Spacenet Enterprises India Ltd Management Discussions.

The World Bank forecasts global economic growth to edge up to 3.1 percent in 2018 after a much stronger-than-expected 2017, as the recovery in investment, manufacturing, and trade continues, and as commodity-exporting developing economies benefit from firming commodity prices.

Growth in advanced economies is expected to moderate slightly to 2.2 percent in 2018, as central banks gradually remove their post-crisis accommodation and as an upturn in investment levels off. Growth in emerging market and developing economies as a whole is projected to strengthen to 4.5 percent in 2018, as activity in commodity exporters continues to recover.

The slowdown in potential growth is the result of years of softening productivity growth, weak investment, and the aging of the global labor force. The deceleration is widespread, affecting economies that account for more than 65 percent of global GDP Without efforts to revitalize potential growth, the decline may extend into the next decade, and could slow average global growth by a quarter percentage point and average growth in emerging market and developing economies by half a percentage point over that period.

Overview of developments in India during 2018-19

India has become the worlds sixth-biggest economy according to updated World Bank figures for 2017. It is the worlds seventh-largest economy by nominal GDP and the third-largest by purchasing power parity (PPP). After the 1991 economic liberalisation, India achieved 6%-7% average GDP growth annually. In FY 2015 and 2018 Indias economy became the worlds fastest growing major economy, surpassing China. Indias gross domestic product (GDP) amounted to $2.597 trillion at the end of last year.

Road A Head:

Spacenet Enterprises India Ltd exploring new business avenue and ventured in to Commodity trading segment which includes both Agri & non Agri commodities like metals, Energy.

The commodity market in India, especially agri-commodities, is on the cusp of transformation. The three biggest bottlenecks - storage, logistics and financing infrastructure inadequacies - that plagued the sector and resulted in colossal harvest and post-harvest losses are finally being eliminated with a synergistic combination of technology, physical infrastructure and stronger regulation.

Historical context

During the pre-Independence era, India had a flourishing market for commodities such as cotton, edible oils, etc. In 1952, futures trading in most commodities was banned due to shortages of essential commodities, which resulted from wars and natural calamities. The ban was lifted in 2002 and several national level electronic exchanges and regional exchanges for trading commodity derivatives sprung up, including the Multi Commodity Exchange (MCXNSE 4.71 %)

Further technology in fusion

Despite these tech-savvy exchanges, not much changed at the ground level. The physical sale of agricultural produce was still administered by states, with each state following its own regulations. Further, within each state there were several market areas and every area had its Agricultural Produce Marketing Committee (APMC), which dictated regulations, fees, etc. This structure tends to compartmentalize markets and inhibit the free flow of commodities.

Warehousing solutions

The government has also been actively incentivising private investments in warehousing by including agri-warehousing under the priority sector lending. In addition to various subsidy schemes and tax sops to attract investor companies, it has promulgated the Warehousing Act, 2007, which seeks to encourage the regulation and development of warehouses. Under the purview of the Warehousing Development and Regulatory Authority (WDRA), a new breed of storage infrastructure is upcoming.

Regulation and reform

While the Forward Markets Commission regulated the commodity markets since the early 1950s, it was perceived as lacking the power to control wild fluctuations in prices and other irregularities.

Accordingly, in 2015, Sebi - which carried the reputation being superior in terms of surveillance, risk-monitoring and enforcement mechanisms, was merged with the FMC, creating a more robust regulatory body for the sector.

Subsequently, Sebi implemented a slew of advancements within the commodity market space. These include allowing stock brokers to deal in commodity derivatives, common broking businesses for equities and commodities, permitting the NSE and BSE to bring commodity derivatives onto their trading platform, introducing option contracts in commodities trading, permitting FPIs to participate in commodity derivatives contracts traded in stock exchanges subject to certain stipulations, allowing certain categories of foreign ..

Future of Commodities.

Looking ahead, it appears that the Indian commodity markets, especially the agri-commodities segment is headed for better days. Not only will it become more efficient, in terms of warehousing, storage and physical trades, but it is expected to become more broad-based, vibrant and deep due to the facilitation it has been receiving from Sebi and the stock and commodity exchanges.

Cautionary Statement

Statements in the Management Discussions and Analysis describing the Companys projections, estimates, and expectations may be "forward looking statements" within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/ supply and price conditions in the domestic and overseas markets in which the Company operates, changes in Government regulations/policies, tax laws, other statutes and other incidental factors.