer virus is a piece of malicious code that is installed without the users knowledge. Viruses can replicate and spread to other computers by attaching themselves to other computer files.

- Worms - Worms are like viruses that are self-replicating. However, they do not need to attach themselves to another program to do so.

- Botnet Software - Botnet software is designed to infect large numbers of Internet-connected devices. Some botnets comprise millions of compromised machines, each using a relatively small amount of processing power. This means it can be difficult to detect this type of malware / attack, even when the botnet is running.

- Rootkits - Rootkits comprise several malicious payloads, such as keyloggers, RATs and viruses, allowing attackers remote access to targeted machines.

- Bootkits - Bootkits are a type of rootkit that can infect start-up code - the software that loads before the operating system.

Drive-by Attack - In a drive-by attack, a hacker embeds malicious code into an insecure website. When a user visits the website, the script is automatically executed on their computer, by infecting it. The designation "drive by" comes from the fact that the victim only has to "drive by" the site by visiting it to get infected. There is no need to click on anything on the site or enter any information.

AI- Enhanced Cyberthreats - AI capabilities are used by hackers to launch sophisticated cyberattacks in the form of complex and adaptive malicious software. AI fuzzing and Machine Learning poisoning are the next generation threats.

Cryptojacking - It is a trend that involves cyber criminals hijacking third-party home or work computers, to "mine" for cryptocurrency. Cryptojacked systems can cause serious performance issues and costly down time as IT works to track down and resolve the issue.

Social engineering - Hackers are continually becoming more and more sophisticated not only in their use of technology, but also psychology. Social engineering is the use of deception to manipulate individuals into divulging confidential or personal information that may be used for fraudulent purposes.

Ransomware - Ransomware is a type of malware that prevents or limits users from accessing their system, either by locking the systems screen or by locking the users files until a ransom is paid.

Confidential Data Theft - Customer accounts can be the most vulnerable point of entry to financial systems. The hackers use stolen privileged credentials to steal from their account.

Advanced Persistent Threat - A stealthy computer network threat actor which gains unauthorized access to a computer network and remains undetected for an extended period.

The Company has made conscious efforts and investments to implement necessary defense mechanisms for most of the above threats and significantly reduced the residual risk.

10. KEY STRATEGIES

INDIA INTERNATIONAL EXCHANGE (IFSC) LIMITED I. Solidify the Pole position in Secondary Market within IFSC through product diversification & innovation

India INX continues to position itself as a preferred offshore platform, open 22 hours a day for trading and become the financial gateway of choice for both inbound and outbound investors. We intend to strengthen our position as a preferred exchange in GIFT IFSC and expand our cross-border reach by forming strategic alliances.

Depending on regulatory approvals, India INX proposes to diversify product offerings by introducing new and innovative products in future to compete with other international exchanges and cater to the needs of investors across the globe.

II. Be the preferred outbound gateway

India Inx Global Access intends to constantly strive to augment its services to clients through geographical diversification and extending competitive services. Global Access would look to further widen the spectrum of coverage of exchanges for its clients by tapping developing markets either through new associations or with the existing associated international brokerages. It would seek to continually attract market participants and clients and capture the significant revenue potential that comes with a broader product line.

III. Go Green and endorse ESG initiatives

India INX to bolster relationship with existing strategic partners such as Luxembourg Green Exchange and forge new alliances to further consolidate its leadership position in Green Finance thereby promoting ESG (environment, social and governance) standards through GSM Green Platform and exhibit its commitment to ‘sustainable finance.

Issuance of ‘Sovereign Green Bonds for mobilizing resources for green infrastructure as announced in the Union Budget 2022-23 is bound to throw new business opportunities and India INX is well positioned to tap these upcoming opportunities and make a mark for itself in this "green corridor space.

IV. Continued Focus on listing of new products in Primary Markets

India INX would like to grow from strength to strength through novel listing practices that appeals to both global and domestic investors and accentuate itself as the primary capital raising avenue. In a post-pandemic landscape, globally, investors are actively looking out for suitable quality investment and long-term financial benefits. This bodes well for the prospects of REITs and InvITs, which has evoked significant interest among investor fraternity globally and India INX through GSM, its primary market platform, is well positioned to harness such business opportunities.

DIVERSIFY OUR PRODUCT AND SERVICE OFFERINGS AND MAINTAIN NEW PRODUCT INNOVATION AND DEVELOPMENT

BSE currently operates in a wide array of segments and offers a bouquet of products including equity, debt, derivatives in equity, currency, commodity and interest rate, mutual fund, insurance, SME, and start-ups segment. In addition to our ongoing strength in service offering, we intend to target the investors needs for all financial products through innovative product and service offerings.

FOCUS ON INCREASING OUR MARKET SHARE OF DERIVATIVE PRODUCTS

We actively evaluate products and asset classes outside our traditional focus areas to diversify our revenue sources. By doing so, we seek to continually attract market participants and issuers and capture the significant revenue potential that comes with a broader product line.

CYBER SECURITY

The Company is running its business on technology and information systems which is internet connected and available to the market. Thus, it is imperative to protect these systems from all known and unknown threat vectors to possible extent. To achieve the same, the Company has strategically implemented 365 Days 24X7 Next Generation Cybersecurity Operation Centre (SOC) which comprises state-of-the-art tools and technologies including cognitive and machine learning. It makes BSE cyber resilient. Similarly, the Company has also setup 365 Days 24X7 Member Security Operations Centre (MSOC) for Member and Brokers.

The Company, via its extended broker network, serves millions of investors every day, for which a secure and trustworthy information and data security ecosystem is vital. With ever increasing threat landscape, the information and data continues to be the most sought-after information asset globally. It is therefore imperative to protect it from the risk of unauthorized usage, data theft and tampering.

Regulators and governments globally and in India have either set out regulations or are in the process of formalizing data protection bills. To ensure meeting the regulatory requirements and protection of data and information, the Company is committed towards confidentiality and integrity of investor and customer data. The Company has created and implemented an Information Security program covering data security and data privacy. The Company is in the process of streamlining all major business processes to fundamentally embed zero trust architecture to meet local and international data privacy requirements. To achieve this some of the existing technological investments will be leveraged and appropriate changes shall be made.

The Company is also enabling its business, cyber security and IT strategy to enable the business and functions run uninterrupted with new norm for working in pandemic situation and implemented controls and solutions to enable users work from home with zero trust, data and information security and Cyber Security controls in place.

Cyber Security is one of the key strategic components to meet the Companys objective and to improve the overall business resiliency.

11. RISKS AND CONCERNS A. BUSINESS RISKS

• Our performance relies upon the volume and value of trades executed on the trading platform, number of orders processed on the Mutual Fund Distribution platform, the number of active investors in the market, the number of new/further listings and the amount of capital raised through such listings.

• Adverse economic conditions could negatively affect our business, financial condition and result of operations.

• Our industry is highly competitive, and we compete globally with a broad range of market participants for listings, clearing, trading and settlement volumes, and distribution of financial products.

• We operate in a business environment that continues to experience significant and rapid technological change.

