<dhhead>Management Discussion & Analysis Report</dhhead>
interest rates aimed at fighting inflation and a withdrawal of fiscal support amid high debt are expected to weigh on growth in 2024.
Key Factors Shaping the Outlook
Growth resilient in major economies
Economic growth is estimated to have been stronger than expected in the 2nd half of CY2023 in the United States, and several major emerging market and developing economies. In several cases, government and private spending contributed to the upswing, with real disposable income gains supporting consumption amid still-tight though easing labor markets and households drawing down on their accumulated pandemic-era savings. A supply-side expansion also took hold, with a broad-based increase in labor force participation, resolution of pandemic-era supply chain problems, and declining delivery times. The rising momentum was not felt everywhere, with notably subdued growth in the euro area, reflecting weak consumer sentiment, the lingering effects of high energy prices, and weakness in interest-rate-sensitive manufacturing and business investment.
Inflation subsiding faster than expected
Amid favourable global supply developments, inflation has been falling faster than expected, with recent readings near the pre-pandemic average for both headline and underlying (core) inflation. Global headline inflation in the 4th quarter of 2023 is estimated to have been about 0.3% point lower than predicted in the October 2023 WEO on a quarter over quarter seasonally adjusted basis. Diminished inflation reflects the fading of relative price shocks, notably those to energy prices and their associated pass-through to core inflation.
High borrowing costs cooling demand
To reduce inflation, major central banks raised policy interest rates to restrictive levels in 2023, resulting in high mortgage costs, challenges for firms refinancing their debt, tighter credit availability, and weaker business and residential investment. But with inflation easing, market expectations that future policy rates will decline have contributed to a reduction in longer-term interest rates and rising equity markets. Still, long-term borrowing costs remain high in both advanced and emerging markets and developing economies, partly because government debt has been rising. In addition, central banks’ policy rate decisions are becoming increasingly asynchronous. In some countries with falling inflation including Brazil and Chile, where central banks tightened policy earlier than in other countries interest rates have been declining since the 2nd half of 2023. In China, where inflation has been near zero, the central bank has eased monetary policy. The Bank of Japan has kept short-term interest rates near zero.
Fiscal policy amplifying economic divergences-
Governments in advanced economies eased fiscal policy in 2023. The United States, where GDP had already exceeded its pre-pandemic path,
1. ECONOMIC OUTLOOK A. ECONOMIC ENVIRONMENT
Global growth is projected at 3.1% in 2024 and 3.2% in 2025, with the 2024 forecast 0.2% point higher than that in the October 2023, World Economic Outlook (WEO) on account of greater-than-expected resilience in the United States and several large emerging market and developing economies, as well as fiscal support in China. The forecast for 2024–25 is, however, below the historical (2000–2019) average of 3.8%, with elevated central bank policy rates to fight inflation, a withdrawal of fiscal support amid high debt weighing on economic activity, and low underlying productivity growth. Inflation is falling faster than expected in most regions, in the midst of unwinding supply-side issues and restrictive monetary policy. Global headline inflation is expected to fall to 5.8% in 2024 and to 4.4% in 2025, with the 2025 forecast revised down. With disinflation and steady growth, the likelihood of a hard landing has receded, and risks to global growth are broadly balanced. On the upside, faster disinflation could lead to further easing of financial conditions. Looser fiscal policy than necessary and then assumed in the projections could imply temporarily higher growth, but at the risk of a more costly adjustment later on. Stronger structural reform momentum could bolster productivity with positive cross-border spillovers. On the downside, new commodity price spikes from geopolitical shocks including continued attacks in the Red Sea and supply disruptions or more persistent underlying inflation could prolong tight monetary conditions. Deepening property sector woes in China or, elsewhere, a disruptive turn to tax hikes and spending cuts could also cause growth disappointments.
Policymakers’ near-term challenge is to successfully manage the final descent of inflation to target, calibrating monetary policy in response to underlying inflation dynamics and where wage and price pressures are clearly dissipating adjusting to a less restrictive stance. At the same time, in many cases, with inflation declining and economies better able to absorb effects of fiscal tightening, a renewed focus on fiscal consolidation to rebuild budgetary capacity to deal with future shocks, raise revenue for new spending priorities, and curb the rise of public debt is needed. Targeted and carefully sequenced structural reforms would reinforce productivity growth and debt sustainability and accelerate convergence toward higher income levels. More efficient multilateral coordination is needed for, among other things, debt resolution, to avoid debt distress and create space for necessary investments, as well as to mitigate the effects of climate change. The global economic recovery from the COVID-19 pandemic, Russia’s invasion of Ukraine, and the cost-of-living crisis is proving surprisingly resilient. Inflation is falling faster than expected from its 2022 peak, with a smaller-than-expected toll on employment and activity, reflecting favourable supply side developments and tightening by central banks, which has kept inflation expectations anchored. At the same time, high eased policy more than did euro area and other economies in which the recovery was incomplete. In emerging market and developing economies, in which output has on average fallen even further below the pre pandemic trend, on average the fiscal stance is estimated to have been neutral. The exceptions include Brazil and Russia, where fiscal policy eased in 2023. In FY 2023-24, the fiscal policy stance is expected to tighten in several advanced and emerging markets and developing economies to rebuild budgetary room for maneuver and curb the rising path of debt, and this shift is expected to slow growth in the near term.
B. INDIAN ECONOMIC OUTLOOK
I. Economic Performance in FY 2023-24
As per the India Economic Survey, the real GDP grew by a robust 7.7% in H1 of FY 2023-24 following a 7.6% growth in Q2. On the back of strong performance in Q2, the RBI has raised its growth forecast to 7% for the full year. Resilient consumption and investment have driven up the growth rate in H1. The urban component has strengthened consumption while rural demand is beginning to pick up. The government capex has increased the investment rate while private investment is showing promise. The strong domestic demand has consequently induced a significant increase in manufacturing and services value-add.
Geopolitical tensions persist and have exacerbated the weakness in global trade emerging from the slowing of global output. Merchandise exports and imports of India have thus contracted in H1 of FY 2023-24 but in a manner that has improved the merchandise trade deficit. Seen with a growing surplus in the services trade account, the current account deficit is expected to narrow in H1 of FY 2023-24. The Foreign Portfolio Investments (FPIs) further fueled optimism as they became net buyers during H1 of FY 2023-24, in contrast to being net sellers during H1 of FY 2022-23. The Foreign Direct Investment (FDI) inflow into India net of repatriation has declined in H1 in line with the global pattern of FDI flows. Notwithstanding these short-term developments, FDI inflows are expected to resurrect in the medium term as strong government support, a stable macroeconomic environment and rising growth in India are enabling conditions for boosting FDI inflows. Evidence to this effect is seen in a sharp rebound in FDI in October 2023. Amidst the fiscal risks prevailing globally, the government has been carefully monitoring public spending to achieve fiscal consolidation. To this end, expenditures have been re-prioritized towards the immediate requirement of safeguarding the vulnerable. Re-prioritization, however, has not compromised the government’s longer-term objective of strengthening productive capital spending. Such a prudent fiscal policy is expected to support the countrys economic growth prospects. Core inflation at 3.53% in January 2024 was at a 47-month low. It has fallen by 269 basis points from its recent peak in January 2023. This decline is primarily attributed to disinflationary monetary policy and softening input prices. Consumer Price Inflation (CPI) has been fluctuating between 5% and 6% since September 2023, which is within the inflation target of 2% to 6% set by the RBI. Recurring food price shocks poses risks to ongoing disinflation. Wholesale Price Inflation (WPI) continued to be in the positive territory after remaining in the deflationary phase since the beginning of FY 2023-24. Increase in WPI inflation is attributed to higher food prices. On the employment front, labour markets have fully recovered their pre-pandemic levels. High frequency indicators further reflect an improvement in the overall employment situation across sectors. Formal sector employment also showed robust growth, as indicated by a steep rise in the subscription base of the Employees Provident Fund Organization (EPFO). The PMI Manufacturing and services employment sub-indices showcase a broad-based improvement in employment generation. The outlook for the employment sector appears bright, with employers intending to maintain or expand their workforce.
High Frequency Indicators (HFIs) in India for October and November 2023 reflect robust economic activity in Q3 of FY 2023-24, which is likely to continue in Q4 as well. Downside risks to growth arise from smoldering inflationary pressures in advanced countries and supply-chain disruptions re-emerging from persistent geopolitical stress, while geopolitics is an independent source of risk in itself. However, India’s domestic economic momentum and stability, low-to-moderate input cost pressures and anticipated policy continuity are significant buffers against those risks.
II. Economic Prospects for FY 2024-25
India’s Gross Domestic Product (GDP) outperformed expectations, achieving a 7.8% growth rate in the January-March quarter. For the full fiscal year 2023-24, GDP growth was revised upwards to 8.2% from the earlier estimate of 7.6%, as reported by the Ministry of Statistics and Programme Implementation (MOSPI). This surge marks an improvement from the 7.0%growth recorded in the preceding fiscal year, showcasing the resilience and strength of the Indian economy amidst evolving global dynamics. The provisional data indicates that real GDP surged to 173.82 lakh crore in FY 2023-24, up from 160.71 lakh crore in the prior fiscal year. This represents an 8.2% growth rate, illustrating the economy’s buoyancy. Likewise, real GVA increased to 158.74 lakh crore, reflecting a significant 7.2% growth from the previous year.
The sector-wise analysis further illuminates the economic landscape, with real Gross Value Added (GVA) experiencing a growth rate of 7.2% in 2023-24, compared to the 6.7% growth observed in FY 2022-23. This impressive full-year growth is driven by the manufacturing and construction sectors, although there has been some moderation in the services sector growth. The agricultural sectors muted growth of 1.4% in FY 2023-24 is in line with expectations due to a poor monsoon. On the expenditure side, a sharp increase in gross fixed capital formation, led by public capital expenditure, supported the growth in FY 2023-24.
On the expenditure side, the growth has been mainly led by the healthy government capex. A strong uptick in overall export growth, along with moderation in import growth, also supported the growth momentum in Q4. However, private consumption growth has remained feeble, maintaining growth at similar levels as last quarter. A combination of factors, including a deficient monsoon and persistent food inflation, has exerted pressure on rural demand sentiments.
Looking forward, high-frequency indicators indicate an ongoing recovery in the rural demand, which has been impacted by the muted farm output due to the poor monsoon last year. Prospects of a good monsoon bode well for the overall consumption demand as it will moderate food inflation and support farm income. However, the temporal and spatial distribution of the monsoon would be an important factor to monitor. Government initiated relief measures, particularly in the run-up to elections, such as the reduction in LPG prices and the extension of the Prime Minister Garib Kalyan Yojana (PMGKAY) for an additional five years until 2029, will also provide a certain degree of relief and support.
Despite significant global headwinds, Indian economy has remained the fastest growing major economy in FY 2023-24, backed by strong capex push and upswing in the manufacturing sector. However, going forward, this momentum will moderate in FY 2024-25. On the external front, unlike in FY 2021-22 and FY 2022-23, where exports contributed noticeably to the growth print, decelerating global economy with stagnant or falling growth among India’s major export destinations will continue to impede exports prospects in coming fiscal. Overall, exports are not expected to contribute significantly to GDP growth in FY 2024-25.
On the investment front, while public capex may witness moderation to stick to the fiscal consolidation target, general election- induced uncertainty and tighter lending conditions would also keep private investments restrained in the first half of FY25. Nevertheless, with the bottoming out of global growth, expected interest rate cuts and post-election clarity, private capex could pick up in later half of FY25.This optimism is bolstered by factors such as elevated capacity utilization levels, sizable order books, and cleaner corporate and bank balance sheets.
Private Final Consumption Expenditure (PFCE) which contributes significantly to India’s GDP noted a moderation in growth the 2nd quarter. Private final consumption expenditure (PFCE), which captures domestic consumption demand, grew by 3.1% in 2nd quarter of FY 2023-24. The revival in consumption since pandemic shock has not been able to maintain a sustained momentum. In the current fiscal, while urban consumption demand has remained buoyant as evident from domestic air passenger traffic, passenger vehicle sales and household credit offtake, rural demand has had a sluggish pace due to weak agriculture sector performance and high food inflation, particularly in cereals which are a staple food for many people in the rural areas.
On the inflation front, the Reserve Bank of India (RBI) has kept its forecast for retail price inflation in FY 2023-24 unchanged at 5.4%. It has brought down the estimate for the January-March 2024 quarter to 5% from 5.2% in the previous meeting. Assuming normal monsoon in the next fiscal, the RBI has projected inflation to close at 4.5% in FY 2024-25, with the April-June 2024 quarter noting an inflation of 5%, July-September 2024 quarter penciling an inflation of 4%, the October-December 2024 quarter observing an inflation of 4.6% and the January-March 2025 quarter noting an inflation of 4.7%.
In the coming months, upside and downside factors persist, expectations are of a subdued recovery in consumption demand. On the upside, expected ease in inflation rates, election-injected income spur and pick-up in private investments bode well for consumption growth. On the downside, in case of rural demand, muted agriculture performance is expected to weigh on consumption and sentiments. In case of urban demand, lagged impact of RBI’s policy rate hikes and RBI’s recent regulatory measures in terms of increasing the risk weights associated with unsecured retail loans are expected to soften the growth in such loans and hence impact consumption.
