ANNEXURE 27 dear weneegerarerrnn tae tee saree ara segrom biiaiaposenanra) GOVERNMENT OF INDIA =" Se. eeertern ° = areret ast rant ete FORWARD MARKETS COMMISSION auettea wae, wren afte archaea ferereay searere MINISTRY OF CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION (sentra Sree Ferret) (DEPARTMENT OF CONSUMER AFFAIRS) and, dat ‘evenssr, seanin ons WS No.11/1/2010-Met. Dated the 26" Aug. 2010 To, Shri Siraj Hussain, TAS, ‘The Chairman and Managing Director, Food Corporation of Indio, Khodya Sadon, Barakhambs Road, New Delhi -110 003 Fax No, 92 11 23413214 Sub: Disposal of coarse grains by F.C.I. through Spot Exchange of Indie Refi Your office letter no. No, 1-10/2010/Coarsegrains/S.1V Doted Aug 24 2010 Kindly refer to the communicotion cited above A menting was held today in FUAC. HGrs.. which was attendad by saniur officials of FMC and representatives of both the Spor Exchanges regarding disposal of coarse. grains through Spot Exchanges of Inds. 1 We have discussed various options available with PCE regardieg scle of coarse grcins, which inclides physical tender process, electronic sale through spct exchanges and other portals offering auction facilities, We hove also cempared! the services offered and fecilities made avilable to FCE under respective models vis a vis cost of operation under respective medels. After detoiled stuly of all these factors, we recommend that FCI should use the platform provided by NCDEX Sper Exchonge ond Nationel Spot Exchenge, ot they previde better Dsante ME AUNOKES FOC NORE toe i PUD,ANNEXURE 27 000 services and foclities compared to other models. We furtiter recommend thot FCT ‘may agree te poy the transaction fee of Rs, 200 per Rs. lakh of turnover payoble 10 these Spot Exchanges, while the Spot Exchange may charge enothe= Rs. 200 from buyers, In other words, cost payable by PCE under in this would be onty Rs, 250, The spot exchanges would provide the following services to FCI: @, Electronic trading 08 per FCT reguirement b. Clearance of funds €. Physical settlement of the commadities from the FCT warehouses kindly see Annexure 3 for comporison of charges in existing markets, compared to the charges payable to these spot exchanges. 2 Yhese spot exchanges are wall minaged entities promoted by reputed inatsutions having very high credibility, goed corporate governance, and rebust risk management systems ond therefore FCT con comfortably dispose its food grains including coarse grains through these spot exchanges namely 1, M/S NCDEX Spo* Exchange and 2. Nationa! Spot Exchange. 4, Sole of coarse grains through these Spot Exchanges will also provide edministrative convenience, transparent price discovery ard complete audit treil of cll transactions coupled with counter party guarantee, ‘This issues with the approval of Chairman, Forward Markets Commission Yours fartiFully eee (Akiak Wishes) DirectorANNEXURE 27 Annexure 1 Comparison of Service charges fro selling of Food grains "E-Auction | Physical “National | tender | Spot F1, Reai-time Trading of jsommedities Nationwide reach "E Goueturparty guarantee Ves i The [B Ganmission! | 28K OF TORN TSW pestinsted” Tea at™ 'tronsactions charges | trading | of trading | at about | trading value foe | 24-25%0F value the cost + Based on the above analysis it is advisable to use National Spot Exchanges recommended by FIMC for the purpose of sale of FCI-food-grains including coarse grains where the cost of transaction of FCT would be only Rs, 200 per lakh. This ic reasonable considering the sarvices provided by these ‘exchanges as compared to al! existing methods available with FEL + Owing 10 complete clearing and settlement of commodities by these exchanges FCE would also have @ tot ef admiristrotive earvenience on ‘account of these facilities. Dagan Hates OnES REAERALSIEEC he