BSE Ltd. के निदेशक की रिपोर्ट

Mar 31, 2025

The Board of Directors (“Board”) present the 20^th Annual Report of BSE Limited (“the Company” or “BSE” or “Exchange”) together with audited financial statements for the Financial Year ended March 31,2025.

1. STATE OF COMPANY’S AFFAIRSA. FINANCIAL SUMMARY AND HIGHLIGHTS

The financial performance for Financial Year (“FY”) 2024-25 is summarised in the following table:

(? in Lakhs)
Particulars	Standalone		Consolidated
	2024-25	2023-24	2024-25	2023-24
Total revenue	2,91,275	1,29,180	3,23,631	1,59,588
Total expenses	1,34,759	87,733	1,48,063	99,040
Profit before contribution to core settlement guarantee fund	1,56,516	41,447	1,75,568	60,548
Contribution to core settlement guarantee fund	9,000	-	9,000	9,170
Profit before exceptional items & tax	1,47,516	41,447	1,66,568	51,378
Exceptional items (income)	-	50,417	-	40,662
Profit before tax and share of profits of associates	1,47,516	91,864	1,66,568	92,040
Share of profits of associates	-	-	8,259	7,182
Profit before tax	1,47,516	91,864	1,74,827	99,222
Tax expenses	36,271	16,525	43,121	22,352
Net profit for the year from continuing operation	1,11,245	75,339	1,31,706	76,870
Net profit for the year from discontinued operation	-	-	526	296
Net Profit for the year from total operation	1,11,245	75,339	1,32,232	77,166
Net profit attributable to the Shareholders of the Company	1,11,245	75,339	1,32,589	77,839
Net profit attributable to the non-controlling interest	-	-	(357)	(673)
Other comprehensive income	(278)	67	501	321
Total comprehensive income for the year	1,10,967	75,406	1,32,733	77,487
Total comprehensive income attributable to the Shareholders of the Company	1,10,967	75,406	1,32,773	78,039
Total comprehensive income attributable to the non-controlling interest	-	-	(40)	(552)
Basic and diluted EPS before exceptional items - Continuing operations (?)	81.01	20.99	96.17	29.69
Basic and diluted after exceptional items - Continuing operations (?)	81.01	54.84	96.17	56.45
Basic and diluted after exceptional items - Total operations (?)	81.01	54.84	96.55	56.66

I. Consolidated Results

The total income of the Company during FY 2024-25 on a consolidated basis was ?3,23,631 Lakh reflecting an increase of ?1,64,043 Lakh (up by 103%) over previous FY. The total expenses for the year were higher by ?49,023 Lakh (up by 49%) at ?1,48,063 Lakh.

During the FY, the income was higher mainly due to increase in income from securities services (up by 150%) contributed by higher income from transaction charges in equity derivatives, equity cash, mutual fund segment and clearing & settlement related income; income from corporate services (up by 40%); investments income (up by 29%); data dissemination (up by 17%) and index related income. Increase in expenses are mainly due to increase in clearing and settlement expense (up by 161%); regulatory contribution (up by 73%); administration and other expenses (up by 20%); computer technology related expenses (up by 20%); employee benefits expense (up by 19%) and depreciation (up by 19%) partly offset by decrease in finance cost (down by 100%).

The net profit after tax excluding exceptional item was higher by ? 91,818 Lakh (up by 227%) from ? 40,414 Lakh in previous FY to ? 1,32,232 Lakh in the current FY.

II. Standalone results

The total income of the Company during the FY 2024-25 on a standalone basis was ?2,91,275 Lakh reflecting an increase of ? 1,62,095 Lakh (up by 125%) over previous FY. The total expenses for the FY were higher by ? 47,026 Lakh (up by 54%) at ? 1,34,759 Lakh.

During the FY, the income was higher mainly due to increase in income from securities services (up by 229%) contributed by higher income from transaction charges in equity derivatives, equity cash, mutual fund segment; income from services to corporates (up by 40%); investments (up by 17%) and data dissemination (up by 17%). Increase in expenses are mainly due to increase in clearing and settlement expense (up by 89%); regulatory contribution (up by 74%); employee benefit expense (up by 42%); administration and other expenses (up by 56%); computer technology

related expenses (up by 2%) and depreciation and amortisation expenses (up by 21%).