• We operate in a highly regulated industry and may be subject to censures, fines, and other legal proceedings if we fail to comply with our legal and regulatory obligations. Changes in government policies could adversely affect trading volumes of instruments traded on BSE.

• The continuation or recurrence of systemic events such as the global economic crisis, changes in economic policies and the political situation in India or globally may adversely affect our performance.

• Any intensification of the COVID-19 pandemic or any future outbreak of another highly infectious or contagious disease may adversely affect our business, results of operations and financial condition. Although the exchange is fully prepared for business continuity, meeting all obligations, and ensuring safety of our staff, it is possible that our ability to deliver satisfactory services to our customers may be affected.

• Our business, financial condition and result of operations are highly dependent upon the levels of activity on the exchange; and in particular upon the volume of financial assets traded, the number of listed securities, the number of new listings and subsequent issuances, and volume of financial products distributed. Moreover, they are dependent on, liquidity and similar factors that affect, either directly or indirectly, the trading, listing, clearing and settlement transaction-based fees.

• Integral to our growth is the relative attractiveness of the financial assets traded on the exchange; and the relative attractiveness of the exchange as a market on which to trade these financial assets. All of these variables are primarily influenced by economic, political and market conditions in India as well as, to a lesser degree, the rest of Asia, the United States, Europe and elsewhere in the world.

• Weak economic conditions of the country may adversely affect listing, trading, clearing and settlement volumes as well as the demand for market data. If the return on investments in Indian companies are generally lower than the return on investments in companies based in other countries, we may be unsuccessful in attracting foreign and local investors to our markets.

• Bullion, Base metals and Energy products are linked to international market, currency and government duties etc.

• Agri commodities are linked to crop production, monsoon, demand, and Government policies.

• Other factors beyond our control, that may materially adversely affect our business, financial condition and result of operations include:

- Broad trends in business and finance, including industry-specific circumstances, capital market trends and the mergers and acquisitions environment.

- Social and civil unrest, terrorism and war.

- Concerns over inflation and the level of institutional or retail confidence.

- Changes in government monetary policy and foreign currency exchange rates.

- The availability of short-term and long-term funding and capital.

- The availability of alternative investment opportunities.

- Changes and volatility in the prices of securities.

- Changes in tax policy (including transaction tax) and tax treaties between India and other countries.

- The level and volatility of interest rates.

- Legislative and regulatory changes, including the potential for regulatory arbitrage among regulated and unregulated markets, if significant policy differences emerge among markets.

- The perceived attractiveness, or lack of attractiveness, of Indian capital markets; and

- UNFORESEEN MARKET CLOSURES OR OTHER DISRUPTIONS IN TRADING.

We operate in a business environment that has undergone, and continues to experience, significant and rapid technological change. To remain competitive, we must continue to enhance and improve the responsiveness, functionality, capacity, accessibility, and features of our trading and clearing platforms, software, systems and technologies. Our success will depend, in part, on our ability to:

- Develop and license leading technologies.

- Eenhance existing trading and clearing platforms and services.

- Anticipate the demand for new services and respond to customer demands, technological advances and emerging industry standards and practices on a cost-effective and timely basis.

- Continue to attract and retain a workforce highly skilled in technology and to develop and maintain existing technology; and

- Respond and adapt to competition from and opportunities of emerging technologies such as Fintech innovation.

B. REGULATORY & COMPLIANCE

BSE has played a pioneering role in the securities market of India and continues to do so, even today. As the first line regulator responsible for orderly functioning of the securities market, BSE strives to enhance the safety and vibrancy of the securities markets.

Using a judicious mix of regulatory measures and technology initiatives, BSE ensures compliance with the regulatory obligations prescribed by SEBI and other regulators. BSE continues to work closely with the regulators to enhance the effectiveness of the regulatory frameworks with a view to protect the interest of investors.

BSE also continues to put in place various automation initiatives to simplify compliance as well as effectively monitor and enforce the regulatory framework. BSE has gone the extra mile and organized webinars, investor knowledge seminars and training programs on various topics of interest during this period, free of cost. These have been widely appreciated.

C. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company identifies risk based internal audit scope and assesses the inherent risk in the processes and activities of all departments to ensure that appropriate risk management limits, control mechanisms and mitigation strategies are in place. The Internal Auditors report observations relating to the deficiencies / non-compliance of various audit areas and give suggestions / recommendations and control directives to mitigate the shortcomings and make the process, procedure, systems and functions more robust, accountable, reliable and compliant. The observations made by the Internal Auditors and the compliances thereof are placed before the Audit Committee.

The Company has implemented the Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Accordingly, the COSO based procedures and process manuals for major functions have been prepared to establish interlinkages between departments, to define responsibility, accountability and reporting matrix, to define control framework of each process and activity and to identify the risks. Internal Auditors refer to COSO based process and procedures while performing the internal audit functions.

The Company has further implemented pre-audit of vendor payments based on a set criteria. It strives to put in checks and controls like internal approvals, budgetary controls, documentary controls, compliance to statutory requirements, etc.

The Company conducts in-house monitoring of the important applicable statutory and regulatory compliances. The status of compliances and the monitoring thereof are regularly placed before the Audit Committee and Board.

The processes and quality management systems of the Company are ISO 9001:2015 certified by S & A Certifications having European accreditation of Euro Cert. The Company conducts the audits of the processes as required under ISO 9001:2015. and has successfully obtained certification valid upto June 07,2025.

The Company has an Audit Committee, the details of which have been provided in the Corporate Governance Report. The Committee reviews audit reports submitted by the Internal Auditors. Suggestions for improvement are considered and the Committee follows up on the implementation of corrective actions. The Committee also meets the Statutory Auditors to ascertain, inter alia, their views on the adequacy of internal control systems.

12. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT INCLUDING NUMBER OF PEOPLE EMPLOYED

A. HUMAN CAPITAL

At BSE, the focus has been on making the right investments in human capital to take the organization and all its employees to the next level of competence and growth. We have always believed that motivated employees are the core source of competitive advantage and hence there is continuous investments in talent management, learning & development programs and other interventions for enhancing employee experience. Recently the organization has gone through a leadership change with Shri Sundararaman Ramamurthy joining us as MD & CEO. We review and revise our systems, policies and processes to ensure that our organizational structures facilitate inclusiveness and accountability and focus towards employee retention.

We believe in diversity and inclusion as part of our culture. Some of the crucial steps taken to create and sustain a more diverse and inclusive environment include: hiring a Chief Risk Officer & Head Human Resources at a Leadership level. Additionally, at the Middle & Junior level we have a diverse workforce with almost 28% women workforce. As of 31st March 2023, the Company had 398 management cadre employees and 103 staff level employees. Human Resource function continues to be a strategic business partner and change catalyst. It plays a pivotal role in unlocking human potential which results in organization transformation and success.

Some of the Talent Management & Development Interventions are as below:

B. TRAINING & DEVELOPMENT:

To engage our employees we continued our best practices on training & development and employee engagement for the entire financial year. This year, post ease in COVID-19 restrictions, we reinitiated various training as well as engagement initiatives on offline basis for employees as well as their family members. Large scale events like the Garba Celebration & the Diwali Celebration, both were attended by employees & their families with a participation of almost 1250+ in each event.