2. INDUSTRY STRUCTURE AND DEVELOPMENTS
A. CAPITAL MARKET
In FY 2023-24, the Indian equity market witnessed a phenomenal performance as benchmark indices soared to unprecedented all-time highs, with the Benchmark Sensex Index scaling milestone of 74,245 mark. The Indian corporate earnings began to show improvement, with companies benefiting from a softening in commodity prices, leading to enhanced profitability and margins.
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 2023-24 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, 11,211 Foreign Portfolio Investors (FPIs), and 17 custodians, with a market capitalization of all listed companies at 387 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 2023-24
T+ 0: The Securities and Exchange Board of India or SEBI has stated that it has been decided to put in place a framework for introduction of the Beta version of T+0 settlement cycle on optional basis in addition to the existing T+1 settlement cycle in equity cash market, for a limited set of 25 scrips and with a limited number of brokers. All investors are eligible to participate in the segment for the T+0 settlement cycle, if they can meet the timelines, process and risk requirements as prescribed by the MIIs. Further, T+0 prices will not be considered in index calculation and settlement price computation. Also, there shall be no separate close price for securities based on trading in the T+0 segment. The surveillance measures applicable in the T+1 settlement cycle shall apply to scrips in the T+0 settlement cycle. SEBI had earlier allowed for introduction of T+1 rolling settlement cycle. All stock exchanges, clearing corporations and depositories jointly decided to shift to T+1 settlement cycle in a phased manner, which was fully implemented w.e.f. January 27, 2023.
IPO listing time reduced to T + 3: Companies launching their public offering from December 1, 2023, had to ensure that the listing happens within three days of the IPO close. The reduction in the timeline for listing is aimed at benefiting both issuers and investors. The reduced listing time means that the issuers would receive their funds in a much shorter time period, and the same is with allottees, who would get their securities within the stipulated 3 days. Also, subscribers who were not allotted shares would receive their money back quickly. This ensures that when two or three IPOs collide on the Street, investors will have funds at their disposal where they can participate in multiple issues in parallel. The mandatory T+3 listing means that HNI (high net worth individual) clients opting for IPO funding will experience a reduction in interest payment duration, down from around 7 days to a mere 4 days.
Major Announcements by SEBI:
Date |
Title |
Mar 21, 2024 |
Introduction of Beta version of T+0 rolling settlement cycle on optional basis in addition to the existing T+1 settlement cycle in Equity Cash Markets |
Mar 20, 2024 |
Safeguards to address the concerns of the investors on transfer of securities in dematerialized mode |
Mar 19, 2024 |
Entities allowed to use e-KYC Aadhaar Authentication services of UIDAI in Securities Market as sub-KUA |
Mar 13, 2024 |
Repeal of circular(s) outlining procedure to deal with cases where securities are issued prior to April 01, 2014, involving offer / allotment of securities to more than 49 but up to 200 investors in a financial year |
Mar 12, 2024 |
Simplification and streamlining of Offer Documents of Mutual Fund Schemes - Extension of timelines |
Mar 11, 2024 |
Measures to instil trust in securities market – Expanding the framework of Qualified Stock Brokers (QSBs) to more stock brokers |
Mar 05, 2024 |
Notification for List of goods notified under SCRA, 1956 |
Feb 20, 2024 |
Centralization of certifications under Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) at KYC Registration Agencies (KRAs) |
Feb 08, 2024 |
Revised Pricing Methodology for Institutional Placements of Privately Placed Infrastructure Investment Trust (InvIT) |
Date |
Title |
Feb 06, 2024 |
Guidelines for returning of draft offer document and its resubmission |
Jan 25, 2024 |
Streamlining of Regulatory Reporting by Designated Depository Participants (DDPs) and Custodians |
Jan 25, 2024 |
Extension of timeline for verification of market rumours by listed entities |
Jan 23, 2024 |
Framework for Offer for Sale (OFS) of Shares to Employees through Stock Exchange Mechanism |
Jan 12, 2024 |
Guidelines for AIFs with respect to holding their investments in dematerialised form and appointment of custodian |
Jan 12, 2024 |
Ease of doing business- Changes in reporting |
Jan 12, 2024 |
Ease of Doing Investments by Investors- Facility of voluntary freezing/ blocking of Trading Accounts by Clients |
Jan 11, 2024 |
Foreign investment in Alternative Investment Funds (AIFs) |
Jan 05, 2024 |
Framework for Short Selling |
Dec 28, 2023 |
Settlement of Running Account of Client’s Funds lying with Trading Member (TM) |
Dec 28, 2023 |
Modifications to provisions of Chapter XXI of NCS Master Circular dealing with registration and regulatory framework for Online Bond Platform Providers (OBPPs) |
Dec 28, 2023 |
Framework on Social Stock Exchange |
Dec 27, 2023 |
Extension of timelines for providing ‘choice of nomination’ in eligible demat accounts and mutual fund folios |
Dec 20, 2023 |
Business Continuity for Clearing Corporations through Software as a Service (SaaS) Model |
Dec 20, 2023 |
Amendment to Circular dated July 31, 2023, on Online Resolution of Disputes in the Indian Securities Market |
Dec 19, 2023 |
Principles of Financial Market Infrastructures (PFMIs) |
Dec 18, 2023 |
Simplification of requirements for grant of accreditation to investors |
Dec 12, 2023 |
Upstreaming of clients’ funds by Stock Brokers (SBs) / Clearing Members (CMs) to Clearing Corporations (CCs) |
Dec 11, 2023 |
Credit of units of AIFs in dematerialised form |
Dec 06, 2023 |
Revised framework for computation of Net Distributable Cash Flow (NDCF) by Infrastructure Investment Trusts (InvITs) |
Dec 06, 2023 |
Revised framework for computation of Net Distributable Cash Flow (NDCF) by Real Estate Investment Trusts (REITs) |
Date |
Title |
Dec 01, 2023 |
Extension of timeline for implementation of provisions of circular SEBI/HO/OIAE/IGRD/CIR/P/2023/156 dated September 20, 2023, on Redressal of investor grievances through the SEBI Complaint Redressal (SCORES) Platform and linking it to Online Dispute Resolution platform. |
Nov 17, 2023 |
Simplified norms for processing investor’s service requests by RTAs and norms for furnishing PAN, KYC details and nomination |
Nov 13, 2023 |
Most Important Terms and Conditions |
Nov 08, 2023 |
Procedural framework for dealing with unclaimed amounts lying with Real Estate Investment Trusts (REITs) and manner of claiming such amounts by unitholders |
Nov 08, 2023 |
Procedural framework for dealing with unclaimed amounts lying with Infrastructure Investment Trusts (InvITs) and manner of claiming such amounts by unitholders |
Nov 08, 2023 |
Procedural framework for dealing with unclaimed amounts lying with entities having listed non- convertible securities and manner of claiming such amounts by investors |
Nov 01, 2023 |
Simplification and streamlining of Offer Documents of Mutual Fund Schemes |
Oct 31, 2023 |
Revision in manner of achieving minimum public unitholding requirement – Infrastructure Investment Trusts (InvITs) |
Oct 20, 2023 |
Guidelines for Business Continuity Plan (BCP) and Disaster Recovery (DR) of Qualified RTAs (QRTAs) |
Oct 19, 2023 |
Ease of doing business and development of corporate bond markets – revision in the framework for fund raising by issuance of debt securities by large corporates (LCs) |
Oct 13, 2023 |
Amendment to the Guidelines on Anti-Money Laundering (AML) Standards and Combating the Financing of Terrorism (CFT) /Obligations of Securities Market Intermediaries under the Prevention of Money- laundering Act, 2002 and Rules framed there under. |
Oct 10, 2023 |
Extension in timeline for compliance with qualification and experience requirements under Regulation 7(1) of SEBI (Investment Advisers) Regulations, 2013 |
Oct 07, 2023 |
Relaxation from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 – Reg. |
Oct 06, 2023 |
Requirement of Base Minimum Capital Deposit for Category 2 Execution Only Platforms |
Date |
Title |
Oct 06, 2023 |
Limited relaxation from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 |
Oct 03, 2023 |
Centralized mechanism for reporting the demise of an investor through KRAs |
Sep 30, 2023 |
Extension of timeline for verification of market rumours by listed entities |
Sep 27, 2023 |
Nomination for Mutual Fund Unit Holders – Extension of timelines |
Sep 26, 2023 |
Extension of timelines (i) for nomination in eligible demat accounts and (ii) for submission of PAN, Nomination and KYC details by physical security holders; and voluntary nomination for trading accounts |
Sep 20, 2023 |
Redressal of investor grievances through the SEBI Complaint Redressal (SCORES) Platform and linking it to Online Dispute Resolution platform |
Sep 14, 2023 |
Regulatory Reporting by AIFs |
Sep 11, 2023 |
Board nomination rights to unitholders of Real Estate Investment Trusts (REITs) |
Sep 11, 2023 |
Board nomination rights to unitholders of Infrastructure Investment Trusts (InvITs) |
Sep 06, 2023 |
Clarification regarding investment of Mutual Fund schemes in units of Corporate Debt Market Development Fund |
Sep 04, 2023 |
Mechanism for Sharing of Information by Credit Rating Agencies (CRAs) to Debenture Trustees (DTs) |
Sep 04, 2023 |
Change in mode of payment w.r.t. SEBI Investor Protection and Education Fund Bank A/c |
Sep 04, 2023 |
New format of Abridged Prospectus for public issues of Non-Convertible Debt Securities and/or Non- convertible Redeemable Preference Shares |
Aug 29, 2023 |
Guidelines for MIIs regarding Cyber security and Cyber resilience |
Aug 24, 2023 |
Modification in Cyber Security and Cyber Resilience framework of Stock Exchanges, Clearing Corporations and Depositories |
Aug 24, 2023 |
Mandating additional disclosures by Foreign Portfolio Investors (FPIs) that fulfil certain objective criteria |
Aug 11, 2023 |
Simplification of KYC process and rationalisation of Risk Management Framework at KRAs |
Aug 10, 2023 |
Procedure for seeking prior approval for change in control with respect to Merchant Bankers and Bankers to an Issue |
Aug 09, 2023 |
Reduction of timeline for listing of shares in Public Issue from existing T+6 days to T+3 days |
Aug 08, 2023 |
Facility to remedy erroneous transfers in demat accounts |
Date |
Title |
Aug 07, 2023 |
Transactions in Corporate Bonds through Request for Quote (RFQ) platform by FPIs |
Aug 04, 2023 |
Validity period of approval granted by SEBI to Alternative Investment Funds (AIFs) and Venture Capital Funds (VCFs) for overseas investment |
Jul 27, 2023 |
Mandating Legal Entity Identifier (LEI) for all non – individual Foreign Portfolio Investors (FPIs) |
Jul 27, 2023 |
Investment by Mutual Fund Schemes and AMCs in units of Corporate Debt Market Development Fund |
Jul 27, 2023 |
Framework for Corporate Debt Market Development Fund (CDMDF) |
Jul 20, 2023 |
New category of Mutual Fund schemes for Environmental, Social and Governance ("ESG") Investing and related disclosures by Mutual Funds |
Jul 19, 2023 |
Trading Window closure period under Clause 4 of Schedule B read with Regulation 9 of SEBI (Prohibition of Insider Trading) Regulations, 2015 ("PIT Regulations") |
– Extending framework for restricting trading by Designated Persons ("DPs") by freezing PAN at security level to all listed companies in a phased manner |
|
Jul 07, 2023 |
Roles and responsibilities of Trustees and board of directors of Asset Management Companies (AMCs) of Mutual Funds |
Jul 04, 2023 |
Appointment of Director nominated by the Debenture Trustee on boards of issuers |
Jun 30, 2023 |
Implementation of circular on upstreaming of clients’ funds by Stockbrokers (SBs) / Clearing Members (CMs) to Clearing Corporations (CCs) |
Jun 23, 2023 |
Trading Supported by Blocked Amount in Secondary Market |
Jun 21, 2023 |
Standardised approach to valuation of investment portfolio of Alternative Investment Funds (AIFs) |
Jun 21, 2023 |
Modalities for launching Liquidation Scheme and for distributing the investments of Alternative Investment |
Funds (AIFs) in-specie |
|
Jun 21, 2023 |
Trading Preferences by Clients |
Jun 16, 2023 |
Adherence to provisions of regulation 51A of SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 by Online Bond Platform Providers on product offerings on Online Bond Platforms |
Jun 16, 2023 |
Amendment to Guidelines on Anti-Money Laundering (AML) Standards and Combating the Financing of Terrorism (CFT) /Obligations of Securities Market Intermediaries under the Prevention of Money Laundering Act, 2002 and Rules framed there under |
Jun 13, 2023 |
Regulatory framework for Execution Only Platforms for facilitating transactions in direct plans of schemes of Mutual Funds |
Date |
Title |
Jun 08, 2023 |
Upstreaming of clients’ funds by Stockbrokers (SBs) / Clearing Members (CMs) to Clearing Corporations (CCs) |
Jun 08, 2023 |
Participation of Mutual funds in repo transactions on Corporate Debt Securities |
Jun 02, 2023 |
Transactions in corporate bonds through Request for Quote platform by Stockbrokers (SBs) |
May 30, 2023 |
Comprehensive guidelines for Investor Protection Fund and Investor Services Fund at Stock Exchanges and Depositories |
May 25, 2023 |
Model Tripartite Agreement between the Issuer Company, Existing Share Transfer Agent, and New Share Transfer Agent as per Regulation 7(4) of SEBI (LODR) Regulation, 2015 |
May 23, 2023 |
Revision in computation of Core Settlement Guarantee Fund in Commodity Derivatives Segment |
May 19, 2023 |
Risk disclosure with respect to trading by individual traders in Equity Futures & Options Segment |
May 12, 2023 |
Investment in units of Mutual Funds in the name of minor through guardian |
May 10, 2023 |
Direct Market Access (DMA) to SEBI registered Foreign Portfolio Investors (FPIs) for participating in Exchange Traded Commodity Derivatives (ETCDs) |
May 09, 2023 |
Registration with the FINNET 2.0 system of Financial Intelligence Unit – India (FIU-India) |
May 05, 2023 |
Testing Framework for the Information Technology (IT) systems of the Market Infrastructure Institutions (MIIs) |
May 03, 2023 |
Introduction of Legal Entity Identifier (LEI) for issuers who have listed and/ or propose to list non-convertible securities, securitised debt instruments and security receipts |
Apr 26, 2023 |
Procedure for implementation of Section 12A of the Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005 |
– Directions to stock exchanges and registered intermediaries |
|
Apr 25, 2023 |
Modifications in the requirement of filing of Offer Documents by Mutual Funds |
Apr 25, 2023 |
Bank Guarantees (BGs) created out of clients’ funds |
Apr 21, 2023 |
Procedure for seeking prior approval for change in control of Vault Managers |
Apr 17, 2023 |
Dispute Resolution Mechanism for Limited Purpose Clearing Corporation (LPCC) |
Apr 13, 2023 |
Contribution by eligible Issuers of debt securities to the Settlement Guarantee Fund of the Limited Purpose Clearing Corporation for repo transactions in debt securities |
Date |
Title |
Apr 11, 2023 |
Formulation of price bands for the first day of trading pursuant to Initial Public Offering (IPO), re-listing etc. in normal trading session |
Apr 10, 2023 |
Direct plan for schemes of Alternative Investment Funds (AIFs) and trail model for distribution commission in AIFs |
Apr 10, 2023 |
Guidelines with respect to excusing or excluding an investor from an investment of AIF |
Apr 05, 2023 |
Advertisement code for Investment Advisers (IA) and Research Analysts (RA) |
C. INDIAN CAPITAL MARKETS PERFORMANCE AND OUTLOOK
The Indian stock market has delivered stellar returns to investors in FY 2023-24. BSE Sensex logged to the tune of 25% rise, 2nd largest gain in last 5 years. It touched an all-time high of 74,119.39 points on March 7, 2024. The increase has been relatively broad-based, driven by sectors which noted high consumer demand, such as FMCG, auto, energy and realty.