The net profit after tax excluding exceptional item was higher by ? 82,413 Lakh (up by 286%) from ? 28,832 Lakh in the previous FY to ? 1,11,245 Lakh in current FY.

B. DIVIDEND

Pursuant to the Dividend Distribution Policy of the Company, the Board of Directors at their Meeting held on May 6, 2025, has recommended a final dividend of ? 23/- (including a special dividend of ? 5/- to commemorate the 150^th year) per equity share of face value of ? 2/- each fully paid up for the FY ended March 31, 2025. This proposal is subject to approval by the Shareholders at the Twentieth Annual General Meeting (“AGM”) scheduled on August 20, 2025, and will result in a total payout of ? 31,585 Lakh. Shareholders holding shares as on the record date i.e. May 14, 2025, will receive the dividend, which will be paid within statutory timelines after tax deductions. For more information on tax deductions, please see the section titled Tax Deducted at Source (“TDS”) on Dividend in the notes accompanying the AGM Notice.

Under Clause 5.3 of the BSE (Corporatisation and Demutualisation) Scheme, 2005, the allotment of equity shares to Trading Members of the erstwhile BSE has been kept in abeyance for various reasons. All corporate benefits including dividend as may be declared by the Company from time to time are being provided for and would be payable on the allotment of these shares. Brief details about the shares being kept in abeyance by the Company are given in ‘Share Capital'' section.

C. TRANSFER TO RESERVES

The Company has not transferred any amount to the reserves during the year under review.

D. INVESTOR RELATIONS

The Company is dedicated to setting a standard in investor relations by adopting best practices and fostering mutual understanding with both International and Domestic investors. To achieve this, the Company strives for excellence in its engagement through various formats, including physical, video, and audio meetings, structured conference calls, and regular interactions such as one-on-one meetings, investor conferences, quarterly earnings calls, and analyst meetings. The leadership team, including the MD & CEO, Chief Financial Officer, Chief Business Officer, and Investor Relations Officer, invested significant time in investor engagement, conducting 60 one-on-one meetings and participating in 21 investor conferences organized by reputable broking houses. Throughout the year, the Company held four quarterly earnings calls that were well attended by both investors and analysts. It is important to note that no unpublished price-sensitive information was discussed in any of the abovementioned meetings. The Company ensures that all investors can access its important information by publishing it on the NSE''s website (where the Company is listed), and it is also provided on the Company''s website.

E. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE COMPANY

There were no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report. Further, there has been no change in the nature of the Company''s business during the year under review.

F. SIGNIFICANT AND MATERIAL ORDERS

There were no significant and material orders passed by the Regulators, Courts or Tribunals during the year impacting the going concern status and the operations of the Company in future.

2. SHARE CAPITAL

During the year, there is no change in the paid-up equity share capital of the Company.

Additionally, in line with clause 5 of the BSE (Corporatisation and Demutualisation) Scheme, 2005 (hereinafter referred to as the "BSE Demutualisation Scheme"), which received approval from SEBI via its notification dated May 20, 2005, every Trading Member holding membership rights of the Exchange, or their nominee, as applicable, as of the specified record date, was entitled to 10,000 equity shares at a face value of ? 1/- per share, in exchange for their membership rights of erstwhile BSE. It should be noted that the entitlement concerning membership rights after the consolidation of share capital has been modified to 5,000 equity shares with a face value of ? 2/- each. As of March 31, 2025, the entitlements of 10 Trading Members continue to remain in abeyance for various reasons. All corporate benefits, including dividends that may be declared by the Company from time to time on the shares that are held in abeyance, are being accounted for and will be payable upon the allotment of these shares.

3. INVESTOR EDUCATION AND PROTECTION FUND

TRANSFER OF UNCLAIMED/UNPAID DIVIDEND

As per Section 124 of the Companies Act, 2013 (“the Act”) and the Investor Education and Protection Fund Authority (IEPF) Rules, any unpaid or unclaimed dividend for seven years must be transferred to the IEPF set up by the Central Government. Consequently, the Company has transferred the following amounts to the IEPF this year:

S r. No.	Type of Dividend	Dividend Per Share	Date of Declaration	Date of Transfer	Amount Transferred
1.	Final Dividend for FY 2016-17	? 23/-	September 4, 2017	October 30, 2024	? 17,21,527
2.	Interim Dividend for FY 2017-18	? 5/-	February 2, 2018	March 26, 2025	? 9,27,185