Apart these large celebrations, there was also a focus on the employees wellness, physical & mental fitness of our employees. In FY 2022-23, the company conducted in person sessions on a continuous basis on topics including Yoga for Mindfulness and Meditation, Diet for Building Immunity, Ayurveda and its uses, Ergonomics, Eyecare, Breathing & Stretching Workouts etc. We have successfully conducted 18 training programs/ workshops focusing on improving the behavioural competencies, skill enhancement and enhancing the technical competencies of our employees. Approx. 350+ employees attended these training programs.

Building High Performing & Learning Culture:

BSE has a culture of learning, collaboration, diversity and well-being. We celebrate and recognize our employees who consistently demonstrate our values while inspiring others to do the same. We commit significant resources to sustaining a culture that enables voice and innovation, and facilitates trust, engagement, belonging and performance. We ensure that employees are at their productive best by continuing to work on simplifying internal processes through a collaborative efforts. The collaborative deliberations and decisions of the organization leadership, supported by the stakeholders and enabled by the people managers, have resulted in various new initiatives for building learning & high performing culture. We initiated a program called Vibrant BSE 2025 where ideas were invited from employees on Centre of Excellence, BSE @ 150 years, Employer of Choice or any other idea that the employee wishes to contribute. We follow an integrated performance management approach to align individuals performance towards organizational goals.

A new Wage Settlement with the Employees Union was signed by BSEs management on 23rd March 2023 for upward revision of wages of unionised staff. This Wage Settlement is valid up to 31st March, 2028.

13. BSES CONTRIBUTION IN THE ESG AND SUSTAINABILITY SPACE

• On April 26,2022; World Intellectual Property Day, an event themed on "IP and Youth: Innovating for a Better Future" was hosted by Legasis, in association with BSE, GIS Foundation, We School, AIMS and DArtist Talent Ventures. On this occasion, BSE shared notable insights on how potential todays youth can be harnessed towards path-breaking innovation to drive change for a better future.

• In April 2022, BSE was actively involved in the virtual launch of Gender Bond Guidelines, co-hosted by UN Women, Citibank, Goldman Sachs (India) and Bank of America (India). BSE brought in perspective on how greater awareness can be scaled towards setting a foundation for gender responsive bonds in Indian Capital Market. BSE shared insights on how innovative ways of sustainable finance could further the overall picture of achieving the United Nations Sustainable Development Goals.

• As part of Azadi ka Amrit Mahotsav (AKAM), Ministry of Housing and Urban Affairs (MoHUA), Government of India organized a conference themed on "Smart Cities, Smart Urbanization" in April 2022. BSE shared insights on "Opportunities through capital markets, Green and Sustainable finance" which will further chart out and crystallize roadmap for future of urban transformation of our country. BSE also shared

• In April 2022, BSE collaborated with GRI (Global Reporting Initiative) for the launch of "New BRSR GRI Standards Linkage". Post launch BSE joined hands with GRI for multiple awareness sessions for listed corporates, themed on BRSR & GRI standards linkage- Bracing quality reporting.

• I n May 2022, BSE shared its thought leadership on how social incubator and social entrepreneurship are key enablers for rural development at the "Launch of Supporting Sustainable Agriculture / Upliftment of Rural Economy Through Organic products of Uttarakhand in Collaboration with ISKCON"

• In September 2022, a prestigious event was conducted at BSE in collaboration with MentorMyBoard - the 2nd Women Directors Conclave 2022. This was an exclusive conclave where Honble Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman ji graced the occasion as a Chief Guest. The conclave was themed towards demonstrating capabilities of Women Board Leaders in India. Women Entrepreneurs across the country came together, brainstormed the way forward for building more women leaders at the Board level and at the same time tapped the networking opportunity with the best minds in Indian Boardrooms.

• In March 2023, BSE hosted the 9th Ring the bell for Gender Equality primarily in collaboration with UN Women, themed: DigitALL- Innovation and technology for gender equality.

Other global partners involved for this initiative were, United Nations Global Compact ("UNGC"), Sustainable Stock Exchanges Initiative ("SSE"), International Finance Corporation ("IFC"), World Federation of Exchanges ("WFE") and MSCI. To further commit to this cause, BSE IPF and UN Women, India have joined hands together and launched a year-long financial literacy program- "FinEMPOWER - Empowering women towards financial security"

• End of March 2023 in an initiative hosted by Climate Bonds, BSE steered interesting outlook and strategies for scaling up Financing and listing of Municipal Green Bonds in India.

14. FINANCIAL PERFORMANCE

A. SOURCES OF FUNDS

I. Equity Share Capital

BSE has one class of shares - equity shares at a face value of 2 each. The Authorised Share Capital is 30,000 Lakh represented by 1, 50,00,00,000 equity shares of 2 each. The Issued Equity Share Capital stood at 2,748 lakh as at March 31, 2023 ( 2,748 lakh as at March 31,2022) represented by 13,74,12,891 equity shares of 2 each (13,74,12,891 equity shares of 2 each as at March 31, 2022). Out of which, 13,54,62,891 Equity Shares of 2/- each was subscribed and paid-up equity share capital as on March 31,2023.

The allotment of 19,50,000 equity shares of 2/- each along with all corporate benefits as declared from time to time, including dividend and bonus have been kept in abeyance for specific reasons pursuant to the provisions of the BSE (Corporatisation & Demutualisation) Scheme, 2005.

II. Other Equity

Capital Reserve: Pursuant to the BSE (Corporatisation & Demutualisation) Scheme, 2005, the balance in Contribution by Members, Forfeiture of

Members Application Money, Technology Reserve, Stock Exchange building, Seth Chunnilal Motilal Library, Charity, Income and Expenditure Account as at August 19, 2005 as appearing in the Company are transferred to Capital Reserve being reserves which shall not be used for purposes other than the operations of the Company. On a standalone as well as consolidated basis, the balance as at March 31, 2023 amounted to 66,179 Lakh, which is the same as the previous year.

General Reserve: The General Reserve created from time to time through transfer profits from Retained Earnings for appropriation purposes. As the General Reserve created by a transfer from one component of equity to another and is not an item of Other Comprehensive Income, items included in General Reserve will not be reclassified to the Statement of Profit and Loss. The balance of General Reserve as on March 31, 2023 was 42,824 Lakh as compared to 42,828 Lakh as on March 31, 2022 on a standalone basis and 43,879 Lakh as at March 31, 2023 as compared to 43,883 Lakh as at March 31, 2022 on a consolidated basis. The reduction is mainly on account of utilization of reserve towards issue of bonus shares.

Capital reserve on business combination: The balance of Capital Reserve on Business Combination as on March 31, 2023 stood at 10,530 Lakh on a standalone and consolidated basis, which is the same as the previous year.