The biggest macro factors influencing the markets include the strong economic growth prospects, solid corporate results, strong inflows from both domestic and foreign institutional investors, favourable government policies and confidence of domestic investors in our economic strength and growth prospects.
The outlook for Indian equities market in FY 2024-25 appears promising, supported by various factors such as economic recovery, stable government, increased focus on reforms, and rise foreign investments. However, it will be crucial to remain vigilant and monitor potential risks, such as global financial conditions and domestic policy changes, as it may have a significant impact in the Indian markets.
India is likely to embrace abundant rainfall during monsoon this year, under the reduced influence of El Ni?o and significant La-Ni?o conditions in the Pacific region after May, according to the Indian Meteorological Department (IMD). A shift from El Ni?o to La Ni?a generally brings positive implications for consumption-based companies in India as rainfall improves. This will lead to a boost in demand on account of better disposable income and favourable agricultural yield. Higher disposable income should boost the subdued demand outlook for rural India which will provide a significant boost to companies which are struggling on account of weak rural demand. The market is expected to closely monitor this shift as it will have an impact on various fronts such as inflation, interest rates, increase in spending, improved profit margins, which might provide India a much-needed volume growth.
Going into FY 2024, corporate earnings would be key among the many factors that will decide the market movement. Other major factors to impact Indian capital markets in the coming year include resurrection in consumption demand, growth led by policy reforms, move towards
* Dollar rate to Rupee Rate as per March 29, 2024 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 world’s largest stock exchange in terms of number of companies listed. As of March 31, 2024, BSE is ranked #7 by market capitalization among global stock exchanges, and the largest in India, with a total market capitalization of 386 lakh crores. As of As of March 31, 2023, BSE was ranked #7 globally.
B. PRIMARY MARKET
The total number of companies listed on BSE as on March 31, 2024, was 5,198 as compared to 5,433 as on March 31, 2023.
In FY 2023-24, Indian Investors showed faith in investing funds in Indian corporate sector primarily via the BSE fund raising platforms. Rs 16.13 lakh crores (USD 193.45 bn*) worth of funds was mobilized through listing of Equity, Bonds, REITs, InvITs and Commercial Papers, etc.
During FY 2023-24, 76 companies tapped the market through the IPO process to get listed on the Mainboard of BSE. The amount raised through Mainboard IPOs in FY 2023-24 was 61,859.85 crore as against
56,740 crore in FY 2022-23.
In addition to 76 IPOs on the Mainboard, 58 companies raised 1,473.99 crore through BSE SME platform in FY 2023-24. 4 companies also raised 13,081.51 crore through InVITs in FY 2023-24. Additionally, 1 Company raised 2,120 crores through REITs in FY 2023-24.
With respect to debt capital the total amount mobilized through Privately Placed Debt Instruments ("PPDI") at BSE in FY 2023-24 was 5,82,528 crores as against 5,31,139 crores in FY 2022-23. During FY 2023-24, there were 48 debt public issues, which mobilized 20,786.60 crores as against 9,462 crores in the FY 2022-23.
The total amount mobilized through Commercial Paper ("CP") at BSE in FY 2023-24 was 8,06,245 crore.
I. Mutual Fund Segment
The BSE StAR MF platform continues to be India’s largest Mutual Fund Distribution Infrastructure with more than 85% of market share by number of transactions amongst exchange-based platforms in the Mutual Fund Industry. In FY 2023-24, BSE StAR MF processed 42 Crore transactions witnessing 59% growth as compared to 26.5 Crore transactions in FY 2022-23. The platform also registered 2181 new members, taking the total network to over 75000 distributors in India.
New SIPs Registration:
In FY 2023-24, BSE StAR MF registered 2.71 Crore new SIPs.
Witnessed a growth of 116% vis-a-vis 1.25 Crore new SIPs registered in FY 2022-23.
Product Offerings
BSE StAR MF is well poised to capture the increasing participation of investors in Mutual Funds, it has boosted the mutual funds distribution for traditional distributors as well as new age platform (Mobile APP/ Website) based network of FinTech, MFDs, Banks, PMS, Custodians, brokers, broker branches and associates across India.
It provides all important modes of connectivity; it can be used via any of the below methods: o Web-Browser o WEB Services o Mobile App
Along with Lumpsum and SIPs, the platform is capable of managing special kind of MF transactions such as SWP (Systematic Withdrawal Plan), STP (Systematic Transfer Plan) to cater to the special needs of investors, with step up SIP (also known as SIP Top up) being the most recent launch.
Moreover, it supports all types of schemes to be transacted (Direct and Regular) via Demat as well as Non Demat mode.
To make it convenient for the investor, StAR MF supports creation of mandates using NACH and eNACH modes, which can be used as a recurring payment option against the multiple SIPs registered for an investor. UPI recurring Mandate is also going to be supported very soon to make it even more convenient for the existing investors and allow a potential untapped market of new investors with lower amounts but with greater frequency.
Product Innovation
StAR MF is going through a revamp and a new version of the platform is being developed while focusing on rich features and intuitive functionalities; scalability, and sustainability of the platform to ensure robustness with a special focus on governance and control to enhance information security and bring transparency.
II. Municipal Bonds and Green Bonds
3 Municipal Bonds were issued at BSE in F.Y. 2023-24.
Pimpri Chinchwad Municipal Corporation has raised 200 crores in the month of June, 2023.
Ahmedabad Municipal Corporation has raised 200 crores in the month of February, 2024.
Vadodara Municipal Corporation has raised Rs 100 crores in the month of March, 2024.
The total amount mobilized through Municipal Bonds at BSE in FY 2023-24 was 500 Crore as against 0 Crore in FY 2022-23. The total amount mobilized through Green Bonds at BSE in FY 2023-24 is
300 Crore as against 1,045 Crore in F.Y. 2022-2023.
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 on this product. BSE aggregates applications 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 on this product. BSE aggregates applications from its vast network of brokers and distributors and channels the same to RBI. During the FY 2023-24, RBI has issued few tranches, BSE has received collection of 5,2227.00 kgs and value of 3,191.00 crores for the period mentioned.
C. SECONDARY MARKET
I. Equity Cash Segment ("ECM")
The S&P BSE SENSEX ended FY 2023-24 at 73,651.35 compared to 58,991.52 at year end of FY 2022-23, an increase of 25% over the year. The average daily value of equity turnover on BSE in FY 2023-24 was
6,622 Crore, a Y-o-Y increase of about 60% from 4,132 Crore in FY 2022-23. The total turnover for year stood at 16.3 lakh crore.
II. Equity Derivatives Segment ("EDX")
In EDX, the daily average value was 34,60,746.77 Crore in FY 2023-24 as compared to 1,37,813 Crore in FY in FY 2022-23. BSE Derivatives recorded the highest turnover of 3,56,89,004 crore during the year. In FY 2023-24, derivatives contract based on the flagship Sensex 30 Index, which was launched on May 15, 2023, with a differentiated Friday expiry and Banking sector Index, Bankex, with Monday expiry, were launched on October 16, 2023. These contracts offers participants the ideal equity hedge in a volatile market, with its constituents representing about 58% of market capitalization of Indias listed universe, and more than 90% of the banking universe respectively. The contracts offer superior flexibility (offset via alternate expiry day) and a cost-efficient hedge for participants than any comparable product in Indian markets. The BSE derivatives contracts were well-received by the market, as in less than one year since launch, BSE ranks second amongst exchanges globally and our flagship index, Sensex, ranks 4th in terms of derivatives contracts traded, according to the data published by the Futures Industry Association (FIA).
III. Currency Derivatives Segment ("CDX")
In CDX, the daily average turnover was 9,733.67 Crore for FY 2023-24 as compared to 25,599 Crore for FY 2022-23, a decline of 62%.
IV. Interest Rate Derivatives ("IRD")
In IRD, the daily average turnover was 122 Crore for FY 2023-24 as compared to 96 Crore in FY 2022-23.
V. Commodity Derivatives
In the commodity derivatives segment, the daily average turnover was 5 Crores for FY 2023-24 as compared to 32 Crore for FY 2022-23.
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, 2024, the value of this index reached 52972.54. Additionally, the total market capitalization of all the 488 companies listed on BSE SME Platform reached 1,27,794.71 Crore. During FY 2023-24 the SME platform continued to be a front-runner with a market share of 52%. During FY 2023-24, 58 companies raised 1474.68 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 company’s 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 2023-24, 19 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 6,99,597 Crore in FY 2023-24 as against
6,59,827 Crore in FY 2022-23. In FY 2023-24, BSE’s market share was 31% for Corporate Bonds Reporting. In case of Statutory Liquidity Ratio ("SLR") securities i.e. Government Securities and Treasury Bills, trades worth 4,36,256 Crore were reported on NDS-RST in FY 2023-24 as against 4,21,328 Crore in FY 2022-23 and BSE’s market share being 53% for FY 2023-24 for reporting of Government securities.
Trading in Non-Convertible Debentures ("NCDs") and Bonds on ‘F’ group of BSE’s equity platform saw volume of 4,106 Crore in FY 2023-24 as against 4,730 Crore in FY 2022-23 and BSE’s market share being 69% for FY 2023-24 for the retail trading of Corporate Bonds.
The settlement volume for corporate bonds witnessed business of
2,704,123 Crore in FY 2023-24 as against 2,37,427 Crore in FY 2022-23. The Company has a market share of 15% for FY 2023-24 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 SEBI’s approval w.e.f February 3, 2020. Total Volume in RFQ platform of BSE was 37,419 Crores for FY 2023-24 as compared to
4,148 Crores for FY 2022-23. BSE’s market share has increased to 5% in FY 2023-24 as compared to 0.68% in FY 2022-23 for Request for Quote (RFQ) in volume terms. Total number of trades on BSE was for FY 2023-24 was 15,040 on the RFQ platform, while in FY 2022-23 the number of trades were 562. BSE’s market share has increased to 30% in FY 2023-24 as compared to 5% in FY 2022-23 for Request for Quote (RFQ) in terms of total number of trades.
An OBPP is a SEBI-registered Online Bond Platform Provider that facilitates the buying and selling of listed securities as per the SEBI regulation dated November 09, 2022. These platforms act as an intermediary, predominantly providing non institutional investors with investment choices and enabling seamless bond transactions on the Exchange.
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 to act 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 2023-24, BSE has received bids worth 819 crores through its various bidding platform while in FY 2022-23, bids worth 671 Crore were received.
