2. 1 Spices Of Fortune All India Spices Conference 7 th Oct 2006, Bangalore www.investsmartindia.com A presentation by the IL&FS Commodities Division Chillies

3. 2 ????? 6500/qtl !!! @ Chillies www.investsmartindia.com A presentation by the IL&FS Commodities Division Who has stolen my chillies ?

4. 3 Agenda of the presentation 1.Overview 2.Supply-n-Demand 3.Challenges Ahead 4.Chilli on Exchange 5.Exchange Advantages 6.Price Outlook

5. 4 Agenda  India  Major Producer, consumer & exporter in the world  Chilli accounts for 20-30% of total Indian spices exports valuing approx 400- 500 crore  Practically all the states in India grows chilli resulting in arrivals round the year.  Andhra Pradesh is a leading producer of commercial grade of chilli Overview

6. 5 Agenda Indian Supply –n-Demand

7. 6 Agenda  Global  India contributes for around 25% of world chilli production  Other major producer are China, Pakistan, Morocco, Mexico, Spain and Turkey  Chilli contributes for 22% of world spices trade in terms of volume.  Globally China is emerging as major threat for India  Asian countries consumes chillies directly while USA and EU imports mainly for its oleoresin requirement Overview

8. 7 Agenda Overview

9. 8 Agenda of the presentation 1.Overview 2.Supply-N-Demand 3.Challenges Ahead 4.Chilli on Exchange 5.Exchange Advantages 6.Price Outlook

10. 9 Acreage and Production Agenda Supply – N- Demand YearAreaProduction 2001-028.810.6 2002-038.58.8 2003-049.911.0 2004-05 E9.510.0 2005-06 E9.510-10.5 Stagnant or Declining Acreage and Production

11. 10 Exports Share of Chilli in Indian spices export is around 20-40% in volumes India export its chilli mainly to Srilanka, Bangladesh, Korea, Malaysia, Singapore, Japan, UK, Germany, France and USA Agenda Supply – N- Demand

12. 11 Exports - India Agenda Supply – N- Demand YearQuantity (tons) Value (Rs. Lakh) 1999-0063,59125471.55 2000-0162,44822973.30 2001-0269,99825244.02 2002-0381,02231514.68 2003-0486,57536687.81 2004-05 E13800049900.50 2005-06 E11325040350.00

13. 12 Exports Agenda Supply – N- Demand Country wise Percentage share of exports India (25%) China (24%) Spain (17%) Mexico (8%) Pakistan (7.2%) Morocco (7%) Turkey (4.5%)

14. 13 Balance Sheet 2005-06 Agenda Supply – N- Demand Sheet 2005-06 (Lakh Tonne) Beginning Stock1.1 Production10 Total Supply11.1 Exports1.0 Domestic Consumption10.1 Total Demand 10.0 Price Sensitive

15. 14 Agenda of the presentation 1.Overview 2.Supply-n-Demand 3.Challenges Ahead 4.Chilli on Exchange 5.Exchange Advantages 6.Price Outlook

16. 15 Adverse climatic conditions - Floods, drought, unseasonal rains etc Increasing consumption - Growing population need Emerging competitors - China – Future threat to Indian exports Lack of sufficient carry over stocks - Due to increase in consumption Malpractices and Speculation - On the basis of growing opportunities Numerous varieties within same region AgendaChallenges Ahead

17. 16 Agenda of the presentation 1.Overview 2.Supply-n-Demand 3.Challenges Ahead 4.Chilli on Exchange 5.Exchange Advantages 6.Price Outlook

18. 17 Chilli first got remarkable participation on NCDEX futures exchange Sanam best Guntur delivered was the first contract launched but was withdrawn on operational issues LCA 335 variety contract introduced - March expiry & onwards Contract trading lot is of 5MT (1 Re change = Rs.50) Margin requirement = 15-25% (Case dependent) Contract is of 3 months expiry Client wise limit is applicable and is 5000 MT (Near month 1000 MT only) Agenda Chilli on Exchange

19. 18 Agenda Chilli on Exchange Contract months Average Volume (MT) Average Open Interest Average Traded Value (Rs. In lacs) March3431.425756.781114.29 April4838.115905.51778.9 June4686.96445.12313.9 July4059.76245.92056.1 Aug5075.68906.92599.3 Sep5430.66467.12961.4 Oct (4 oct)9640.89951.75851.7 Nov (4 Oct)4372.45336.42765.9 Dec (4 oct)4355.79016.32801.4 NCDEX Chilli – Average Volume, OI, Value

20. 19 AgendaChilli on Exchange Expiry Month Qty(MT) Settlement prices/tonnes Total Value lakhs April10360203.6 June88544630394.97 July2690483901301.69 Aug169054810926.28 Sep234051770 1211.41 Exchange Deliveries & Settlement

21. 20 Agenda of the presentation 1.Overview 2.Supply-n-Demand 3.Challenges Ahead 4.Chilli on Exchange 5.Exchange Advantages 6.Price Outlook

22. 21 Price discovery India’s branding on world trade Hedge availability to corporates and individual traders Arbitrage opportunities – Investment demand Directional trades or speculation Jobbing and Punting Agenda Exchange Advantage

23. 22 Agenda of the presentation 1.Overview 2.Supply-n-Demand 3.Challenges Ahead 4.Chilli on Exchange 5.Exchange Advantages 6.Price Outlook

24. 23 Forecasting model Fundamental Analysis - SND, Policies, Weather situation etc Derivative Analysis - Study of volume, Open Interest and Spreads Technical Analysis - Chart based study and forecasting of prices Agenda Price Outlook

25. 24 Agenda Price Outlook  Technical Analysis

26. 25 AgendaPrice Outlook Primary trendline intact with support taken recently at 5600. Corroborative evidence of bullishness from the fact that the levels of 5600 - 5800 acted as a strong resistance during early days of May 2006 and has changed from. resistance to support, preventing further decline. Second rally started in August from 4600, making a top of 6600. The 50% Fibonacci retracement of this rally reckons to 5600, which exactly coincides, with our support level. The bull market is in place and the required correction has also come to an end. Any advance above 6100 levels should be considered as a buying opportunity for medium and long-term investors. However intermediate consolidation phase cannot be ignored if it remains below 6100 in the near future. However the probability of prices resuming the uptrend is high.

27. 26 AgendaPrice Outlook Trading Strategy Buy December Contract on Dips of around 6000 Medium to longer term Target – 6700 -7000 Exit or play short trades on breakout below 6000 - Dec Contract Six Month Range = 5500-7500

28. 27 Thank You ! www.investsmartindia.com IL&FS Investsmart Commodities Limited K.N.Rahaman Manager – Commodities Research 022-67160 851-56