Retained Earnings: On a standalone basis, the balance in the Retained Earnings as at March 31, 2023 was 1,04,658 Lakh, as compared to 1,06,474 Lakh in the previous year. Retained Earnings as at March 31,

2023 includes balance of 257 Lakh ( 213 Lakh as on March 31,2022) pertaining Other Comprehensive Income (OCI) which is mainly on account of remeasurement gains/losses on our defined employee benefit plans (net of taxes).

On a consolidated basis, the balance in Retained Earnings as at March 31, 2023 was 1,46,812 Lakh as compared to 1,42,147 Lakh in the previous year. Retained Earnings as at March 31, 2023 includes balance of 2,581 Lakh ( 1,434 Lakh as on March 31,2022) pertaining to Other Comprehensive Income (OCI) which is mainly on account of remeasurement gains/losses on our defined employee benefit plans (net of taxes) and foreign currency translation reserve being exchange differences on translating the financial statements of International Financial Services Centre (IFSC) operation.

Other Reserves:

( in Lakh)

Sr. Particulars No. As at March 31,2022
Standalone:
a) Share application money pending allotment 0A 0A
Total 0A 0A

5

The Power of Vibrance

( in Lakh)

Sr. Particulars No. As at March
31,2023 31,2022
Consolidated:
a) Share application money pending allotment 0A 0A
b) Liquidity enhancement scheme (LES) reserve 6 8
Total 6 8
A less than INR 50,000/- India INX had launched Liquidity Enhancement Scheme (LES) to enhance liquidity in INDIA INXs derivatives contracts traded in the Exchange in accordance with the circular issued by regulator from time to time. The Company has created additional LES reserve of 1,354 Lakh and incurred an expense of 1,356 Lakh during the year ended March 31, 2023, accordingly LES reserve balance as on March 31,2023, is 6 Lakh (Previous year: 8 lakh). The LES reserve as on March 31, 2023 will not form part of net worth of India INX in accordance with the IFSCA circular F. No.286/IFSCA/PM(CMD-DMIIT)/2021/4 dated March 31,2022.
INDIA INX has created LES reserve as tabled below: ( in Lakh)
Particulars As at March
31,2023 31,2022
Opening Balance 8 22
Add: Transfer from Retained Earning 1,354 1,313
Less: LES expenditure incurred during the year (1,356) (1,327)
Closing Balance 6 8
III. Other Comprehensive Income: ( in Lakh)
Sr. Particulars No. As at March
31,2023 31,2022
Standalone:
a) Remeasurements gain / (loss) on the defined employee benefit plans 257 213
Total 257 213
Consolidated:
a) Remeasurements gain / (loss) on the defined employee benefit plans (600) (63)
b) Foreign Currency Translation Reserve 3,181 1,497
Total 2,581 1,434

Total Equity: The Total Equity attributable to the shareholders of the Company on a consolidated basis increased to 2,70,115 Lakh as on March 31,2023 from 2,65,452 Lakh as on March 31,2022. The book value per equity shares on consolidated basis increased to 199 as at March 31,2023 as compared to 196 as at March 31,2022.

The Total Equity on standalone basis decreased to 2,26,900 Lakh as on March 31,2023 from 2,28,716 Lakh as on March 31,2022. The book value per equity shares on standalone basis decreased to 167 as at March 31,2023 as compared to 169 as at March 31,2022.

Non-Controlling Interest: Investors had taken minority stake in India INX; India ICC and BSE E-Agricultural, due to which non-controlling interest generated as at March 31, 2023 was 12,784 Lakh as compared to 13,519 Lakh as on March 31,2022.

Core Settlement Guarantee Fund: On a consolidated basis, the balance of Core Settlement Guarantee Fund as at March 31, 2023 increased by 11,675 Lakh to 75,764 Lakh, as compared to 64,089 Lakh as at March 31,2022.

B. APPLICATION OF FUNDS:

I. Property Plant & Equipment and Investment Property: Additions to Gross Block - Standalone: During the year, the Company capitalised 7,761 Lakh to the gross block comprising of 157 Lakh in Plant and Equipments, 202 Lakh in Electrical Installations, 7,051 Lakh in Computer Equipments, 78 Lakh in Furniture and Fixtures, 200 Lakh in Office Equipments and 73 Lakh in Motor vehicles.

During the previous year, the Company capitalised 1,340 Lakh to the gross block comprising of 7 Lakh in Plant and Equipments, 11 Lakh in Electrical Installations, 1,254 Lakh in Computer Equipments, 2 Lakh in Furniture and Fixtures and 66 Lakh in Office Equipments.

Additions to Gross Block - Consolidated: During the year, the Company capitalised 9,457 Lakh to the gross block comprising 9 Lakh in Buildings, 157 Lakh in Plant and Equipments, 203 Lakh in Electrical Installations, 8,722 Lakh in Computer Equipments, 82 Lakh in Furniture and Fixtures, 211 Lakh in Office Equipments and 73 Lakh in Motor Vehicles.

During the previous year, the Company capitalised 1,642 Lakh to the gross block comprising 7 Lakh in Plant and Equipments, 11 Lakh in Electrical Installations, 1,554 Lakh in Computer Equipments, 3 Lakh in Furniture and Fixtures and 67 Lakh in Office Equipments.

Deductions from Gross Block - Standalone: During the year, the Company disposed of various assets with a gross block of 241 Lakh comprising of 50 Lakh in Plant and Equipments, 50 Lakh in Electrical Installations, 67 Lakh in Computer Equipments, 8 Lakh in Furniture and Fixtures and 66 Lakh in Office Equipments.

During the previous year, the Company disposed of various assets with a gross block of 3,784 Lakh comprising of 18 Lakh in Plant and

Management Discussion & Analysis

Equipments, 3 Lakh in Electrical Installations, 3,732 Lakh in Computer Equipments, 17 Lakh in Furniture and Fixtures and 14 Lakh in Office Equipments.

Deductions from Gross Block - Consolidated: During the year the Company disposed of various assets with a gross block of 284 Lakh comprising of 50 Lakh in Plant and Equipments, 53 Lakh in Electrical Installations, 74 Lakh in Computer Equipments, 9 Lakh in Furniture and Fixtures, 70 Lakh in Office Equipments and 28 Lakh in Motor Vehicles.

During the previous year, the Company disposed of various assets with a gross block of 3,787 Lakh comprising of 18 Lakh in Plant and Equipments, 3 Lakh in Electrical Installations, 3,733 Lakh in Computer Equipments, 17 Lakh in Furniture and Fixtures and 16 Lakh in Office Equipments.

Goodwill and Other Intangible Assets - Standalone: During the year, the Company capitalised 3,768 Lakh in Software as compared to 859 Lakh in previous year.

Goodwill and Other Intangible Assets - Consolidated: The carrying value of Goodwill was unchanged at 3,742 Lakh as at March 31, 2023 as compared to previous year. During the year, the Company capitalised 5,562 Lakh in Software as compared to 870 Lakh during previous year.

Capital Work in Progress and Intangible under development (CWIP) - Standalone: The carrying value of CWIP was 174 Lakh as at March 31,2023 as compared to 440 Lakh as at March 31,2022.