IX. Exchange Traded Funds ("ETF")
As on March 31, 2024, BSE had 143 ETFs listed on its platform, as compared with 114 as on March 31, 2023. During FY 2023-24, the average daily turnover in ETF is 45.26 Crores compared with 19.68 Crores in FY 2022-23.
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 2023-2024, there were 26 OFS issues out of which BSE was appointed as the Designated Stock Exchange in 18 issues (69%). Out of the 26 OFS issues, 8 issues were conducted exclusively on the BSE platform, the total amount raised through OFS issues on BSE platform was 13,437 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 2023-2024, there were 119 such OTB issues, of which BSE was appointed as the Designated Stock Exchange in 103 issues (87%). Out of the 119 OTB issues, 88 issues were conducted exclusively on BSE platform, the total subscription through OTB issues on BSE Platform was 36,197 Crores.
XI. Securities Lending & Borrowing ("SLB")
In terms of year-over-year performance, the SLB turnover experienced a contraction of nearly a quarter of its previous amount, showing a 24% reduction. Meanwhile, the lending fees witnessed a more moderate decline, dipping by 12.6%.
Segment FY 2023-24 |
FY 2022-23 |
( Crore) |
( Crore) |
Turnover for the period – 1st Leg of 3377 |
4443 |
SLB transactions |
|
Lending fees |
15.64 |
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. FY 2023-24, BSE reversed action initiated against Promoters/ Directors of 2 exclusively listed companies, which were found to be compliant with SEBI circular dated October 10, 2016, and August 1, 2017, and consequently these companies were removed from the BSE’s Dissemination Board. As on March 31, 2024, there are 674 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, Biotechnology and Life Science, 3D Printing, Space technology, E-Commerce, Hi- Tech Defense, Drones, Nano Technologies, Artificial Intelligence, E-gaming etc. The criterion 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 company’s 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 preferably be 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 2023-24, no start-up companies were listed on BSE. On March 31, 2024, the total market capitalization of all the 14 companies listed on BSE Startups Platform reached 896.06 Crore. During FY 2023-24, 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 167.91 crores in India INX and 114.68 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 for 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 INX’s derivatives for FY 2023-24 is USD 306.16 billion. The cumulative notional trading turnover as of FY 2023-24 is 8.91 trillion. 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. To date, Global Securities Market has established around USD 75 billion in MTN programmes and around USD 56 billion of bonds issued. During FY 2023-24, 100% of the ESG funds raised by Indian issuers was listed on India INX’s Global Securities Market. In the current fiscal, the budget 2023 has increased attractiveness of the GIFT IFSC jurisdiction with providing the issuers a sweet deal of lower withholding tax of 9% for listing their ECB Bonds in GIFT IFSC vs 20% otherwise. The NBFC’s also sought this route and found new set of investors in GIFT IFSC, this has led to the onshoring the offshore in complete sense in the year 2023-24.
During the year, Exchange platform has witnessed a bouquet of instruments being listed, the first ever Yen denominated issuance by Maharatna REC Limited of JPY 61+ Billion, the first ever FCB issuance to be issued through IFSC of EUR 3.5 Million by NeoGrowth Credit , USD 750 Million notes issued by Shriram Finance Ltd. and USD 600 Million to be issued by the country’s largest bank viz: State Bank of India. This continual confidence in the jurisdiction will certainly make the vision and dream of Honourable Prime Minister Shri Narendra Modi of GIFT IFSC being the pivotal centre of fund raising for Indian and foreign issuers. India INX is committed towards this journey. 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.
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 FY 2023-24:
I. MARKETS BUSINESS PERFORMANCE
Growth in the core business segment – India INX Derivatives
India INX’s core business of Derivatives has achieved remarkable growth since its launch in January 2017.
During the Financial Year 2023-24, an overall market share was 30% based on the notional Trading Turnover for Derivatives.
INDIA INX is the leading Exchange at GIFT IFSC for Equity Index
Options with market share of 87% during FY 2023-24.
India INX’s Gold Futures market share as compared to equivalent Gold
Futures traded in Dubai was 54% during FY 2023-24.
Secondary Markets India INX’s Derivatives Business Performance
The notional trading turnover on INDIA INX’s derivatives for FY 2023-24 is USD 306.16 billion.
The Average Daily Trading Value (ADTV) of India INX’s Derivatives was USD 1,195.95 million per day in during the FY 2023-24. Cumulative Trading Turnover of India INX Derivatives has crossed USD 8,907.22 billion (Rupees 7,42,62,963 Crores [1]) as on March 31, 2024, with the cumulative Trading Volume at 53,65,29,307 contracts (lots).
Growth in India INX Derivatives Trading Turnover
Key statistics for India INX Derivatives by product Notional
Trading Turnover (USD million)
Asset class |
FY 2023-24 |
Share (%) |
FY 2022-23 |
Share (%) |
INDIA50 Index |
24,905 |
8.13% |
1,48,374 |
4.40% |
Futures |
||||
INDIA50 Index |
2,77,912 |
90.77% |
31,88,154 |
94.61% |
Options |
||||
Gold Futures (32 tr oz) |
2,901 |
0.95% |
31,632 |
0.94% |
INRUSD Futures |
444 |
0.15% |
1,662 |
0.05% |
TOTAL |
3,06,162 |
100% |
33,69,822 |
100% |
Key statistics for India INX Derivatives by product Trading Volume
(no. of contracts or lots)
Segment |
FY 2023-24 |
Share (%) |
FY 2022-23 |
Share (%) |
INDIA50 Index |
12,42,265 |
7.95% |
81,61,507 |
4.48% |
Futures |
||||
INDIA50 Index |
1,43,02,868 |
91.53% |
17,32,97,387 |
95.14% |
Options |
||||
Gold Futures (32 tr oz) |
45,343 |
0.29% |
5,52,439 |
0.30% |
INRUSD Futures |
36,481 |
0.23% |
1,33,711 |
0.07% |
TOTAL |
1,56,26,957 |
100% |
18,21,45,044 |
100.00% |
India INX’s Primary Market Platform Global Securities Markets
India INX set up India’s 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
As on March 31, 2024: India INX’s Global Securities Market has cumulatively established around USD 75 billion of Medium-Term Notes ("MTN") and listed around USD 56 billion of debt securities including masala bonds and green bonds.
with providing the issuers a sweet deal of lower withholding tax of 9% for listing their ECB Bonds in GIFT IFSC vs 20% otherwise. The NBFC’s also sought this route and found new set of investors in GIFT IFSC, this has led to the onshoring the offshore in complete sense in the FY 2023-24.
For the period April 1, 2023, to March 31, 2024, total value of bond listed on GSM Platform is USD 5,839 Mn against the relevant Established or Updated MTN / Standalone Programme is given below:
Sr. No |
Name of Issuer |
MTN / Standalone Programme established / updated (USD Million) |
Debt Securities (Bonds) Listed (USD Million) |
No. of ISINs |
1 |
REC Limited |
3,000 |
1,169 |
5 |
2 |
Bank of Baroda |
3,000 |
300 |
1 |
3 |
International Finance Corporation |
- |
150 |
1 |
4 |
State Bank of India |
- |
1,600 |
3 |
5 |
HDFC Bank Limited |
- |
900 |
3 |
6 |
Shriram Finance Limited |
- |
750 |
2 |
7 |
NeoGrowth Credit Private Limited |
- |
4 |
1 |
8 |
IRB Infrastructure Developers Limited |
- |
540 |
2 |
9 |
Aviom India Housing Finance Private Limited |
- |
5 |
1 |
10 |
Adani Green Energy (UP) Limited, Parampujya Solar Energy Private Limited and Prayatna Developers Private Limited |
- |
409 |
2 |
11 |
Aye Finance Private Limited |
- |
12 |
1 |
Total |
6000 |
5,839 |
22 |
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, India’s 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 GA’s vision is to become the leading provider of financial services by offering centralized access to international financial markets for the benefit of India INX’s members from GIFT IFSC and resident Indians under the LRS route.
During FY 2023-24, 100% of the ESG funds raised by Indian issuers was listed on India INX’s Global Securities Market. In the current fiscal, the budget 2023 has increased attractiveness of the GIFT IFSC jurisdiction
Access to International Exchanges
India INX GA, provides a platform for trading in global markets, including Shares, ETFs, Bonds, Mutual Funds & Derivatives. It offers major exchanges of the US, Canada, UK, Europe, Australia, and Japan, covering a significant percent of the investing universe. With access to over 150 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, Trade Station Group, R. J. O’Brien Limited, KGI Securities & others to provide access to international exchanges. Further, India INX Global Access has also tied up with ICICI Bank and IndusInd Bank to bringdown the cost of remittance of funds for resident Indian investors under LRS.
Key Business Statistics for FY 2023-24 are as given below.
Business Partners Onboarded – 34 Client Accounts Opened – 708 Traded Value – USD 2.04 Billion
Traded Quantity (across multiple asset class) – 58,07,676 No. of Trades – 70,442
II. KEY REGUALTORY DEVELOPMENTS i. UNION BUDGET 2024-25
The interim budget has maintained the existing tax rates while extending income tax benefits by a year in three significant areas: startups, Indian branches of foreign banks located in GIFT City (Gandhinagar, Gujarat), and sovereign funds as well as foreign pension funds. a. Tax exemption for International Financial Services Centre units under Sections 10(4D) and 10(4F) has been prolonged by one year, now applicable until March 31, 2025. b. Noteworthy tax benefits are extended to entities within the IFSC, including: i. Derivative contracts issued by Foreign Portfolio Investors (FPIs) within GIFT City and overseen by the IFSCA are officially acknowledged as valid legal contracts. This legalization essentially permits the use of specific financial instruments, such as Participatory Notes (P-notes), allowing foreign investors to indirectly access Indian securities. ii. The Indian branches of foreign banks situated in GIFT City are now authorized to utilize these Offshore Derivative Contracts (ODCs) for investments in the Indian stock market. c. Entities in GIFT City qualify for a ten-year tax exemption out of a total of fifteen consecutive years. In the FY 2022-23 budget, the period allowed for transferring funds from other countries into GIFT City was prolonged by two years. In FY 2023-24, it has been extended even further. d. An equivalent one-year extension has been granted to airline leasing finance companies intending to relocate their base to GIFT City. e. Also, Tax exemption for Sovereign Wealth Funds and Pension Funds under Section 10(23FE) has been prolonged by one year, now applicable until March 31, 2025. f. Sovereign wealth funds and pension funds (specified funds) are eligible for a tax exemption on the interests, profits, and dividends earned by their units in GIFT City from investments made between April 2020 and March 2024. g. The tax exemption under Section 80-IAC has been extended until March 31, 2025, with a one-year extension for Startups. Startups that have had a turnover of less than 100 crore in any of the preceding financial years qualify for a three-year tax holiday at any point within the initial ten years of their establishment. Startups that were established on or before March 31, 2024, were entitled to a three-year tax holiday under Section 80-IAC of the Income Tax Act, 1961. The deadline for incorporation has now been extended by one year. Consequently, startups incorporated on or before March 31, 2025, are now eligible for this benefit. 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 August 11, 2023, the turnover during this session was USD 12.37 Billion. India INX is the first Market Infrastructure Institution (MII) in IFSC to have successfully conducted the unannounced DR live session as per IFSCA 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 %2Fguidelines-for-bcp-dr-for-miis16112022070946. pdf&Title=Guidelines%20for%20Business%20Continuity%20 Plan%20%28BCP%29%20and%20Disaster%20Recovery%20 %28DR%29%20for%20Market%20Infrastructure%20Institutions%20 %28MIIs%29&Date=16%2F11%2F2022
4. BUSINESS OPERATION REVIEW
A. MEMBERSHIP
During FY 2023-2024, 46 Deposit Based Membership ("DBM") applications were received at BSE. Since launch of new DBM scheme in April 2010, BSE has received a total of 1070 DBM applications, as on March 31, 2024.
B. CORPORATE SERVICES (LISTING)
The Corporate Services segment of BSE registered revenue growth in FY 2023-24. Annual Listing Fees (equity, debt, and MF) increased by 15% to
204 Crore compared to 177 Crore in FY 2022-23. 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 48 Crore in FY 2023-24 as compared to 42 Crore in FY 2022-23, an increase of 14% 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 company’s market data and information to all international clients. The business for sales and marketing of the company’s 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 company’s 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 company’s product offerings.
The total revenue from the sale of market data and information products was 43.14 Crore in FY 2023-24 as compared to 38.86 Crore in FY 2022-23. The increase in revenue was on account of addition of domestic as well as international customers and revision in international pricing.
D. INDEX
AIPL’s Total Revenue increased from 5,507 lacs in FY 2022-23 to
6,443 lacs in FY 2023-24, which is a growth of 21%. The Profit before Tax increased from 1,560 lacs in FY 2022-23 to 2,047 lacs in FY 2023-24, which is a growth of 31%.
In 2023-24 we saw an increase in demand for Data Subscription for S&P BSE 500, S&P BSE BANKEX and S&P BSE SENSEX.
5. SIGNIFICANT DEVELOPMENTS
A. TRADING PREFERENCE BY CLIENTS
Clients need to give an authorization to the trading member (TM) providing there preference to trade on different stock exchange for the same segment or on different segment. In order to ensure that clients are permitted to access all the stock exchanges in which the stockbrokers are registered for the same segment. SEBI has mandated TMs that w.e.f. August 01, 2023, "Trading Preferences" to be obtained from clients in a new format which captures preference for segment.