TRANSFER OFSHARES

As per IEPF Rules, equity shares with unpaid or unclaimed dividends for seven consecutive years must be transferred to the IEPF Authority''s Demat Account within thirty days of becoming due. Accordingly, 543 equity shares of ? 2/- each, with unpaid dividends as of October 5, 2024, were transferred to the IEPF Account in financial year 2024-25. Additionally, 2,600 equity shares of ? 2/- each, with unpaid dividends as of March 6, 2025, were also transferred on time. Members can reclaim both unclaimed dividends and shares from the IEPF Authority by following the prescribed procedure. Claims against the Company for unclaimed dividends and shares transferred to the IEPF Authority are not permitted. Shareholders can reclaim their shares by submitting an online application in Form IEPF-5 at www.iepf.gov.in.

DETAILS OF NODAL OFFICER

Name: Shri Vishal Bhat, Company Secretary & Compliance Officer Email address: [email protected]

DETAILS OF THE RESULTANT BENEFITS ARISING OUT OF SHARES ALREADY TRANSFERRED TO THE IEPF

S r. No.	Dividend	Financial Year	Cumulative No. of Shares	Amount (?)
1.	Interim Dividend	2017-18	225	1,125
2.	Thirteenth Final Dividend	2017-18	225	6,975
3.	Interim Dividend	2018-19	448	2,240
4.	Fourteenth Final Dividend	2018-19	448	11,200
5.	Fifteenth Final Dividend	2019-20	760	12,920
6.	Sixteenth Final Dividend	2020-21	1058	22,218
7.	Bonus shares (2:1)	2021-22	3060	-
8.	Seventeenth Final Dividend	2021-22	4590	59,285
9.	Eighteenth Final Dividend	2022-23	5859	68,288
10.	Nineteenth Final Dividend	2023-24	9010	1,31,378

YEARLY AMOUNT OF UNPAID/UNCLAIMED DIVIDENDS REMAINING IN THE UNPAID ACCOUNT AS OF MARCH 31,2025, ALONG WITH THE ASSOCIATED SHARES THAT ARE SUBJECT TO TRANSFER TO THE IEPF, INCLUDING THE DEADLINES FOR SUCH TRANSFER:
S r. Date of declaration of Dividend No.	Number of Shareholders against whom Dividend amount is unpaid	Number of shares against whom Dividend amount is unpaid	Amount Unpaid as on March 31, 2025 (in T)	Due date of transfer of Unpaid and Unclaimed Dividend to IEPF*
1 13th Final Dividend (FY 2017-18) AGM held on August 2, 2018	2,194	84,316	26,13,796	September 3, 2025
2 Interim Dividend (FY 2018-19) Board Meeting held on November 30, 2018	2,577	1,03,069	5,15,345	December 30, 2025
3 14th Final Dividend (FY 2018-19) AGM held on July 15, 2019	1,887	70,830	17,70,750	August 18, 2026
4 15th Final Dividend (FY 2019-20) AGM held on July 30, 2020	2,048	98,928	15,33,708	August 30, 2027
5 16th Final Dividend (FY 2020-21) AGM held on August 24, 2021	2,221	1,12,107	21,37,445	September 23, 2028
6 17th Final Dividend (FY 2021-22) AGM held on July 14, 2022	2,859	1,94,281	25,00,870.50	August 16, 2029
7 18th Final Dividend (FY 2022-23) AGM held on August 31,2023	2,622	1,86,690	21,37,615	October 2, 2030
8 19th Final Dividend (FY 2023-24) AGM held on July 15, 2024	3,466	1,92,632	27,12,928	August 15, 2031
The unclaimed and unpaid amount as on the due date will be transferred within 30 days.

Shareholders are encouraged to claim their outstanding or unclaimed dividends to prevent the transfer of such dividends and the related shares to the I EPF.

4. MANAGEMENT

A. DIRECTORS AND KEY MANAGERIAL PERSONNEL

As of March 31,2025, the Board consists of eight Directors, which includes six Public Interest Directors ("PIDs") and two Non-Independent Directors ("NIDs"), one of whom holds the position of Managing Director. Pursuant to SECC Regulations, the Company has appointed Key Management Personnel. As on March 31, 2025, there were 15 Key Management Personnels (including Key Managerial Personnel as defined under the Companies Act, 2013) who were also designated as Senior Management of the Company as per Listing Regulations.

