NCDEX SPOT EXCHANGE (NSPOT)

Spot the future with us

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NSPOT: The Leading Electronic Spot NSPOT: The Leading Electronic Spot Market Market

NSPOT is the leading electronic spot market in India

It is promoted by NCDEX 

NSPOT is market leader in all its launched commodities: Chana, Sugar, RM Seed, Gold and Silver.

NSPOT is governed by respective state laws and regulations of spot markets (APMCs) as applicable for the select commodity.

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NSPOT – Offerings NSPOT – Offerings

Continuous markets: Compulsory delivery based contracts in

Agriculture: Chana, Sugar, RM Seed,Mustard, Imported Lemon Tur ,Gubarga Tur and Imported Urad

Bullion : Gold and Silver from Mumbai, Ahmedabad

Metals: Steel Ingots would be launched soon

NCDEX SPOT AdvantagesNCDEX SPOT Advantages

Price Transparency

Timely Payment

Counterparty Risk Mitigation

Wider Network and Geographical Reach

Alternate platform for delivery

Tur Spot Exchange

NSPOT obtained license to start spot exchanges for various commodities in Karnataka

Spot exchange in Tur launched in January 2010 at Gulbarga

Plans to extend scope to Sedam, Chitapur, Yadgir etc. in the course of time

Model being rolled out after extensive discussions with value chain participants including farmers, traders, commission agents, brokers, trading corporates, and end consumers

Current status of Red Current status of Red gramgram

Current status of Red Current status of Red gramgram

o India is largest producer and consumer of red gram in the world.

o Occupies 3.6 million hectare area with production of 2.6 million tonnes.

o Karnataka holds second position in tur production occupying 681000 ha. Producing 485000 tones.

o In Karnataka ,Gulbarga is the potential grower of Tur holding first rank in the production.

o Gulbarga Tur famous for good quality in terms of its taste.

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Existing marketing Existing marketing scenarioscenario

Existing marketing Existing marketing scenarioscenario

o Farmers sell Tur in the APMC through commission agents and commissions are in the range of 2-4%.

o Farmers pledge their loan against the advances taken between sowing and harvesting.

o Do not get remunerative prices due to lack of awareness about grading ,sorting, etc.

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Contd…Contd…Contd…Contd…

o Lack of marketing information regarding arrivals and price prevailing in other markets.

o Inadequate storage facilities in rural areas.

o Inadequate transportation facilities.

o Farmers are forced to go for distress sell.

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o To support farmers online spot trading is proposed by NSPOT

o Farmers would bring their produce in the godowns of exchange and after grading online trading will be done.

o Growers would be able to fix the price of their produce.

o On the basis of warehouse receipt bank will give 65% of the cost of commodity as loan.

About Proposal

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Farmers(Tur growers)

TUR BOARD

Govt. of Karnatak

a

NCDEXSPOT

Bank

MYRADA

TUR SPOT EXCHANGE MODELTUR SPOT EXCHANGE MODEL

Encourages Farmer deposits by providing them with Encourages Farmer deposits by providing them with transportation, packaging and labour cost on recoverable basis transportation, packaging and labour cost on recoverable basis in colloboration with Tur Board and MYRADA.in colloboration with Tur Board and MYRADA.

MYRADA ,an NGO,aggregates farmer stocks thro’ its farmer MYRADA ,an NGO,aggregates farmer stocks thro’ its farmer facilitation centres spread across 12 locations in Gulbarga facilitation centres spread across 12 locations in Gulbarga District,KarnatakaDistrict,Karnataka

These stocks are brought to the accredited warehouse of These stocks are brought to the accredited warehouse of NSPOT,managed by NCMSL-warehouse service providerNSPOT,managed by NCMSL-warehouse service provider

Farmers can avail pledge loan on their deposits thro’ SBIFarmers can avail pledge loan on their deposits thro’ SBI

Once sale is concluded on the NSPOT ,the proceeds will be Once sale is concluded on the NSPOT ,the proceeds will be adjusted against pledge loan and other expenditure and adjusted against pledge loan and other expenditure and balance will be transferred to beneficiary A/Cbalance will be transferred to beneficiary A/C

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Farmers’s A/c – after deducting the

expenses towards packing,

transportation & loading.

Refund of Amount drawn from

Revolving Fund A/c

Allocation of Funds by KTAM

to MYRADA

MYRADA opens a

‘Revolving Fund Account’

16 Farmers’ Facilitation

Centres (FFC)

A/c reconciliation & Reporting

Trades on NSPOT

Farmers Lot are

deposited on NSPOT

Warehouse

Incurs expenditure on Aggregation of Farmer’s Produce

(Like Packing, Transportation & Loading / Unloading)

Transfer of Sales proceeds by the NSPOT after

adjusting, transaction and assaying charges

Business Model- FunctioningBusiness Model- Functioning

The Seller has to first bring in the commodity in accredited godown at designated warehouse.