B. UPSTREAMING OF CLIENTS’ FUNDS BY TRADING MEMBERS / CLEARING MEMBERS TO CLEARING CORPORATIONS
As per the regulatory mandate dated December 12, 2023, Trading Member (TM) / Clearing Member (CM) shall upstream all the clients’ clear credit balances to CCs on End of Day (EOD) basis. Such upstreaming shall be done only in the form of either cash, lien on Fixed Deposit Receipts (FDRs) created out of clients’ funds, or pledge of units of Mutual Fund Overnight Schemes
(MFOS) created out of clients’ funds. As the bank instruments provided by clients as collateral i.e. client FDRs and Bank Guarantees (BGs) cannot be unstreamed to CCs, they shall be ineligible to be accepted as collateral in any segment of securities market with an exception to BGs provided by non-individual clients in Commodity Segment on meeting specified terms and conditions. Operational Guidelines with respect to Upstreaming of Clients funds is issued by the Exchange on January 19, 2024.
C. BANK GUARANTEES CREATED OUT OF CLIENTS’ FUNDS
Trading Members (TM) and Clearing Members (CM) pledge clients funds with Banks which in turn issue Bank Guarantees (BGs) to clearing corporations for higher amounts. This implicit leverage exposes the market and especially the clients funds to risks. To safeguard the interest of the investors, SEBI has mandated that w.e.f. May 01, 2023, no new BGs shall be created out of clients’ funds and Existing BGs created out of clients’ funds shall be wound down by September 30, 2023.
D. MOST IMPORTANT TERMS AND CONDITIONS
SEBI has prescribed a uniform document for formalizing the broker-client relationship. To bring into focus the critical aspects of the broker-client relationship and for ease of understanding of the clients, it has been decided that brokers shall inform a standard Most Important Terms and Conditions (MITC) which shall be acknowledged by the client. The standard MITC was issued by the Exchange on January 05, 2024.
6. SECONDARY MARKET POLICY DEVELOPMENTS
A. Enhanced Surveillance Measure (ESM)
Based on joint discussion with Exchanges and SEBI, the ESM framework was introduced in June 2023 for identifying highly volatile "micro-small cap" main board companies. These are companies with a market capitalization of less than 500 crores. The parameters used to shortlist securities under this framework are high-low price variation and close-to-close price variation.
B. Recently implemented Surveillance Framework for SME Segment
SME segment commenced in 2010 but the segment was excluded from all major Surveillance actions since the segment was at a nascent stage. Only two types of Surveillance Actions were applied on SME stocks i.e. Price Bands and Long Term ASM framework.
In order to address the Surveillance concerns regarding the SME segment, the extant Short Term ASM (STASM) Framework, Trade for Trade Framework and Graded Surveillance (GSM) Framework applicable for main board companies has been extended to Small and Medium Enterprises (SME) stocks subject to certain changes.
7. REGULATORY
A. SURVEILLANCE & INVESTIGATION I. Statistics for FY 2023-24
As part of market monitoring activities during FY 2023-2024, 41,578 surveillance alerts were generated, of which 755 alerts were taken up for snap investigations. Subsequently till March 31, 2024, 203 cases were taken up for preliminary/ detailed investigations, of which 144 preliminary/ investigation reports have been forwarded to SEBI.
II. Broker Supervision
Broker Supervision 764 inspections of members were conducted during FY 2023-24, which include 700 routine inspections. Further, 64 out of 764 member inspections were jointly conducted with SEBI, other Exchanges and Depositories during FY 2023-24 which was selected by SEBI for joint inspection for the FY 2023-24.
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). SEBI, as a part of enhancing investor experience had initiated opening of additional Investor Service Centres across the country by the Exchanges. It was targeted to have in place 50 such Common 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 and are fully functional.
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.
Online Dispute Resolution
Effective August 16, 2023, SEBI has introduced the Online Dispute Resolution ("ODR") mechanism, wherein the Investor Grievance Redressal Mechanism and Arbitration Mechanism administered by the Company has been replaced by the ODR mechanism. In the ODR mechanism, investors can lodge their disputes against SEBI registered intermediaries for resolution through the Conciliation and Arbitration process under the ODR mechanism.
Hence, the Company is now administering the Conciliation and Arbitration matters against other intermediaries like Mutual Funds and Registrar and Transfer Agents in addition to those against the Trading Members and Listed Companies which were being handled by the Company. For lodging the disputes, the Company, along with other stock exchanges and depositories, has put in place a common portal, viz., SMARTODR. in. After the disputes are lodged on the SMARTODR portal, the disputes are allocated to the 7 MIIs, viz. BSE, NSE, MSE, MCX, NCDEX, CDSL and NSDL in accordance with the provisions of the SEBI circular. Post lodging of the disputes on the portal, the same are resolved in accordance with the provisions of the SEBI circular in a timebound manner.
As of March 31, 2024, the Company had received 746 disputes of which 653 disputes were resolved / closed prior to reference to ODR Institute whereas 74 disputes were referred to ODR Institute for resolution.
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 Financial Results, Annual Secretarial Compliance Report, Annual Reports, have been updated 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 2023-24, the Exchange received 16,83,768 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 of certain additional disclosures under Regulation 30 of Listing Regulations along with updates to already available XBRL utilities, were introduced in XBRL. Further, the Company is working with other MIIs to introduce 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 1383 companies from April 1, 2016, till March 31, 2024, which have been suspended for a period of more than 6 months for non-compliance with the erstwhile Listing Agreement/ Listing Regulations/ other reasons 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 them 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 Asia’s 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 world’s 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 India’s 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.
BSE advocates the use of Licensed and Supported Open-source products and in line with this thought, BSE has engaged with various reputed OEMs such as Redhat, Oracle for support of their Open-Source products.
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.
BSE has taken up an ambitious task of revamping the Data warehouse technology to support a Data Lake/Lake house architecture. It is envisaged that all T-1 and earlier data shall be sourced from here.
B. OPPORTUNITIES
I. Gold Spot Exchange Domestic Zone
The Government of India in the budget of FY 2021-22 had 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 September 28, 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.
II. Power Exchange
India’s power demand is expected to grow with the government’s 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 intra-state 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 May 12, 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 July 6, 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 22.61% in the proposed power exchange through its wholly owned subsidiary, BSE Investments Limited.
III. Asia Index Private Limited ("AIPL")
India has been at the forefront of the global rise in passive investment. Assets under Management (AUM) of Exchange Traded Funds (ETFs) in India have seen a remarkable growth from an AUM of Rs 351 crore in 2014 to Rs 6,27,244 crore as of March 31, 2024, signalling an increasing interest for passive investing. They have become popular due to varied reasons including passive managers’ lower costs compared to those of their active peers, regulatory developments, such as India’s capital markets regulator SEBI reclassifying mutual fund schemes or plans to exclude equity-oriented passive funds from the 25% investment cap in group companies, and inflows from Employees Provident Fund Organisation (EPFO). In addition to the above measures, ETFs have also appealed to a broad spectrum of new investors, who prefer the advantage of low-cost option for engaging in equity markets.
In this regard, on May 31, 2024, BSE completed the acquisition of S&P Dow Jones Indices’ entire equity stake in AIPL making AIPL a wholly owned subsidiary of BSE. AIPL provides index and index related services to stock exchanges, asset management companies, insurance companies, investment banks and other financial institutions across the globe. Apart from being used for the launch of index linked funds/ ETFs and trading of index based derivative contracts, the indices are also being used by the AMCs for benchmarking the performance of their active fund schemes. AIPL calculates, publishes, and maintains a diverse family of indices, which will be an important area of focus in the coming year, given the growth of passive investments in India. As investors increasingly gravitate towards passive products, which have lower expense ratios than active funds, sell-side firms will increasingly have to rely on automation to cut operational costs and remain competitive.
9. THREATS
A. INDUSTRY ACTIVITY LEVELS DECLINE
The Company’s 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 Company’s efforts can influence these activity levels, many factors that can have an impact on these factors 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 Company’s 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, associated fees and levies, 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. 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: l 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. l 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. l 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 user’s computer activity and harvest personal information.
- Viruses - A computer virus is a piece of malicious code that is installed without the user’s 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. l 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.
l 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. l 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. l 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. l 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. l Con_dential 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. l 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 via Global Access
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. Strengthen our position as the Exchange of choice and expand cross-border reach.
India INX intends to strengthen its position as a preferred exchange in GIFT city and expand its cross-border reach by forming strategic alliances.
IV. 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’. India INX and LuxSE shall collaborate on educational and assistance services to promote and facilitate sustainable finance industry in India by leveraging LuxSE’s LGX Academy and LGX Assistance Services. LGX Academy delivers online sustainable finance training and has delivered onsite training around the globe in emerging markets. We are working with a number of reputed partners (IFC, UNESCAP, etc.) across the globe to deliver capacity building projects in emerging markets to both public and private sectors players. The same was also discussed in the IFSCA delegation visit to Luxembourg. 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.
V. 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. With direct listing guidelines been enabled by the government and regulators, the Exchange is also gearing up to on board equity offerings by Foreign and Indian issuers.
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. These initiatives have yielded us positive results, evident in our increasing market share in the equity futures and options, with Sensex and Bankex contracts. With the introduction of Single stock derivatives from July 1, 2024, and other unique products in Index derivatives, BSE has become the world’s second largest exchange in a short span, since the introduction of futures and options contracts on Sensex and Bankex with a differentiated expiry.
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 a 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 and implemented controls and solutions to enable users work 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 Company’s objective and to improve 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.
- Enhance 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 continues to play a significant role in the securities market of India and as a first line regulator is responsible for ensuring orderly functioning of the securities market. BSE has always strived for the safety and vibrancy of the securities markets and continues to work toward further enhancing the same. BSE has been collaboratively working with other MIIs under the guidance of SEBI in various initiatives aimed at making our marketplaces safer and also in building of efficient market eco system. Besides this, BSE strives to ensure compliance with the regulatory obligations prescribed by SEBI and other regulators through implementation of regulatory measures, technology initiatives and strengthening the resources. BSE is also focused on simplifying the compliance burden on various stakeholders without compromising on essence or principles of compliance. BSE continues to put in place various automation initiatives to simplify compliance as well as effectively monitor and enforce the regulatory framework. Creating investor awareness has been key focus for BSE and to achieve the same BSE has been conducting webinars, seminars, and training programs for investors free of cost. BSE has also used the digital space for creating awareness with creation of investor awareness series involving "Mr. Mane", which has 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 and also shared with the Statutory Auditors for their information.
The internal audit scope is prepared after considering all interdepartmental policies and procedures, any regulatory or statutory changes and critical functions of the organization and then placed before the Audit Committee for their approval.
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 the 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, we believe that a skilled & motivated workforce can drive innovation, enhance operational efficiency which allows us to achieve organizational goals. 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. With strengthening leadership across all functions, we are reviewing and revising our systems, policies and processes to ensure that our organizational structures facilitate inclusiveness and accountability.
Diversity & Inclusion are imperative for fostering innovation & creating an equitable organization. By ensuring equal opportunities & fostering a culture of respect, BSE has unlocked its potential of its workforce and drive positive change. At an organizational level, upwards of 30% of our workforce is woman workforce.
As of March 31, 2024, the Company had 420 management cadre employees and 101 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:
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 effort. 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 follow an integrated performance management approach to align individuals’ performance towards organizational goals. BSE’s focus has been on further strengthening the competencies identified and subsequently we organized training programs with a focused development of these identified competencies. During FY 2023-24, BSE conducted 9 training programs where approx. 320+ employees were trained. Some of the behavioral training programs conducted were Personal Effectiveness, Decision Making, Time Management, Stress Management, and some of the Technical Programs were Advanced Excel, Power Point, etc.
We have also encouraged & engaged our employees in developing their technical skills by taking up external certification like the Google Business Intelligence & IBM Data Analyst which focus on Data Analysis, Data Mining
& Visualization, Data Modelling, Business Intelligence, Dashboarding & Reporting etc. This decision has been widely accepted and the employees are working towards getting themselves certified on the above courses.
C. EMPLOYEE ENGAGEMENT:
BSE’s engaged workforce is motivated and is ready to contribute their best efforts leading to increased productivity & greater job satisfaction. Our workforce collaborates effectively with colleagues and demonstrates a strong sense of ownership & accountability towards the organization & society. Some of our Employee Engagement events like Garba Celebration, Ganesh Pooja, and Diwali Celebration were attended by almost 1250+ employees including their family members.
BSE’s focus has been on employees’ mental wellness and physical fitness. Organizing sports events like Cricket & Badminton tournaments, wellness programs both in an offline & online platform have been one of the focus areas in the FY 2023-24. Donation drive of groceries, stationery, toys, and other usable items was done across 6 NGOs by BSE covering old age home, shelter home for children, Cancer Treatment home etc. Employees across the group in large numbers participated in our beach cleaning drive to give our beaches a new life and our commitment towards a healthier planet.
13. BSE’S CONTRIBUTION IN THE ESG AND SUSTAINABILITY SPACE
BSE and UN Women conducted the campaign FinEmpower, a yearlong joint capacity building program to empower women towards financial security. In May 2023 the event was conducted at Bangalore with Ubuntu Consortium and Niti Ayog. In October 2023, another event was conducted at Hyderabad with WE Hub Government of Telangana, Niti
Ayog, CII IWN, CO-WE, HeadStart, Co-Karma. BSE further organised this initiative in February 2024 at Goa with Goa Startup Mission and Go Womania.