As of the date of this report, in accordance with Section 203(1) of the Companies Act, 2013, Shri Sundararaman Ramamurthy, Managing Director & CEO, Shri Deepak Goel, Chief Financial Officer, and Shri Vishal Bhat, Company Secretary & Compliance Officer, are recognized as the Key Managerial Personnels (KMPs) of the Company.

CHANGES DURING THE YEAR AND THEREAFTER

• Shri Jagannath Mukkavilli, NID, was subject to retirement by rotation and, being eligible, was re-appointed during the 19^th AGM on July 15, 2024, which received approval from SEBI. As the sole director subject to retirement by rotation, he will be retiring at the upcoming AGM and has expressed his willingness to be re-appointed. A resolution requesting shareholders'' approval, along with other necessary details, is included in the Notice of the 20^th AGM.

• Shri Pramod Agrawal stepped down from his position as Chairperson and Public Interest Director, effective November 8, 2024. The resignation letter, along with the accompanying reasons, can be found in the Stock Exchange Intimation of the Company dated November 8, 2024.

• Prof. Subhasis Chaudhuri, PID, was appointed as the Chairperson of the Governing Board w.e.f. November 21,2024.

• Shri Shamanna Balasubramanya and Shri Rajiv Bansal were appointed as PIDs, effective January 23, 2025, and April 1,2025, respectively, for a term of three years each. In the opinion of the Board, Shri Shamanna

Balasubramanya and Shri Rajiv Bansal are a person of integrity and fulfills requisite conditions as per applicable laws.

• Shri Umakant Jayaram, PID and Sushri Jayshree Vyas, PID, completed their second term and accordingly ceased to be PID w.e.f. closure of working hours on February 3, 2025, and April 24, 2025, respectively.

• During the year, there was no change in the Key Managerial Personnel of the Company. For changes in Key Management Personnel (as per SECC Regulations) / Senior Management (as per Listing Regulations) please refer the relevant section of the Corporate Governance Report.

B. DECLARATIONS BY PUBLIC INTEREST DIRECTORS

The Company has received confirmations from all PIDs, as per Section 149(7) of the Act, that they meet the independence criteria in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations. Additionally, all PIDs have declared that they satisfy the ''fit and proper'' criteria under Regulation 20 of the SECC Regulations. They have also adhered to the Code for Independent Directors in Schedule IV of the Act and submitted their annual compliance affirmation with the Code of Conduct for the Board of Directors and Senior Management. Furthermore, all PIDs have provided declarations in line with Rule 6(3) of the Companies (Appointment and Qualification of Directors) Rules, 2014, confirming no circumstances exist that could impair their independent judgment or influence their duties. There have been no changes affecting their status as PIDs.

C. DECLARATION BY THE COMPANY

None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 164(2) of the Act read with Rule 14 of Companies (Appointment and Qualifications of Directors) Rules, 2014.

D. MEETINGS OF THE BOARD AND ITS VARIOUS COMMITTEES

Eight (8) Meetings of the Board of Directors were held during FY 2024-25. The details of Meetings of Board and Committees held during the year, attendance of Directors at the Meetings and constitution of various Committees of the Board are included separately in the Corporate Governance Report forming part of this Annual Report.

E. AUDIT COMMITTEE RECOMMENDATIONS

All recommendations of Audit Committee were approved by the Board of Directors during the year.

F. PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES, INDIVIDUAL DIRECTORS AND INDEPENDENT EXTERNAL PROFESSIONALS

The annual performance evaluation of the Directors (including Chairperson), Independent External Professionals, Committees and the Board as a whole was carried out in compliance with the requirements of applicable Act and Regulations. For criteria and manner of performance evaluation kindly refer the relevant section of the Corporate Governance Report.

G. REMUNERATION OF DIRECTORS, KMPs AND EMPLOYEES

In compliance with the requirements of Section 197(12) of the Act, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and SECC Regulations, a statement containing the remuneration details of Directors, KMPs and employees is annexed as Annexure A.

H. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Act, the Board, to the best of its knowledge and ability, confirms that:

a) In the preparation of the annual accounts for the financial year ended March 31, 2025, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as of March 31,2025, and of the profit of the Company for the financial year ended March 31,2025;

c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the annual accounts on a going concern basis;

e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

I. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has maintained adequate internal financial controls over financial reporting. These includes policies and procedures -

a) Pertaining to the maintenance of records that is reasonably detailed, accurately, and fairly reflects the transactions and dispositions of the assets of the Company.

b) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Indian Accounting Standards notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time, and that receipts and expenditures of the Company are being made only in accordance with authorization of management and Directors of the Company, and

c) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company''s assets that could have a material impact on the financial statements. Such internal financial controls over financial reporting were operating effectively as of March 31,2025, based on the criteria established in the

Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

J. COMPLIANCE WITH SECRETARIAL STANDARDS

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.

K. IMPLEMENTATION OF CORPORATE ACTION

During the year under review, the Company has complied with the specified time limit for implementation of Corporate Actions.

L. ANNUAL RETURN

The draft Annual Return in Form MGT-7, prepared as per Section 92(3) of the Act is placed on the website of the Company at https://www.bseindia.com/investor relations/annualreport.html.

5. SUBSIDIARIES AND ASSOCIATES

Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Company''s subsidiaries and associates in Form AOC-1 is attached to the financial statements of the Company.

Further, pursuant to the provisions of Section 136 of the Act, the standalone and consolidated financial statements of the Company, along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company at https://www.bseindia.com/investor relations/annualreport.html.

Additionally, during the year, the following changes occurred:

• Asia Index Private Limited, previously a joint venture between BSE Limited and SPDJ Singapore Pte Limited, became a wholly owned subsidiary of your company effective May 31,2024.

• BSE Tech Infra Services Private Limited, a step-down subsidiary merged with BSE Technologies Private Limited, a wholly owned subsidiary, w.e.f. October 1,2024.

• The Company executed a Share Purchase Agreement on May 2, 2025, with AV Financial Experts Network Private Limited, resulting in the divestment of its 100% stake in BSE Institute Limited, a wholly owned subsidiary.

6. PUBLIC DEPOSITS

The Company has neither accepted nor has any outstanding deposits from the public within the meaning of Section 73 & Section 76 of the Act and the Rules made there under.

7. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The Particulars of investments made by the Company are provided in Note Nos. 7, 8 & 9 of the Notes to the Standalone Financial Statements. Further, the Company has not issued any guarantees or securities to any person or entity and has not engaged in making loans or advances that could be classified as loans to firms or companies where the directors of the Company hold an interest.

8. AUDITORS

A. STATUTORY AUDITORS

S.R. Batliboi & Co. LLP, Chartered Accountants (Firm Registration No. 301003E/E300005), Mumbai, are the Statutory Auditors of the Company and are appointed for a term of five years till the conclusion of 22^nd AGM of the

Company to be held in the year 2027.

The Statutory Auditors have confirmed that they are not disqualified from continuing as Auditors of the Company.

The Statutory Auditors have issued the Reports with an unmodified opinion and their Reports do not contain any qualification, reservation, observation, adverse remark or disclaimer on the financial statements of the Company for FY 2024-25.During the year, the Auditors have not reported any fraud to the Audit Committee or the Board.

B. SECRETARIAL AUDIT AND SECRETARIAL AUDITOR’S REPORT

DM & Associates Company Secretaries LLP Mumbai (Firm Reg No. L2017MH003500) have conduct the Secretarial Audit of the Company for FY 2024-25.

The Secretarial Auditor''s report does not contain any qualifications, reservations, or adverse remarks for FY 2024-25 and is enclosed as Annexure B to this report.

The Board of Directors, have appointed Dhrumil M. Shah & Co. LLP (Firm Registration: L2023MH013400), Practicing Company Secretaries, as the Secretarial Auditors of the Company for a term of five consecutive years commencing from FY 2025-26 till FY 2029-30, subject to approval of the Members at the ensuing AGM.

C. INTERNAL AUDITOR

M/s. Rodi Dabir & Co., Internal Auditors of the Company have carried out Internal Audit for FY 2024-25. The reports and findings of the Internal Auditors are periodically reviewed by the Audit Committee and Board.

The Board of Directors, based on the recommendation of the Audit Committee, have appointed M/s. Aneja Associates as the Internal Auditor of the Company, for a period of 3 years commencing from financial year 202526 on a yearly renewal basis.