Capital Work in Progress and Intangible under development (CWIP) - Consolidated: The carrying value of CWIP was 193 Lakh as at March 31,2023 as compared to 1,002 Lakh as at March 31,2022.

Capital Expenditure Commitments: The estimated value of contracts remaining to be executed on capital account and not provided for are mentioned in below table:

( in Lakh)

Sr. Particulars No. As at March 31,2023 As at March 31,2022
Standalone:
a) Towards Tangible assets 4,006 3,146
b) Towards Intangible assets 186 3,042
Total 4,192 6,188
Consolidated:
a) Towards Tangible assets 4,380 3,146
b) Towards Intangible assets 208 3,042
c) Towards Investments 92 65
Total 4,680 6,253

II. Financial Assets:

Investments:

Investment in Subsidiaries and Associates

7? in I

Sr. Particulars No. As at March 31,2023 As at March 31,2022
Standalone:
a) Investment in Subsidiaries 72,605 72,355
b) Investment in Associates 3,543 4,723
c) Asset classified as held for sale 1,180 -
Total 77,328 77,078
Consolidated:
a) Investment in Subsidiaries - 2
b) Investment in Associates 41,038 48,811
c) Asset classified as held for sale 10,935 -
Total 51,973 48,813

During the year, the Company infused further equity in to the following subsidiaries:

( in lakh)

in Lakh)
Sr. Name of subsidiary No. Amount of additional investment during FY 2022-23
1) BSE Investments Limited 250
Total investments in subsidiaries during FY 2022-23 250

The details of share of profits / loss of associates:

( in Lakh)

Sr. Name of Associate No. Share of Profit / (Loss) added during FY 2022-23 Share of Profit / (Loss) added during FY 2021-22
1. Asia Index Private Limited 543 442
2. CDSL Commodity Repository Limited (26) (1)
3. BSE EBIX Insuretech Private Limited 3 6
4. BSE EBIX Insurance Broking Private Limited (119) (40)
5. Hindustan Power Exchange Limited (Formerly Pranurja Solutions Limited) (226) (70)
6. India international Bullion Holding IFSC Limited (310) (98)
7. Central Depository Services (India) Limited 5,236 6,195
Total 5,127 6,434

The details of fresh investments made in Associates by Subsidiaries of BSE:

( in Lakh)

Sr. Particulars No. FY 23 FY 22
Consolidated
a) Fresh Investments by India INX in India International Bullion Holding IFSC Limited 598 1,028
b) Fresh Investments by India ICC in India International Bullion Holding IFSC Limited 598 1,028
Total 1,195 2,056
The details of dividend from Associates eliminated from Investments:
( in Lakh)
Sr. Particulars No. FY 23 FY 22
Consolidated
a) Dividend received from Central Depository Services (India) Limited 3,135 1,881
Total 3,135 1,881
Other Investments:
( in Lakh)
Sr. Particulars No. As at March 31,2023 As at March 31,2022
Standalone:
i. Bonds and Non-Convertible Debentures 49,350 5,233
ii. Exchange traded funds through asset management company 4,735 4,655
iii. Growth oriented debt schemes of mutual funds 24,893 1,07,365
iv. Less: Provision for diminution (1,654) (1,700)
v. Earmarked Investments 2,719 3,230
vi. Accrued Interest 1,074 126
Total 81,117 1,18,909

( in Lakh)

Sr. Particulars No. As at March 31,2023 As at March 31,2022
Consolidated:
i. Investment in Equity 1,092 842
ii. Bonds; Non-Convertible Debentures and G Sec 52,468 7,259
iii. Exchange traded funds through asset management company 4,735 4,655
iv. Dividend oriented debt schemes of mutual funds 2,914 2,345
v. Growth oriented debt schemes of mutual funds 30,234 1,12,453
vi. Less: Provision for diminution (1,654) (1,700)
vii. Earmarked Investments 13,152 21,450
viii. Interest accrued 1,366 695
Total 1,04,307 1,47,999

All the investments made by the Company comprise of mutual fund units (including investment in fixed maturity plan securities) and quoted and unquoted debt securities (including investment in bonds, non-convertible debentures and government securities).

Trade Receivables: On a standalone basis, trade receivables amounted to 4,679 Lakh as at March 31,2023 as compared to 5,254 Lakh as at March 31, 2022. Average collection period was 30.23 days as compared to 32.56 days in the previous year.

On a consolidated basis, trade receivables amounted to 9,089 Lakh as at March 31,2023 as compared to 6,339 Lakh as at March 31, 2022. Average collection period was 34.52 days as compared to 37.01 days in the previous year.

In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss. The Company follows ‘simplified approach for recognition of impairment loss allowance on trade receivable. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivable based on a detailed analysis of trade receivable by individual departments. ECL impairment loss allowance (or reversal) recognised during the year is recognised as income/ expense in the Statement of Profit and Loss. ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount.

The movement of impairment allowance is shown below:

( in Lakh)

Particulars As at March 31,2023 As at March 31,2022
Standalone:
Opening Balance of Impairment Loss 4,501 5,153
Additional Provision during the Year (1,337) (652)
Closing Balance of Impairment Loss 3,164 4,501
Consolidated:
Opening Balance of Impairment Loss 4,805 5,168
Additional Provision during the Year (1,331) (363)
Closing Balance of Impairment Loss 3,474 4,805

Cash and Cash equivalents and other bank balances: On a standalone basis, balance in current accounts and deposit accounts including accrued interest stood at 95,057 Lakh as at March 31, 2023, as compared to 76,050 Lakh as at March 31,2022. On a consolidated basis, balance in current accounts and deposit accounts including accrued interest stood at 3,04,957 Lakh as at March 31,2023 as compared to 3,51,166 Lakh as at March 31,2022.

( in Lakh)

Particulars As at March 31,2023 As at March 31,2022
Standalone:
In Current Accounts - Own 256 253
In Deposit Accounts - Own including accrued Interest 65,468 45,856
Total Cash and Bank Balance (Own) 65,724 46,109
In Current Accounts - Earmarked 2,400 2,322
In Deposit Accounts - Earmarked including accrued Interest 26,933 27,619
Total Cash and Bank Balance (Earmarked) 29,333 29,941
Total Cash and Bank Balance 95,057 76,050
Consolidated:
In Current Accounts - Own 1,216 2,582
In Deposit Accounts - Own including Interest accrued 81,109 69,674
Total Cash and Bank Balance (Own) 82,325 72,256
In Current Accounts - Earmarked 13,425 17,638
In Deposit Accounts - Earmarked including Interest accrued 2,09,207 2,61,272
Total Cash and Bank Balance (Earmarked) 2,22,632 2,78,910
Total Cash and Bank Balance 3,04,957 3,51,166

The earmarked balances in the current account and deposit accounts are restricted cash and bank balances which are to be used for specified purposes only. All other cash and bank balances are available for operating activities of the Company.