The Exchange also facilitates corporates to raise funds through issue of Green Bonds as an option to raise funds. Ahmedabad Municipal Corporation and Vadodara Municipal Corporation during the year raised 300 Crore through issue of Green Bonds using BSE EBP Platform.
The first issue of AAA-Rated Five-Year Social Bonds by NABARD of approx. 1040.50 Cr happened in September 2023 through BSE’s platform.
The "International Finance Conclave on Role of Financial Markets in sustainable growth through ESG Investments" was organized by Anjuman-I-Islams Allana Institute of Management Studies in association with BSE Ltd, on November 09, 2023.
During the year BSE conducted 2683 Investor Awareness Programs across different locations through appointed resources.
On March 7, 2024, BSE hosted the 10th Ring the bell for Gender Equality primarily in collaboration with UN Women, themed: "Invest in women: Accelerate Progress". 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.
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 2,746 lakh as at March 31, 2024 (2,748 lakh as at March 31, 2023) represented by 13,73,26,359 equity shares of 2 each (13,74,12,891 equity shares of 2 each as at March 31, 2023). Out of which, 13,53,76,359 Equity Shares of 2/- each was subscribed, and paid-up equity share capital as on March 31, 2024.
During the year, the Company bought back 86,532 Equity Shares at
1,080/- per Equity Share resulting in a cash outflow of 935 crores (excluding expenses towards buyback). Accordingly, the total paid-up share capital of the Company was reduced by 2 Lakh.
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
Sr. No. |
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
Standalone: |
|||
a) |
Share application money pending allotment |
0^ |
0^ |
b) |
Capital redemption reserve |
2 |
0 |
Total |
2 |
0^ |
|
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, 2024 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, 2024 was 41,406 Lakh as compared to 42,824 Lakh as on March 31, 2023 on a standalone basis and 42,461 Lakh as at March 31, 2024 as compared to 43,879 Lakh as at March 31, 2023 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, 2024 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, 2024 was 1,63,572 Lakh, as compared to
1,04,658 Lakh in the previous year. Retained Earnings as at March 31, 2024 includes balance of 324 Lakh ( 257 Lakh as on March 31, 2023) 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, 2024 was 2,08,341 Lakh as compared to 1,46,812 Lakh in the previous year. Retained Earnings as at March 31, 2024 includes balance of 2,766 Lakh ( 2,581 Lakh as on March 31, 2023) 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 Lakhs)
( in Lakhs)
Sr. No. |
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
Consolidated |
|||
a) |
Share application money pending allotment |
0^ |
0^ |
b) |
Liquidity enhancement scheme (LES) reserve |
9 |
6 |
c) |
Capital redemption reserve |
2 |
0 |
Total |
11 |
6 |
|
^ less than 50,000/-
Capital redemption reserve: Capital redemption reserve of 2 Lakh (representing the nominal value of the shares bought back and extinguished) has been created from balance in retained earnings on account of buyback of shares.
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 646 Lakh and incurred an expense of 643 Lakh during the year ended March 31, 2024, accordingly LES reserve balance as on March 31, 2024, is 9 Lakh ( as on March 31, 2023: 6 Lakh). The LES reserve as on March 31, 2024 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 Lakhs)
Particulars |
As at March 31, 2023 |
Opening Balance |
8 |
Add: Transfer from Retained Earning |
1,354 |
Less: LES expenditure incurred during the year |
1,356 |
Closing Balance |
6 |
III. Other Comprehensive Income:
( in Lakhs)
Sr. Particulars No. |
As at March 31, 2023 |
Standalone: |
|
a) Remeasurements gain / (loss) on the defined employee benefit plans |
257 |
Total |
257 |
( in Lakhs)
Sr. Particulars No. |
As at March 31, 2023 |
Consolidated |
|
a) Remeasurements gain / (loss) on the defined employee benefit plans |
(600) |
b) Foreign Currency Translation Reserve |
3,181 |
Total |
2,581 |
Total Equity: The Total Equity attributable to the shareholders of the Company on a consolidated basis increased to 3,30,229 Lakh as on March 31, 2024 from 2,70,115 Lakh as on March 31, 2023. The book value per equity shares on consolidated basis increased to 244 as at March 31, 2024 as compared to 199 as at March 31, 2023.
The Total Equity on standalone basis increased to 2,84,396 Lakh as on March 31, 2024 from 2,26,900 Lakh as on March 31, 2023. The book value per equity shares on standalone basis increased to 210 as at March 31, 2024 as compared to 167 as at March 31, 2023.
Non-Controlling Interest: Investors had taken minority stake in India INX; India ICC, due to which non-controlling interest generated as at March 31, 2024 was
15,237 Lakh as compared to 12,784 Lakh as on March 31, 2023.
Core Settlement Guarantee Fund: On a consolidated basis, the balance of Core Settlement Guarantee Fund as at March 31, 2024 increased by
19,732 Lakh to 95,496 Lakh, as compared to 75,764 Lakh as at March 31, 2023.
B. APPLICATION OF FUNDS:
I. Property Plant & Equipment and Investment Property: Additions to Gross Block - Standalone: During the year, the Company capitalised 9,568 Lakh to the gross block comprising of 371 Lakh in Plant and Equipments, 204 Lakh in Electrical Installations, 8,778 Lakh in Computer Equipments, 13 Lakh in Furniture and Fixtures, 202 Lakh in Office Equipments.
During the previous year, the Company capitalised 7,761 Lakh to the gross block comprising of 157 Lakh in Plant and Equipments, 202 Lakh in Electrical Installations, 7051 Lakh in Computer Equipments, 78 Lakh in Furniture and Fixtures and 200 Lakh in Office Equipments and
73 Lakh in Office Equipments.
Additions to Gross Block - Consolidated: During the year, the Company capitalised 11,004 Lakh to the gross block comprising 21 Lakh in Buildings, 371 Lakh in Plant and Equipments, 204 Lakh in Electrical Installations, 10,179 Lakh in Computer Equipments, 15 Lakh in Furniture and Fixtures, 214 Lakh in Office Equipments.
During the previous year, the Company capitalised 9,457 Lakh to the gross block comprising 9 Lakh in Buildings, 157 Lakh in Plant and
Equipment’s, 203 Lakh in Electrical Installations, 8,722 Lakh in Computer Equipment’s, 82 Lakh in Furniture and Fixtures and 211 Lakh in Office Equipments and 73 Lakh in Motor Vehicles.
Deductions from Gross Block - Standalone: During the year, the Company disposed of various assets with a gross block of 179 Lakh comprising of 7 Lakh in Plant and Equipment’s, 8 Lakh in Electrical Installations,
148 Lakh in Computer Equipments, 16 Lakh in Office Equipments.
During the previous 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.
Deductions from Gross Block - Consolidated: During the year the Company disposed of various assets with a gross block of 190 Lakh comprising of 7 Lakh in Plant and Equipments, 9 Lakh in Electrical Installations, 149 Lakh in Computer Equipments, 6 Lakh in Furniture and Fixtures, 19 Lakh in Office Equipment.
During the previous 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, 73 Lakh in Computer Equipments, 9 Lakh in Furniture and Fixtures and 70 Lakh in Office Equipments and 28 Lakh in Motor Vehicles.
Other Intangible Assets - Standalone: During the year, the Company capitalised 964 Lakh in Software as compared to 3,768 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, 2024 as compared to previous year. During the year, the Company capitalised 1,844 Lakh in Software as compared to 5,562 Lakh during previous year.
Capital Work in Progress and Intangible under development (CWIP) - Standalone: The carrying value of CWIP was 1,448 Lakh as at March 31, 2024 as compared to 174 Lakh as at March 31, 2023.
Capital Work in Progress and Intangible under development (CWIP)
- Consolidated: The carrying value of CWIP was 1,451 Lakh as at March 31, 2024 as compared to 193 Lakh as at March 31, 2023. 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 Lakhs)
Sr. No. |
Particulars |
As at March 31, 2024 As at March 31, 2023 |
|
Standalone: |
|||
a) |
Towards Tangible assets |
6,307 |
4,006 |
b) |
Towards Intangible assets |
1,008 |
186 |
Total |
7,315 |
4,192 |
|
( in Lakhs)
Sr. No. |
Particulars |
As at March 31, 2024 As at March 31, 2023 |
|
Consolidated: |
|||
a) |
Towards Tangible assets |
7,713 |
4,380 |
b) |
Towards Intangible assets |
1,008 |
208 |
c) |
Towards Strategic Investments |
72 |
72 |
Total |
8,793 |
4,660 |
|
II. Financial Assets: Investments:
Investment in Subsidiaries and associates:
( in Lakhs)
Sr. No. |
Particulars |
As at March 31, 2024 As at March 31, 2023 |
|
Standalone: |
|||
a) |
Investment in Subsidiaries |
81,309 |
72,605 |
b) |
Investment in Associates |
3,543 |
3,543 |
c) |
Asset classified as held for sale |
- |
1,180 |
Total |
84,852 |
77,328 |
|
Consolidated: |
|||
a) |
Investment in Subsidiaries |
- |
- |
b) |
Investment in Associates |
46,041 |
41,038 |
c) |
Asset classified as held for sale |
- |
10,935 |
Total |
46,041 |
51,973 |
|
During the year, the company infused further equity into the following subsidiaries: ( in Lakhs)
Sr. No |
Name of Subsidiary |
Amount of additional investment during FY 2023-24 |
1 |
BSE Investments Limited |
3,000 |
2 |
India International Exchange (IFSC) Limited |
2,236 |
3 |
India International Clearing Corporation (IFSC) Limited |
3,468 |
Total investments in subsidiaries during FY 2023-24 |
8,704 |
During the year, the company received dividend from below mentioned subsidiary companies: ( in Lakhs)
Sr. No |
Name of Subsidiary |
FY 2023-24 |
1 |
Indian Clearing Corporation Limited |
3,000 |
2 |
BSE Institute Limited |
1,500 |
3 |
BSE Technologies Private Limited |
1,000 |
Total dividends from subsidiary companies during FY 2023-24 |
5,500 |
The details of share of profits / loss of associates:
( in Lakhs)
Sr. No |
Name of Associate |
Share of Profit / (Loss) added during FY 2023-24 |
Share of Profit / (Loss) added during FY 2022-23 |
1. |
Asia Index Private Limited |
769 |
543 |
2. |
CDSL Commodity Repository Limited |
(14) |
(26) |
3. |
BSE EBIX Insuretech Private Limited |
(32) |
3 |
4. |
BSE EBIX Insurance Broking Private Limited |
15 |
(119) |
5. |
Hindustan Power Exchange Limited (Formerly Pranurja Solutions Limited) |
337 |
(226) |
6. |
India International Bullion Holding IFSC Limited |
(102) |
(310) |
7. |
Central Depository Services (India) Limited |
6,253 |
5,236 |
8. |
BSE E-Agricultural Markets Limited |
(48) |
- |
Total |
7,178 |
5,101 |
The details of fresh investments made in Associates by Subsidiaries of BSE:
Sr. No. |
Particulars |
FY 24 |
FY 23 |
Consolidated |
|||
a) |
Fresh Investments by India INX in India International Bullion Holding IFSC Limited |
- |
598 |
b) |
Fresh Investments by India ICC in India International Bullion Holding IFSC Limited |
- |
598 |
Total |
- |
1,195 |
|
The details of dividend from Associates eliminated from Investments:
Sr. No. |
Particulars |
FY 24 |
FY 23 |
Consolidated |
|||
a) |
Dividend received from Central |
2,508 |
3,135 |
Depository Services (India) Limited |
|||
Total |
2,508 |
3,135 |
|
Other Investments:
( in Lakhs)
Sr. No. |
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
Standalone: |
|||
i. |
Bonds, Non-convertible debentures and State development loans |
1,06,734 |
49,350 |
ii. |
Exchange traded funds through asset management company |
4,122 |
4,735 |
iii. |
Growth oriented debt schemes of mutual funds |
42,263 |
24,893 |
iv. |
Less: Provision for diminution |
(1,611) |
(1,654) |
v. |
Earmarked Investments |
2,505 |
2,719 |
vi. |
Accrued Interest |
3,395 |
1,074 |
Total |
1,57,408 |
81,117 |
|
Consolidated: |
|||
i. |
Investment in Equity |
4,092 |
1,092 |
ii. |
Bonds, Non-convertible debentures and State development loans and Government Securities |
1,13,172 |
52,468 |
iii. |
Exchange traded funds through asset management company |
4,122 |
4,735 |
iv. |
Dividend oriented debt schemes of mutual funds |
- |
2,914 |
v. |
Growth oriented debt schemes of mutual funds |
51,365 |
30,234 |
vi. |
Less: Provision for diminution |
(1,611) |
(1,654) |
vii. |
Earmarked Investments |
18,166 |
13,152 |
viii. |
Interest accrued |
3,640 |
1,366 |
Total |
1,92,946 |
1,04,307 |
|
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
11,919 Lakh as at March 31, 2024 as compared to 4,679 Lakh as at March 31, 2023. Average collection period was 29.67 days as compared to 30.23 days in the previous year.