D. COST RECORDS AND COST AUDIT

Maintenance of cost records and requirement of Cost Audit as prescribed under the provisions of Section 148(1) of the Act, are not applicable for the business activities carried out by the Company.

9. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

A. CONSERVATION OF ENERGY

I. The steps taken and their impact on conservation of energy

To improve energy efficiency, the company has systematically replaced equipment that consumes a lot of energy with modern, energy-efficient options. For instance, induction ballasts have been upgraded to electronic ballasts, and fluorescent lights have been replaced with LED lighting. Regular practices include switching off lights and equipment when they are not in use, along with the installation of motion sensors in certain areas to automate this process. Additionally, bright colors were selected for office interiors to maximize the use of natural light, while glass windows were treated to minimize heat absorption, thereby effectively reducing the energy demands of air conditioning. Moreover, a VRV (Variable Refrigerant Volume) system has been installed in conjunction with the central air-conditioning system. This setup allows the central AC to remain inactive during periods of low building occupancy, leading to a significant reduction in energy consumption. Collectively, these initiatives demonstrate the company''s continuous dedication to enhancing energy usage and efficiency.

II. The steps taken by the Company for utilising alternate sources of energy

The company''s infrastructure, equipped with glass windows that enhance

the influx of natural light, considerably diminishes the need for artificial lighting during daylight hours. This method not only supports sustainability but also cuts down on electricity consumption.

III. The capital investment on energy conservation equipment

In the FY 2024-2025, Company has invested ? 1.93 Crore in installation of VRV system and Motion Sensors to reduce operational cost of Central AC and lighting.

B. TECHNOLOGY ABSORPTION

The Company continues to play a crucial role in the growth narrative of India, serving as a significant facilitator of capital formation. Technology has been pivotal in the modernization and efficiency of the Company, allowing it to stay competitive and appealing to investors.

I. Advanced Trading Infrastructure

The Company is consistently enhancing its trading infrastructure and systems to accommodate increasing volumes in a changing competitive and regulatory environment. Ongoing investments in high-performance equipment bolster throughput and minimize latency, all while ensuring information security is not compromised.

II. Strengthening Risk Management

The Company utilizes a thorough automated framework for risk management and surveillance to uphold market integrity, safeguard investors, and ensure orderly trading. This fosters investor confidence during periods of market volatility. The systems that support these operations remain proactive and adaptable in response to the dynamic and evolving market and regulatory demands.

III. Agility in Disaster Recovery operations

The Company has adopted a proactive stance towards Disaster Recovery (DR) Operations, conducting various mock trading systems and live trading systems from DR biannually. Additionally, the Company engages in collaborative sessions with other Market Infrastructure Institutions (MIIs) to test various scenarios, including ungraceful shutdowns and unannounced DR. Such testing ensures the resilience and availability of the trading platform and its associated systems.

IV. Technology upgrades in StAR MF platform

The Company''s StAR Mutual Fund Platform is the leading mutual fund transaction processing platform in India.

This year, the Company has invested in modernizing the technology platform of the StAR MF platform with an event-driven microservices architecture. This upgrade offers flexibility through modular API-driven integration, accelerates transaction processing, increases throughput, and enhances reliability. Optimized intra-day processes for sharing transaction and settlement data with Registrars and Transfer Agents, leading to settling more transactions nearer to the daily cut-off.

In summary, technology remains the cornerstone of the Company''s operations, facilitating its expansion within a complex and dynamic business and regulatory landscape.

C. CYBER SECURITYTECHNOLOGY ABSORPTION AND CERTIFICATION

In the constantly changing realm of Information and Cyber Security, remaining proactive is not merely an option but an essential requirement. Cyber threats are on the rise, and new threat vectors are continuously developing. To guarantee that BSE''s information assets remain robust against these information and cyber security threats, the 24X7 Information and Cyber Security Operation Centre (SOC) is dedicated to evolving and enhancing our defenses through the implementation of cutting-edge technologies.

I. SOAR (Security Orchestration, Automation and Response)

BSE uses SOAR to step-up the Company''s Cyber security operation centres'' response capability by enabling orchestration and automation by combining SIEM and other technologies. SIEM use-case playbooks has been created in SOAR along with required integrations. Security Orchestration has enabled the threat intelligence feed from multiple sources and streamlined the threat response workflows. It helped to reduce the turnaround time on security alerts and enabled cyber security analysts to act on alerts quickly through defined cyber security alert playbooks.