Other Financial Assets:

( in Lakh)

Particulars As at March 31,2022
Standalone:
Deposit with public bodies and others 206 162
Loan to staff 50 56
Bank deposits incl. accrued interest (> 1 Year maturity) - Own 7,345 -
Bank deposits incl. accrued interest (> 1 Year maturity) - Earmarked 9,490 7,912
Due from subsidiaries 73 83
Deposits made under protest for property tax and others 9 9
Total 17,173 8,222
Consolidated:
Deposit with public bodies and others 378 333
Loan to staff 63 70
Expenses recoverable from subsidiaries 47 3
Bank deposits incl accrued interest (> 1 Year maturity) - Own 20,328 4,643
Bank deposits incl accrued interest (> 1 Year maturity) - Earmarked 54,450 13,501
Receivable towards incentive scheme 1 8
Settlement Obligation Receivable 1,229 1,108
Deposits made under protest for property tax and others 9 9
Total 76,505 19,675

Deposit with public bodies and others represent amount given as deposit to public bodies and deposit for taking rental properties. Bank deposits are deposits which have a maturity tenure of more than 12 months. Other bank deposits are classified as cash and cash equivalents and other bank balances. Accrued interest is the interest accrued but not due on the fixed deposits. The amount receivable from portfolio management account represents, the amount remaining to be invested by the portfolio management professionals.

Other Assets:

( in Lakh)

Particulars As at March 31,2023 As at March 31,2022
Standalone:
Gratuity Asset (Net) 306 307
Prepaid Expenses 365 308
Advance to Creditors 565 306
Input Credit Receivable 640 456
Total 1,876 1,377
Consolidated:
Gratuity Asset (Net) 319 310
Prepaid Expenses 1,475 1,139
Advances Recoverable in Cash or in Kind or for value to be received 162 23
Advance to Creditors 581 319
Core SGF 406 435
Input Tax Credit Receivable 1,206 705
Total 4,149 2,931

Input Tax Credit receivable represents the input tax credit of Goods & Service Tax (GST) receivable which can be utilised subsequently against future GST liability as per the provisions of GST Act. Advance to creditors represent the amount paid in advance to vendors for which services have been availed partly or yet to be availed.

III. Financial Liabilities:

Trade Payables:

( in Lakh)

Particulars As at March 31,2023 As at March 31,2022
Standalone:
Trade Payables - MSME 2 5
Trade Payables - Others 5,882 5,259
Total 5,884 5,264
Consolidated:
Trade Payables - MSME 65 57
Trade Payables - Others 7,975 7,228
Total 8,040 7,285

Other Financial Liabilities:

( in Lakh)

Particulars As at March 31,2023 As at March 31,2022
Standalone:
Accrued employee benefit expenses 3,711 4,257
Deposits received 15,201 14,617
Unpaid dividends 176 162
Due to subsidiaries 2,316 945
Earmarked Liabilities 32,461 32,260
Total 53,865 52,241
Consolidated:
Accrued employee benefit expenses 4,684 5,418
Deposits and margin received 16,705 15,959
Unpaid dividends 176 162
Payables on purchase of fixed assets 1 3
Lease obligations 2 2
Earmarked Liabilities 32,461 32,260
Clearing and Settlement 1,49,802 1,81,730
Total 2,03,831 2,35,534

Accrued employee benefit represents emoluments payable to employees over a period of time based on the HR policies designed for the benefit of the employees. Deposits received includes deposits received from trading members and clearing members which are based on guidelines issued by SEBI. Lease obligations are liabilities which are at a fixed rate of interest having an original repayment period of 5 years. Earmarked liabilities are backed up by corresponding bank balances and bank deposits mentioned above. Clearing and Settlement liability represents the early pay-in received by Indian Clearing Corporation Limited (ICCL) with respect to trades executed on trading platform of the exchanges pending settlement, deposits received from clearing banks and margin money/ deposits received from members.

Provisions

( in Lakh)

Particulars As at March 31,2023 As at March 31,2022
Standalone:
Compensated Absence 1,051 1,224
Total 1,051 1,224
Consolidated:
Provision for Gratuity 383 326
Compensated Absence 1,818 2,167
Total 2,201 2,493

The provision for Gratuity and compensated absences are made based on actuarial valuation reports.

Income Tax Assets and Liabilities:

( in Lakh)

Particulars As at March 31,2023 As at March 31,2022
Standalone:
Deferred Tax Assets - A 6,102 10,725
Deferred Tax Liabilities - B 286 1,701
Deferred Tax Net (A-B) 5,816 9,024
Income Tax Assets - C 10,868 8,191
Income Tax Liabilities - D 1,626 951
Income Tax Net (C-D) 9,242 7,240
Consolidated:
Deferred Tax Assets - E 8,813 13,790
Deferred Tax Liabilities - F 358 1,806
Deferred Tax Net (E-F) 8,455 11,984
Income Tax Assets - G 14,520 12,506
Income Tax Liabilities - H 1,974 963
Income Tax Net (G-H) 12,546 11,543

Deferred Tax Assets primarily comprise deferred tax on property, plant and equipment, impairment of financial assets, expenses allowed on payment basis u/s 43B of Income Tax Act, 1961 and payment made towards voluntary retirement scheme. Deferred tax liabilities primarily comprise of deferred tax on fair market valuation of mutual fund. The deferred tax assets and liabilities have been offset wherever the Company has a legally enforceable right to set off current income tax assets against current income tax liabilities and where the deferred tax assets and deferred tax liabilities relate to the taxes levied by the same taxation authority.

Current Income tax liabilities represents estimated income tax liabilities net of Advance taxes paid and tax deducted at source.

Other Liabilities:

( in Lakh)

Particulars As at March 31,2023 As at March 31,2022
Standalone:
Income received in advance 220 219
Advance from customers 2,932 2,558
Statutory remittances 9,827 14,892
Other liabilities 8,219 8,308
Total 21,198 25,977
Particulars As at March 31,2023 As at March 31,2022
Consolidated:
Income received in advance 1,614 1,323
Advance from customers 2,940 2,573
Statutory remittances 11,829 16,912
Other liabilities 8,220 8,309
Unamortised portion of Capital Subsidy 33 57
Contribution payable to IPF 36 31
Total 24,672 29,205

Statutory remittances include dues payable to statutory bodies, which have been paid off subsequently before the applicable due dates. Other liabilities include amount set aside to Investors service fund @ 20% of annual listing fees as per the directive of SEBI and dividend of earlier years in respect of shares held in abeyance (For further details refer schedule 19 of standalone and consolidated financial statements).