On a consolidated basis, trade receivables amounted to 21,087 Lakh as at March 31, 2024 as compared to 9,089 Lakh as at March 31, 2023. Average collection period was 39.62 days as compared to 34.52 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 Lakhs)
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
Standalone: |
||
Opening Balance of Impairment Loss |
3,164 |
4,501 |
Additional Provision / (Reversal) during the Year |
(607) |
(1,337) |
Closing Balance of Impairment Loss |
2,557 |
3,164 |
Consolidated: |
||
Opening Balance of Impairment Loss |
3,474 |
4,805 |
Additional Provision / (Reversal) during the Year |
(633) |
(1,331) |
Closing Balance of Impairment Loss |
2,841 |
3,474 |
Cash and Cash equivalents and other bank balances: On a standalone basis, balance in current accounts and deposit accounts including accrued interest stood at 99,086 Lakh as at March 31, 2024, as compared to
95,057 Lakh as at March 31, 2023. On a consolidated basis, balance in current accounts and deposit accounts including accrued interest stood at
4,46,285 Lakh as at March 31, 2024 as compared to 3,04,957 Lakh as at March 31, 2023.
( in Lakhs)
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
Standalone: |
||
In Current Accounts – Own |
357 |
256 |
In Deposit Accounts – Own including accrued |
56,586 |
65,468 |
Interest |
||
Total Cash and Bank Balance (Own) |
56,943 |
65,724 |
( in Lakhs)
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
In Current Accounts – Earmarked |
3,106 |
2,400 |
In Deposit Accounts – Earmarked including accrued Interest |
39,037 |
26,933 |
Total Cash and Bank Balance (Earmarked) |
42,143 |
29,333 |
Total Cash and Bank Balance |
99,086 |
95,057 |
Consolidated: |
||
In Current Accounts – Own |
2,600 |
1,216 |
In Deposit Accounts – Own including Interest accrued |
84,445 |
81,109 |
Total Cash and Bank Balance (Own) |
87,045 |
82,325 |
In Current Accounts – Earmarked |
46,900 |
13,425 |
In Deposit Accounts – Earmarked including |
3,12,340 |
2,09,207 |
Interest accrued |
||
Total Cash and Bank Balance (Earmarked) |
3,59,240 |
2,22,632 |
Total Cash and Bank Balance |
4,46,285 |
3,04,957 |
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 Lakhs)
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
Standalone: |
||
Deposit with public bodies and others |
209 |
206 |
Loan to staff |
44 |
50 |
Bank deposits incl. accrued interest (> 1Year maturity) – Own |
26,618 |
7,345 |
Bank deposits incl. accrued interest (> 1Year maturity) – Earmarked |
6,469 |
9,490 |
Due from subsidiaries |
60 |
73 |
Receivable from portfolio management account |
1 |
- |
Deposits made under protest for property tax and others |
9 |
9 |
Total |
33,410 |
17,173 |
Consolidated: |
||
Deposit with public bodies and others |
361 |
378 |
Loan to staff |
49 |
63 |
( in Lakhs)
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
Expenses recoverable from subsidiaries |
1 |
47 |
Receivable from portfolio management account |
1 |
- |
Bank deposits incl accrued interest (> 1Year maturity) - Own |
54,483 |
20,328 |
Bank deposits incl accrued interest (> 1Year maturity) - Earmarked |
1,30,009 |
54,450 |
Receivable towards incentive scheme |
- |
1 |
Settlement Obligation Receivable |
281 |
1,229 |
Deposits made under protest for property tax and others |
9 |
9 |
Total |
1,85,194 |
76,505 |
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 Lakhs)
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
Standalone: |
||
Gratuity Asset (Net) |
238 |
306 |
Prepaid Expenses |
441 |
365 |
Advance to Creditors |
1,043 |
565 |
Input Credit Receivable |
1,119 |
640 |
Total |
2,841 |
1,876 |
Consolidated: |
||
Gratuity Asset (Net) |
252 |
319 |
Prepaid Expenses |
2,181 |
1,475 |
Advances Recoverable in Cash or in Kind or for value to be received |
139 |
162 |
Advance to Creditors |
1,138 |
581 |
Core SGF |
282 |
406 |
Input Tax Credit Receivable |
1,998 |
1,206 |
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 Lakhs)
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
Standalone: |
||
Trade Payables – MSME |
4 |
2 |
Trade Payables – Others |
15,820 |
5,882 |
Total |
15,824 |
5,884 |
Consolidated: |
||
Trade Payables – MSME |
119 |
65 |
Trade Payables – Others |
18,936 |
7,975 |
Total |
19,055 |
8,040 |
Other Financial Liabilities:
( in Lakhs)
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
Standalone: |
||
Accrued employee benefit expenses |
2,739 |
3,711 |
Deposits received |
15,710 |
15,201 |
Unpaid dividends |
188 |
176 |
Due to subsidiaries |
3,329 |
2,316 |
Payables on purchase of fixed assets |
961 |
- |
Earmarked Liabilities |
41,386 |
32,461 |
Total |
64,313 |
53,865 |
Consolidated: |
||
Accrued employee benefit expenses |
3,877 |
4,684 |
Deposits and margin received |
17,103 |
16,705 |
Unpaid dividends |
188 |
176 |
Payables on purchase of fixed assets |
961 |
1 |
Lease obligations |
2 |
2 |
Earmarked Liabilities |
41,386 |
32,461 |
Clearing and Settlement |
3,58,165 |
1,49,802 |
Total |
4,21,682 |
2,03,831 |
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 Lakhs)
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
Standalone: |
||
Provision for SEBI regulatory fee |
16,977 |
- |
Compensated Absence |
1,107 |
1,051 |
Total |
18,084 |
1,051 |
Consolidated: |
||
Provision for SEBI regulatory fee |
16,977 |
- |
Provision for Gratuity |
288 |
383 |
Compensated Absence |
1,867 |
1,818 |
Total |
19,132 |
2,201 |
The provision for Gratuity and compensated absences are made based on actuarial valuation reports.
# Please refer note 45 of Standalone notes to the accounts for details Pertaining to provision for SEBI Regulatory fee.
Income Tax Assets and Liabilities:
( in Lakhs)
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
Standalone: |
||
Deferred Tax Assets – A |
5,720 |
6,102 |
Deferred Tax Liabilities – B |
585 |
286 |
Deferred Tax Net (A-B) |
5,135 |
5,816 |
Income Tax Assets – C |
7,861 |
10,868 |
Income Tax Liabilities – D |
1,461 |
1,626 |
Income Tax Net (C-D) |
6,400 |
9,242 |
Consolidated: |
||
Deferred Tax Assets – E |
6,534 |
8,813 |
Deferred Tax Liabilities – F |
657 |
358 |
Deferred Tax Net (E-F) |
5,877 |
8,455 |
( in Lakhs)
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
Income Tax Assets – G |
11,622 |
14,520 |
Income Tax Liabilities – H |
1,496 |
1,974 |
Income Tax Net (G-H) |
10,126 |
12,546 |
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 Lakhs)
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
Standalone: |
||
Income received in advance |
862 |
220 |
Advance from customers |
3,486 |
2,932 |
Statutory remittances |
25,947 |
9,827 |
Other liabilities |
9,045 |
8,219 |
Total |
39,340 |
21,198 |
Consolidated: |
||
Income received in advance |
2,142 |
1,614 |
Advance from customers |
3,518 |
2,940 |
Statutory remittances |
27,935 |
11,829 |
Other liabilities |
9,045 |
8,220 |
Unamortised portion of Capital Subsidy |
17 |
33 |
Contribution payable to IPF |
39 |
36 |
Total |
42,696 |
24,672 |
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 Lakhs)
Particulars |
FY 2023-24 |
FY 2022-23 |
Variance (%) |
A Income |
|||
Securities services |
62,861 |
27,036 |
133% |
Services to corporates |
34,923 |
29,036 |
20% |
Data dissemination fees |
4,314 |
3,886 |
11% |
Revenue from operations |
1,02,098 |
59,958 |
70% |
Investment income |
23,676 |
10,979 |
116% |
Other income |
3,406 |
3,302 |
3% |
Total income |
1,29,180 |
74,239 |
74% |
B Expenses |
|||
Employee benefits expense |
10,993 |
9,281 |
18% |
Computer technology related expenses |
16,349 |
15,093 |
8% |
Clearing and settlement expenses |
20,655 |
6,172 |
235% |
Provision for SEBI Regulatory |
16,977 |
Nil |
100% |
Fee |
|||
Administration and other expenses |
15,256 |
12,758 |
20% |
Liquidity enhancement scheme expenses |
- |
2,277 |
(100%) |
Total expenses |
80,230 |
45,581 |
76% |
C EBITDA |
48,950 |
28,658 |
71% |
EBITDA Margin |
38% |
39% |
|
Depreciation and amortisation expense |
7,503 |
4,898 |
53% |
D Profit before exceptional item and tax |
41,447 |
23,760 |
74% |
Exceptional items |
50,417 |
- |
|
E Profit before tax |
91,864 |
23,760 |
287% |
Tax expenses |
16,525 |
7,069 |
134% |
F Net profit for the year |
75,339 |
16,691 |
351% |
Net margin |
58% |
22% |
|
Net margin excluding exceptional item |
22% |
22% |
|
Effective tax rate |
18% |
30% |
|
Effective tax rate excluding exceptional item |
30% |
30% |
|
G Other comprehensive income |
67 |
44 |
52% |
H Total comprehensive income for the year |
75,406 |
16,735 |
351% |
Standalone Income:
( in Lakhs)
Particulars |
FY 2023-24 |
% of Total Income |
% Growth |
FY 2022-23 |
% of Total Income |
Securities Services |
62,861 |
49% |
133% |
27,036 |
36% |
Services to Corporates |
34,923 |
27% |
20% |
29,036 |
39% |
Data Dissemination Fees |
4,314 |
3% |
11% |
3,886 |
5% |
Investment Income |
23,676 |
18% |
116% |
10,979 |
15% |
Other Income |
3,406 |
3% |
3% |
3,302 |
4% |
Total Income |
1,29,180 |
100% |
74% |
74,239 |
100% |
The Total Income for the year was higher by 54,941 Lakh at 1,29,180 Lakh (up 74%) as compared to 74,239 lakh in FY 23. The income from securities services is increased by 35,825 Lakh (up 133%) to 62,861 Lakh in FY 24 as compared to 27,036 Lakh in FY 23. This is mainly due to increase in income from equity derivatives segment by 17,618 Lakh, equity cash segment by 10,736 Lakh and Mutual Fund segment by 4,946 Lakh. The increase in transaction charges is mainly due to increase in average daily turnover in equity cash segment from 4,132 crore in FY 23 to 6,622 crore in FY 24, increase in average daily premium turnover in equity derivatives segment from 4 crore in FY 23 to 2,133 crore in FY 24 and increase in average daily number of chargeable orders received for mutual fund segment from from 8.34 Lakh in FY 23 to 13.38 Lakh in FY 24. The investment income for FY24 has increased by 12,697 Lakh (up 116%) from 10,979 Lakh to 23,676 Lakh. The income from services to corporate for FY 24 has increased by 5,887 Lakh (up 20%) from 29,036 Lakh in FY 23 to 34,923 Lakh. The increase is mainly due to increase in listing fees by 4,496 Lakh (up 19%) from 23,513 Lakh in FY 23 to 28,009 Lakh in FY 24. The income from data dissemination for FY 24 has increased by 428 Lakh (up 11%) from 3,886 Lakh to
4,314 Lakh.
Standalone Expenses:
( in Lakhs)
Particulars |
FY 2023-24 |
% of Total Income |
% Growth |
FY 2022-23 |
% of Total Income |
Employee Benefit |
10,993 |
9% |
18% |
9,281 |
13% |
Expenses |
|||||
Computer Technology |
16,349 |
13% |
7% |
15,093 |
20% |
Related Expenses |
|||||
Regulatory Fees |
19,226 |
15% |
876% |
1,969 |
3% |
Legal Fees |
372 |
0% |
(15%) |
440 |
1% |
Professional Fees |
1,662 |
1% |
32% |
1,255 |
2% |
Electricity Charges |
1,668 |
1% |
50% |
1,109 |
1% |
Repairs & Maintenance |
1,339 |
1% |
12% |
1,200 |
2% |
( in Lakhs)
Particulars |
FY 2023-24 |
% of Total Income |
% Growth |
FY 2022-23 |
% of Total Income |
Travelling Expenses |
306 |
0% |
11% |
276 |
0% |
Operating lease expenses |
102 |
0% |
28% |
80 |
0% |
Impairment loss allowance on trade receivable and financial assets |
56 |
0% |
247% |
(38) |
0% |
Clearing house expenses |
20,655 |
16% |
235% |
6,172 |
8% |
Others |
7,502 |
6% |
16% |
6,467 |
9% |
Depreciation and finance costs |
7,503 |
6% |
53% |
4,898 |
7% |
Liquidity enhancement scheme expenses |
- |
- |
(100%) |
2,277 |
3% |
Total |
87,733 |
68% |
74% |
50,479 |
68% |
The Total Expenses for the year were higher by 37,254 Lakh from
50,479 Lakh (up 74%) to 87,733 Lakh. The increase in expenses is largely on account of increase in clearing and settlement expenses by
14,483 Lakh (up 20%) from 6,172 Lakh in FY 23 to 20,655 Lakh in FY 24, depreciation and amortisation cost by 2,605 Lakh (up 53%) from 4,898 Lakh in FY 23 to 7,503 Lakh in FY 24, employee cost by
1,712 Lakh (up 18%) from 9,281 Lakh in FY 23 to 10,993 Lakh in FY 24, Computer Technology Related Expenses by 1,256 Lakh (up 8%) from 15,093 Lakh in FY 23 to 16,349 Lakh in FY 24, regulatory fees by
17,257 Lakh (up 876%) from 1,969 Lakh in FY 23 to 19,226 Lakh in FY 24 and electricity charges by 559 Lakh (up 50%) from 1,109 Lakh in FY 23 to 1,668 Lakh in FY 24.