Assaying according to NCDEX Spot specifications

The required quantity of commodity stored in warehouse then needs to be locked in for trade/Sale by the Seller client or member in the WMS at the NCDEX Spot member level.

The seller can then sell the commodity equivalent to that locked quantity or less than that quantity.

All the outstanding sell positions will result into delivery at the end of the day.

The sell positions can also be squared off

Selling Side

The buyer needs to pay   upfront margin to take the buy position on the Spot platform .

All outstanding buy positions at the end of the day will result into delivery.

The buyer if desired can square off his position during the day.

Buying Side

Settlement

The settlement of funds and sales tax if any will happen on T + 2 (i.e Settlement will take place on second day after trading day)

Price Transparency

Better price discovery mechanism owing to larger

participation

Alternative platform for sale of commodity.

Opportunity for bulk deals.

Reduction in transaction cost

Direct selling of small quantities with reduction in

channel.

Buyer Default adequately compensated

Proper assaying of quality & quantity

Facility of pledge loan thro’ Banks

Direct transfer of sale proceeds to seller bank A/C on 3rd

day of sale

Benefit Accrual - FarmersBenefit Accrual - Farmers

Price Transparency

Better price discovery mechanism owing to larger

participation

Alternative platform for availability of commodity.

Opportunity for bulk deals with reduction in channel.

Reduction in transaction cost

Direct Buying for small quantities

Seller Default adequately compensated

30 % reduction in market fee-which is at 1.5%

Pledge loan facility for traded stock thro’ Banks

Assured quality & quantity

Benefit Accrual - ConsumersBenefit Accrual - Consumers

Farmer awareness programmesFarmer awareness programmes

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Cost comparison between Traditional and NSPOT trading per QuintalCost comparison between Traditional and NSPOT trading per Quintal

Particulars Cost in traditional trading (In Rs.)

Cost in NSPOT trading(In Rs.)

Transportation /Quintal 50 ( Approx) 30 (Approx)

Weighment & sieving/Q 6 12( At FFC)

Soot (2kg/Q) 100 Nil

Loading & unloading/Q 10 9.50

Sampling charge (300gm/Q)

15 Nil

Quality assessment Nil 1.66

Weighment charge in warehouse/Q

Nil 0.40

Transaction charge/Q Nil 8

Commission (2% on sell) 100 Nil

Tur Board Nil 7

Ware house charge/Q/month

4.50 6

Total 285.50 74.56

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Contract SpecificationsLot size 10 MT after std. deduction of 0.5% with

=/- 5% qty. variation

Packing 100 or 50 kg in sound jute bags

Moisture content 12% max

Damaged//discoloured grains Up to 5% max

Foreign matter(including dust,sand & other admixtures)

1% max

Broken seeds 1% max

Ad mixture 0.5% max

Grain Retention Min 90% on 3.75 mm Sieve

Tick size Rs.1 per qtl

Quotation base value Rs. Per qunital

Unit of trading 10 MT (10000 kg)

Unit of delivery 10 MT (10000 kg)

Buyer margin 9%

Validity 3 months from the date of sample collection

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Quality Analysis Report-Sample lotsQuality Analysis Report-Sample lotsLot No Date Admixture Moisture Foreign Matter Damaged Broken seeds Grain

Retention Village

1 30/1/2010 0.42 9.1 0.47 3.09 0.74 98.29 Sarsamba

2 2/2/2010 0.41 9.2 0.73 1.9 0.11 97.21 Kodli

3 3/2/2010 0.09 9.2 0.24 4.9 0.08 96.29 Sarsamba

4 6/2/2010 0.3 9.3 0.2 3.29 0.2 92.19 Sarsamba

5 6/2/2010 0.56 10.2 0.02 0.8 0.18 99.2 gilda`s

6 10/2/2010 0 9.9 0.38 1.17 0.16 98.19 Kodli

7 10/2/2010 0.06 9.2 0.76 1.83 0.27 97.65 Kodli

8 11/2/2010 0.25 9.8 0.9 5.8 0.5 97.34 Sarsamba

9 15/2/2010 0.03 9.3 0.35 4.34 0.2 99.16 Sarsamba(sindagi)

10 15/2/2010 0.06 9.2 0.4 1.54 0.32 98.76 Sugoor

Average 0.22 9.44 0.45 2.87 0.28 97.43  

  Std Parameter 0.50% 12% 1% upto to 5% 1% Min 90% on 3.75mm sieve  

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THANK YOUTHANK YOU

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