IV. Financial Results:

Standalone Performance:

( in Lakh)

Particulars FY 2022-23 FY 2021-22 Variance (%)
A. Income
Securities services 27,036 28,490 (5%)
Services to corporates 29,036 28,608 1%
Data dissemination fees 3,886 3,600 8%
Revenue from operations 59,958 60,698 (1%)
Investment income 10,979 9,122 20%
Other income 3,302 2,582 28%
Total income 74,239 72,402 3%
B. Expenses
Employee benefits expense 9,281 9,830 (6%)
Computer technology related expenses 15,093 12,579 20%
Administration and other expenses 18,930 17,573 8%
Liquidity enhancement scheme expenses 2,277 2,174 5%
Total expenses 45,581 42,156 8%
C. EBITDA 28,658 30,246 (5%)
EBITDA Margin 39% 42%
Depreciation and amortisation expense 4,898 4,136 18%
D. Profit before tax 23,760 26,110 (9%)
Tax expenses 7,069 6,598 7%
E. Net profit for the year 16,691 19,512 (14%)
Net margin 22% 27%
Effective tax rate 30% 25%
F. Other comprehensive income 44 107 (59%)
G. Total comprehensive income for the year 16,735 19,619 (14%)

Standalone Income:

( in Lakh)

Particulars FY 2022-23 % of Total Income % Growth FY 2021-22 % of Total Income
Securities Services 27,036 36% (5%) 28,490 38%
Services to Corporates 29,036 39% 1% 28,608 40%
Data Dissemination Fees 3,886 5% 8% 3,600 5%
Investment Income 10,979 15% 20% 9,122 13%
Other Income 3,302 4% 28% 2,582 4%
Total Income 74,239 100% 3% 72,402 100%

The Total Income for the year was higher by 1,837 Lakh at 74,239 Lakh (up 3%) as compared to 72,402 lakh in FY 22. The investment income for FY23 has increased by 1,857 Lakh (up 20%) at 10,979 Lakh as compared to 9,122 Lakh for FY22. Other income for FY 23 has increased by 720 Lakh (up 28%) at 3,302 Lakh as compared to 2,582 Lakh for FY 22. The increase is mainly due to interest on income tax refund of 484 Lakh. The income from services to corporate for FY 23 has increased by 428 Lakh (up 1%) at 29,036 Lakh as compared to 28,608 Lakh for FY 22. The increase is mainly due to increase in listing fees by 1,255 (up 6%) Lakh to 23,275 Lakh in FY 23 as compared to 22,020 Lakh in FY 22. The income from data dissemination for FY 23 has increased by 286 Lakh (up 8%) at 3,886 Lakh as compared to 3,600 Lakh for FY 22. The increase in income is offset by decrease in income from securities services by 1,454 Lakh (down 5%) to 27,036 Lakh in FY 23 as compared to 28,490 Lakh in FY 22. This is mainly due

to decrease in average daily turnover of equity cash segment to 4,132 crore in FY 23 as compared to 5,396 crore in FY 22. The average daily number of chargeable orders received for mutual fund segment has also increased to 2,057 Lakh in FY 23 from 1,545 Lakh in FY 22.

Standalone Expenses:

( in Lakh)

Particulars FY 2022-23 % of Total Income % Growth FY 2021-22 % of Total Income
Employee Benefit Expenses 9,281 13% (6%) 9,830 14%
Computer Technology Related Expenses 15,093 20% 20% 12,579 17%
Regulatory Fees 5,742 8% 7% 5,385 7%
Legal Fees 440 1% 46% 302 0%
Professional Fees 1,255 2% 50% 836 1%
Electricity Charges 1,109 1% 33% 834 1%
Repairs & Maintenance 1,200 2% 37% 873 1%
Travelling Expenses 276 0% (16%) 330 0%
Operating lease expenses 80 0% 4% 77 0%
Impairment loss allowance on trade receivable and financial assets (38) 0% (87%) (284) 0%
Clearing house expenses 6,172 8% (12%) 6,976 10%
Others 2,694 4% 20% 2,244 3%
Depreciation and finance costs 4,898 7% 18% 4,136 6%
Liquidity enhancement scheme expenses 2,277 3% 5% 2,174 3%
Total 50,479 68% 9% 46,292 64%

The Total Expenses for the year were higher by 4,187 Lakh at 50,479 Lakh (up 9%). The increase in expenses is mainly due to increase in Computer Technology Related Expenses by 2,514 lakh (up 20%) to 15,093 Lakh in FY 23 from 12,579 Lakh in FY 22. Increase in depreciation and amortisation cost by 762 (up 18%) Lakh to 4,898 Lakh in FY 23 from 4,136 Lakh in FY 22. The increase in expenses are partly offset by decrease in employee cost by 549 Lakh (down 6%) to 9,281 Lakh in FY 23 from 9,830 Lakh in FY 22. Decrease in clearing house expenses by 804 Lakh (down 12%) to 6,172 Lakh in FY 23 from 6,976 Lakh in FY 22.

Consolidated Performance:

( in Lakh)

Particulars FY 2022-23 FY 2021-22 Variance (%)
A. Income
- Securities services 43,561 38,896 12%
- Services to corporate 29,042 28,642 1%
- Data dissemination fees 3,886 3,600 8%
- Training institute 1,875 1,349 39%
- IT Services 3,189 1,828 74%
Revenue from operations 81,553 74,315 10%
- Investment income 10,931 9,755 12%
- Other income 2,910 2,283 27%
Total income 95,394 86,353 10%
B.Expenses
- Employee benefit expense 18,020 17,728 2%
- Computer technology related 12,390 9,687 28%
expenses
- Administration and other expenses 27,766 22,086 25%
- Liquidity enhancement scheme expenses 3,633 3,500 4%
Total expenses 61,809 53,001 17%
C. EBITDA 33,585 33,352 1%
EBITDA Margin 35% 39%
Depreciation and amortization expense 6,034 4,829 25%
Finance costs 2,748 2,215 24%
D. Profit before exceptional items and tax 24,803 26,308 (6%)
Share of profit of associates 4,923 6,418 (23%)
E. Profit before tax 29,726 32,726 (9%)
Tax expenses 9,161 8,233 11%
F. Net profit for the year 20,565 24,493 (16%)
Net profit attributable to the shareholders of the Company 22,067 25,433 (13%)
Net Profit attributable to the noncontrolling interest (1,502) (940) 60%
Net Margin 22% 28%
Effective tax rate 31% 25%
G. Other comprehensive income 1,994 639 212%
H. Total comprehensive 22,559 25,132 (10%)
Total comprehensive income attributable to the shareholders of the Company 23,294 25,895 (10%)
Total comprehensive income attributable to the non-controlling interest (735) (763) (4%)

Consolidated Income:

( in Lakh)

Particulars FY 2022-23 % of Total Income % Growth FY 2021-22 % of Total Income
Securities Services 43,561 46% 12% 38,896 45%
Services to Corporates 29,042 30% 1% 28,642 33%
Data Dissemination Fees 3,886 4% 8% 3,600 4%
Training Institute 1,875 2% 39% 1,349 2%
Sale of Software 3,189 3% 74% 1,828 2%
Investment Income 10,931 11% 12% 9,755 11%
Other Income 2,910 3% 27% 2,283 3%
Total Income 95,394 100% 10% 86,353 100%