Consolidated Performance:
( in Lakhs)
Particulars |
FY 2023-24 |
FY 2022-23 |
Variance (%) |
A. Income |
|||
- Securities services |
94,858 |
43,561 |
118% |
- Services to corporate |
34,968 |
29,042 |
20% |
- Data dissemination fees |
4,314 |
3,886 |
11% |
- Training institute |
1,909 |
1,875 |
2% |
- IT Services |
2,954 |
3,189 |
(7%) |
Revenue from operations |
1,39,003 |
81,553 |
70% |
- Investment income |
20,247 |
10,931 |
85% |
- Other income |
2,540 |
2,910 |
(13%) |
Total income |
1,61,790 |
95,394 |
70% |
( in Lakhs)
Particulars |
FY 2023-24 |
FY 2022-23 |
Variance (%) |
B. Expenses |
|||
- Employee benefit expense |
20,471 |
18,020 |
14% |
- Computer technology related expenses |
13,744 |
12,390 |
11% |
- Clearing and settlement expenses |
13,314 |
2,532 |
426% |
- Provision for SEBI |
16,977 |
Nil |
|
Regulatory fee |
|||
- Administration and other expenses |
33,884 |
25,234 |
34% |
- Liquidity enhancement scheme expenses |
643 |
3,633 |
(82%) |
Total expenses |
99,033 |
61,809 |
60% |
C. EBITDA |
62,757 |
33,585 |
87% |
EBITDA Margin |
39% |
35% |
|
Depreciation and amortization expense |
9,544 |
6,034 |
58% |
Finance costs |
1,505 |
2,748 |
(45%) |
D. Profit before exceptional items and tax |
51,708 |
24,803 |
108% |
Exceptional items |
40,662 |
- |
|
E. Profit before tax and share of net profits of investments accounted for using equity method |
92,370 |
24,803 |
272% |
Share of profit of associates |
7,182 |
4,923 |
46% |
F. Profit before tax |
99,552 |
29,726 |
235% |
Tax expenses |
22,386 |
9,161 |
144% |
G. Net profit for the year |
77,166 |
20,565 |
275% |
Net profit attributable to the shareholders of the Company |
77,839 |
22,067 |
253% |
Net Profit attributable to the non-controlling interest |
(673) |
(1,502) |
55% |
Net Margin (G/A) |
48% |
22% |
|
Net Margin excluding exceptional item (net of tax) |
25% |
22% |
|
Effective tax rate |
22% |
31% |
|
Effective tax rate excluding exceptional item |
36% |
31% |
|
H. Other comprehensive income |
321 |
1,994 |
(84%) |
I. Total comprehensive |
77,487 |
22,559 |
243% |
Total comprehensive income attributable to the shareholders of the Company |
78,039 |
23,294 |
235% |
Total comprehensive income attributable to the non-controlling interest |
(552) |
(735) |
25% |
Consolidated Income:
( in Lakhs)
Particulars |
FY 2023-24 |
% of Total Income |
% Growth |
FY 2022-23 |
% of Total Income |
Securities Services |
94,858 |
59% |
118% |
43,561 |
46% |
Services to |
34,968 |
22% |
20% |
29,042 |
30% |
Corporates |
|||||
Data Dissemination |
4,314 |
3% |
11% |
3,886 |
4% |
Fees |
|||||
Training Institute |
1,909 |
1% |
2% |
1,875 |
2% |
Sale of Software |
2,954 |
2% |
(7%) |
3,189 |
3% |
Investment Income |
20,247 |
13% |
85% |
10,931 |
11% |
Other Income |
2,540 |
2% |
(13%) |
2,910 |
3% |
Total Income |
1,61,790 |
100% |
70% |
95,394 |
100% |
The Total Income for the year was higher by 66,396 Lakh from 95,394 Lakh (up 70%) to 1,61,790 Lakh in FY 24. The income from securities services for FY24 has increased by 51,297 Lakh (up 118%) from
43,561 Lakh in FY 24 to 94,858 Lakh in FY 24. The increase is mainly in income from transaction charges by 34,149 Lakh, Treasury Income from Clearing and Settlement Funds 10,078 Lakh and clearing and settlement services 5,186 Lakh. Increase in transaction charges is mainly due to increase in income from equity derivatives segment by
17,618 Lakh, equity cash segment by 10,736 Lakh and Mutual Fund segment by 4,946 Lakh. This is mainly due to increase in average daily turnover in equity cash segment from 4,132 crore in FY 23 to 6,622 crore in FY 24, increase in average daily premium turnover in equity derivatives segment from 4 crore in FY 23 to 2,133 crore in FY 24 and increase in average daily number of chargeable orders received for mutual fund segment from from 8.34 Lakh in FY 23 to 13.38 Lakh in FY 24. The investment income for FY24 has increased by 9,316 Lakh (up 85%) from 10,931 Lakh in FY23 to 20,247 Lakh for FY24. The income from services to corporate for FY 24 has increased by 5,926 Lakh (up 20%) from 29,042 Lakh in FY 23 to 34,968 Lakh. The increase is mainly due to increase in listing fees by 4,535 Lakh (up 19%) from 23,519 Lakh in FY 23 to 28,054 Lakh in FY 24 and increase in book building software charges by 532 Lakh (up 13%) from 4,232 Lakh in FY 23 as compared to 4,764 Lakh in FY 24. The income from data dissemination for FY 24 has increased by 428 Lakh (up 11%) from 3,886 Lakh to
4,314 Lakh.
The Total Expenses for the year were higher by 39,491 Lakh (up 56%) from 70,591 Lakh for FY23 to 1,10,082 Lakh. The increase in expenses is largely on account of increase in clearing and settlement expenses by
10,782 Lakh (up 426%) from 2,532 Lakh in FY 23 to 13,314 Lakh in FY 24, regulatory fees by 17,160 Lakh (up 804%) from 2,135 Lakh in FY 23 to 19,295 Lakh in FY 24, depreciation and amortisation cost by
2,267 Lakh (up 26%) from 8,782 Lakh in FY 23 to 11,049 Lakh in FY 24, employee cost by 2,451 Lakh (up 14%) from 18,020 Lakh in FY 23 to 20,471 Lakh in FY 24, Computer Technology Related Expenses by 1,354 Lakh (up 11%) from 12,390 Lakh in FY 23 to 13,744 Lakh in FY 24, Professional Fees by 1,910 Lakh (up 54%) from 3,520 Lakh in FY 23 to 5,430 Lakh in FY 24 and Bank Charges by 1,427 Lakh (up 152%) from 938 Lakh in FY 23 to 2,365 Lakh in FY 24 partly offset by decrease in Liquidity enhancement scheme expenses 2,990 Lakh (down 82%) from 3,633 Lakh in FY 23 to 643 Lakh in FY 24.
Particulars |
FY 2023-24 |
% of Total Income |
% Growth |
FY 2022-23 |
% of Total Income |
Employee benefit expenses |
20,471 |
13% |
14% |
18,020 |
19% |
Computer technology related expenses |
13,744 |
8% |
11% |
12,390 |
13% |
Regulatory fees |
19,295 |
12% |
804% |
2,135 |
2% |
Legal Fees |
428 |
0% |
(12%) |
488 |
1% |
Professional fees |
5,430 |
3% |
54% |
3,520 |
4% |
Electricity charges |
1,777 |
1% |
46% |
1,216 |
1% |
Repairs & maintenance |
1,445 |
1% |
12% |
1,291 |
1% |
Travelling expenses |
517 |
0% |
4% |
496 |
1% |
Operating lease expenses |
384 |
0% |
4% |
369 |
0% |
Impairment loss allowance on trade receivable and financial assets |
131 |
0% |
(91%) |
1,449 |
2% |
Clearing house expenses |
13,314 |
8% |
426% |
2,532 |
3% |
Bank charges |
2,365 |
1% |
152% |
938 |
1% |
Others |
19,089 |
12% |
43% |
13,332 |
14% |
Depreciation & finance costs |
11,049 |
7% |
26% |
8,782 |
9% |
Liquidity enhancement scheme expenses |
643 |
0% |
(82%) |
3,633 |
4% |
Total |
1,10,082 |
68% |
56% |
70,591 |
74% |
Consolidated Expenses:
( in Lakhs)
V. Cash Flow Standalone:
Summary of standalone cash flow statement is given below: ( in Lakhs)
Particulars |
FY 2023-24 |
FY 2022-23 |
Operating activities |
49,231 |
8,692 |
Investing activities |
(28,346) |
9,617 |
Financing activities |
(17,910) |
(18,551) |
Net increase / (decrease) in cash and cash equivalents |
2,975 |
(242) |
Cash and cash equivalents at the beginning of the year |
341 |
583 |
Cash and cash equivalents at the end of the year |
3,316 |
341 |
In FY 24, there was a net cash inflow from operating activities amounting to 49,231 Lakh as compared to cash inflow of 8,692 Lakh in FY 23. There was net cash outflow from investing activities amounting to 28,346 Lakh in FY 24 as compared to net cash inflow from investing activities amounting to 9,617 Lakh in FY 23. The net cash outflow from financing activities was lower in FY 24 at 17,910 Lakh as compared to net cash outflow of 18,551 Lakh in FY 23.
Consolidated:
Summary of consolidated cash flow statement is given below:
( in Lakhs)
Particulars |
FY 2023-24 |
FY 2022-23 |
Operating activities |
2,84,203 |
(13,711) |
Investing activities |
(1,07,145) |
(11,133) |
Financing activities |
(14,905) |
(18,551) |
Net increase / (decrease) in cash and cash equivalents |
1,62,153 |
(43,395) |
Cash and cash equivalents at the beginning of the year |
45,299 |
88,694 |
Cash and cash equivalents at the end of the year |
2,07,452 |
45,299 |
In FY 24, there was a net cash inflow from operating activities amounting to
2,84,203 Lakh as compared to net cash outflow from operating activities amounting to 13,711 Lakh in FY 23. There was net cash outflow from investing activities amounting to
1,07,145 Lakh in FY 24 as compared to net cash outflow of 11,133 Lakh in FY 23. The net cash outflow from financing activities amounting to 14,905 Lakh in FY 24 as compared to net cash outflow of 18,551 Lakh in FY 23 mainly on account of issue of share by subsidiary company offset by lower payment of dividend.
Earnings per Share (EPS)
The details of change in EPS on standalone and consolidated basis are as follows:
Particulars |
FY 2023-24 |
FY 2022-23 |
% Increase |
Standalone: |
|||
Basic and diluted EPS before exceptional items |
20.99 |
12.15 |
73% |
Basic and diluted EPS after exceptional items |
54.84 |
12.15 |
351% |
Consolidated: |
|||
Basic and diluted EPS before exceptional items |
29.91 |
16.06 |
86% |
Basic and diluted EPS after exceptional items |
56.66 |
16.06 |
253% |
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
The Company had received a letter dated April 26, 2024, issued by Securities Exchange Board of India ("SEBI") wherein it was advised to pay the regulatory fees on the ‘Annual Turnover’ considering notional value in case of option contracts from the FY 2006-07 onwards, with interest at the rate of 15% per annum. Accordingly, the Company has made provision of differential SEBI regulatory fee in the current period (refer note no. 45 of Standalone Financial Statements) for 16,977 lakhs.
There are no other material changes and commitments, affecting the financial position of the Company which have occurred between the end of the FY of the Company to which the financial statements relate and the date of this report.
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 2023-24 |
FY 2022-23 |
Variation (bps) |
% Change* |
Standalone: |
||||
Debtors Turnover (in times) |
9.15 |
6.81 |
-- |
34.36% |
Creditors Turnover (in times) |
4.81 |
6.52 |
-- |
(26.23%) |
Net Profit Margin (in %) |
73.79 |
27.84 |
4595 |
165.05% |
Return on Net worth (in %) |
29.50 |
7.33 |
(2217) |
(302.46%) |
Return on Investments (in %) |
7.94 |
4.92 |
302 |
61.38 |
Return on Capital Employed |
32.34 |
10.48 |
2186 |
208.59% |
* Pleae refer Note 46 fo Standalone Financials for reasons of significant changes.
Return on Net worth (ROE):
Net Profit for the year has increased by 351.37% (from Net profit of 16,691 Lakh in FY 2022-23 to Net Profit of 75,339 Lakh in FY 2023-24) as against YoY growth of 1.80% in average Net Worth (from 2,27,573 Lakh in FY 2022-23 to 2,55,358 Lakh in FY 2023-24).
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