The Total Income for the year was higher by 9,041 Lakh at 95,394 Lakh (up 10%) as compared to 86,353 Lakh in FY 22. The income from securities services for FY 23 has increased by 4,665 Lakh (up 12%) to 43,561 Lakh as compared to 38,896 Lakh for FY 22. The increase is mainly in income from clearing and settlement services, Treasury Income from Clearing and Settlement Funds and annual subscription & admission fees partly offset by decrease in transaction charges. Decrease in transaction charges are mainly due to decrease in average daily turnover of equity cash segment to 4,132 crore in FY 23 as compared to 5,396 crore in FY 22. The average daily number of chargeable orders received for mutual fund segment has also increased to 2,057 Lakh in FY 23 from 1,545 Lakh in FY 22. The income from services to corporate for FY 23 has increased by 400 Lakh (up 1%) at 29,042 Lakh as compared to 28,642 Lakh for FY 22. This increase is mainly due to increase in company reinstatement fees by 295 Lakh (up 70%) to 719 Lakh in FY 23 as compared to 424 Lakh in FY 22. The income from data dissemination for FY 23 has increased by 286 Lakh (up 8%) at 3,886 Lakh as compared to 3,600 Lakh for FY 22. The income from sale of software licenses for FY 23 has increased by 1,361 Lakh (up 74%) at 3,189 Lakh as compared to 1,828 Lakh for FY 22. The training income for FY 23 has increased by 526 Lakh (up 39%) at 1,875 Lakh as compared to 1,349 Lakh for FY 22.

Consolidated Expenses:

( in Lakh)

Particulars FY 2022-23 % of Total Income % Growth FY 2021-22 % of Total Income
Employee benefit expenses 18,020 19% 2% 17,728 21%
Computer technology related expenses 12,390 13% 28% 9,687 11%
Regulatory fees 11,540 12% 36% 8,511 10%
Legal Fees 488 1% 37% 355 0%
Professional fees 3,520 4% 55% 2,276 3%
Electricity charges 1,216 1% 31% 926 1%

( in Lakh)

Particulars FY 2022-23 % of Total Income % Growth FY 2021-22 % of Total Income
Repairs & maintenance 1,291 1% 36% 950 1%
Travelling expenses 496 1% 2% 484 1%
Operating lease expenses 369 0% 54% 240 0%
Impairment loss allowance on trade receivable and financial assets 1,449 2% Very High 16 0%
Clearing house expenses 2,532 3% (40%) 4,244 5%
Others 4,865 5% 19% 4,084 5%
Depreciation & finance costs 8,782 9% 25% 7,044 8%
Liquidity enhancement scheme expenses 3,633 4% 4% 3,500 4%
Total 70,591 74% 18% 60,045 70%

The Total Expenses for the year were higher by 10,546 Lakh at 70,591 Lakh (up 18%). The increase in expenses is mainly due to increase in technology cost by 2,703 Lakh (up 28%) to 12,390 Lakh as compared to 9,687 Lakh for FY 22. Increase in contribution to core SGF by 2,591 (up 89%) Lakh to 5,496 Lakh as compared to 2,905 Lakh for FY 22. Increase in impairment loss allowable on account of settlement obligation by 1,433 Lakh to 1,449 Lakh in FY 23 from 16 Lakh in FY 22. Increase in Professional Fees Expenses by 1,244 Lakh (up 55%) to 3,520 Lakh as compared to 2,276 Lakh for FY 22. Increase in depreciation costs by 1,205 Lakh (up 25%) to 6,034 Lakh in FY 23 from 4,829 Lakh in FY 22. Increase in Finance Cost by 533 Lakh (up 24%) to 2,748 Lakh in FY 23 from 2,215 Lakh in FY 22. The increase in expenses are partly offset by decrease in clearing house expenses by 1,712 Lakh (down 40%) to 2,532 Lakh as compared to 4,244 Lakh for FY 22.

V. Cash Flow

Standalone:

Summary of standalone cash flow statement is given below:

( in Lakh)

Particulars FY 2022-23 FY 2021-22
Operating activities 8,692 20,250
Investing activities 9,617 (21,611)
Financing activities (18,551) (9,619)
Net increase / (decrease) in cash and cash equivalents (242) (10,980)
Cash and cash equivalents at the beginning of the year 583 11,563
Cash and cash equivalents at the end of the year 341 583

In FY 23, there was a net cash inflow from operating activities amounting to 8,692 Lakh as compared to cash inflow of 20,250 Lakh in FY 22.

There was net cash inflow from investing activities amounting to 9,617 Lakh in FY 23 as compared to net cash outflow of 21,611 Lakh in FY 22.

The net cash outflow from financing activities was higher in FY 23 at 18,551 Lakh as compared to net cash outflow of 9,619 Lakh in FY 22 mainly on account of higher payment of dividend.

Consolidated:

Summary of consolidated cash flow statement is given below:

( in Lakh)

Particulars FY 2022-23 FY 2021-22
Operating activities (13,711) 1,44,175
Investing activities (11,133) (97,990)
Financing activities (18,551) 894
Net increase / (decrease) in cash and cash equivalents (43,395) 47,079
Cash and cash equivalents at the beginning of the year 88,694 41,615
Cash and cash equivalents at the end of the year 45,299 88,694

In FY 23, there was a net cash outflow from operating activities amounting to 13,711 Lakh as compared to net cash inflow of 1,44,175 Lakh in FY 22.

There was net cash outflow from investing activities amounting to 11,133 Lakh in FY 23 as compared to net cash outflow of 97,990 lakh in FY 22.

The net cash outflow from financing activities amounting to 18,551 Lakh in FY 23 as compared to net cash inflow of 894 Lakh in FY 22 mainly on account of issue of share by subsidiary company offset by higher payment of dividend.

Earnings per Share (EPS)

The details of change in EPS on standalone and consolidated basis are as follows:

Particulars FY 2022-23 FY 2021-22 % Increase
Standalone:
Basic and diluted EPS 12.15 14.20 (14%)
Consolidated:
Basic and diluted EPS 16.06 18.51 (11%)

VI. Segment-wise reporting - Consolidated

The Company operated in one reportable business segment viz: Stock Exchange Operations i.e., Facilitating Trading in Securities and other related ancillary Services as at the reporting date, and therefore has only one reportable Segment as per Indian Accounting Standard 108 "Operating Segments".

VII. Material developments after balance sheet date

No major developments to be reported.

VIII. Key financial ratios

Pursuant to SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector-specific financial ratios.

Particulars FY 2022-23 FY 2021-22 Variation (bps) % Change*
Debtors Turnover (in times) 6.81 5.93 - 14.84%
Current Ratio (in times) 1.79 2.33 - (23.18%)
Operating EBIDTA Margin (in %) 23.98 30.55 (657) (21.51%)
Net Profit Margin (in %) 27.84 32.15 (431) (13.41%)
Return on Net worth (in %) 7.33 8.73 (139) (15.97%)

*There is no deviation exceeding 25% in any of the above metrics.

Return on Net worth (ROE):

Net Profit for the year has reduced by 14.46% (from Net profit of 19,512 Lakh in FY 2021-22 to Net Profit of 16,691 Lakh in FY 2022-23) as against YoY growth of 1.80% in average Net Worth (from 2,23,557 Lakh in FY 2021-22 to 2,27,573 Lakh in FY 2022-23).