II. Technology for Phishing Simulation and Employee awareness training

Humans are considered one of the weakest and most vulnerable links in Information and Cybersecurity. It is important to ensure continuous awareness, training, and assessment of human aspect for strong cybersecurity. The Company conducts periodic cybersecurity training and assessment exercises for employees and vendors. With phishing simulation and Learning Management System (LMS) based training, awareness, and assessment technology, it will help to cover all employees and ensure each employee and vendors who are working at the Company premises are going through the assigned trainings and clear the assessments.

III. Threat Intel Platform, External Risk Exposures and Brand Monitoring Service

To ensure continuous digital risk assessment and mitigation of possible threats, the Company has subscribed for services which provides external threat intel for cyber threats where the threats are discovered by research and threat intel provider companies. Brand monitoring services to discover the threats pertaining to the Company''s information assets and to avoid the misuse of the Company''s digital assets and brand name. Surface and Dark web are monitored to identify possible and related cyber threats and exposures being planned or surfaced for the Company.

IV. Certification

The Company has successfully achieved the Information Security Management System ISO 27001:2022 and Business Continuity Management System ISO 22301:2019 certifications.

Conclusion

BSE''s continues to innovate and enhance its technology stack in order to create a resilient marketplace for investors. It also undertakes timely refresh of technologies thereby keeping pace with a fast-moving landscape.

During FY 2024-25, it has augmented its infrastructure significantly, thereby allowing it to keep pace with growing volumes in the Derivatives, Equities and Mutual Fund Segments. BSE remains committed to investing in technology as a key driver towards achieving business and excellence.

Disclosures

a) The efforts made towards technology absorption

The Company continued with passion looking for path-breaking technologies & adopt them. The year had seen a tremendous increase in volumes requiring the Company to invest in adopting new technologies.

The Company has taken the lead for implementation of:

• Upgradation and enhancements in infrastructure

• Implementation of newer technologies to meet key business and regulatory requirements

• Enhancing the security posture across infrastructure and applications

• Improvising the operational capabilities & high availability

• Effective utilisation is made of available indigenous technology team expertise and develop home grown applications.

Needless to mention, the efforts put in by the Company have shown results in the form of a robust platform supporting exponential growth in volumes. All departments within the Company are equipped with tech enabled solutions and applications to deliver best of the services to all its customers.

b) The benefits derived like product improvement, cost reduction, product development or import substitution

While the Company continues to invest in technology, it is conscious of costs pushing itself to build and adopt efficient technology solutions. There is significant focus on innovation in deployment of technology while supporting business growth and a fast-evolving regulatory landscape.

c) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) - Not

Applicable.

i. The details of technology imported - Not Applicable

ii. The year of import - Not Applicable

iii. Whether the technology been fully absorbed - Not Applicable

iv. If not fully absorbed, areas where absorption has not taken place, and the reasons thereof - Not Applicable

d) The expenditure incurred on Research and Development - Not

Applicable

D. FOREIGN EXCHANGE EARNING AND OUTGO

The particulars of Foreign Exchange Earnings and outgo during the year under review are furnished hereunder:

Foreign Exchange Earning: ? 3,895 Lakh (Previous Year: ? 3,464 Lakh) Foreign Exchange Outgo: ? 244 Lakh (Previous Year: ? 245 Lakh)

10. RISK MANAGEMENT AND COMPLIANCE

Risk Management constitutes a vital component of the operational framework at BSE. The Enterprise Risk Management (“ERM”) framework includes practices related to the identification, assessment, mitigation, and monitoring of strategic, operational, financial, compliance, and emerging risks, such as geo-political risks, aimed at achieving key business objectives and minimizing the negative effects of risks.

The Company''s Board of Directors has established a Risk Management Committee (“RMC”) to supervise the ERM Framework, oversee risk mitigation, monitor the risk management plan, and ensure its effectiveness. Additionally, the Audit Committee provides further oversight concerning financial risks and controls.

Management at BSE identifies significant risks, both existing and emerging, and prioritizes mitigation actions based on their potential adverse effects on operations and/or shareholder value. Given that the Exchange functions in a dynamic environment, these risks are regularly reviewed and evaluated for their potential impact and exposure. A comprehensive enterprise-wide Risk Management Framework and Policy was developed in accordance with the guidelines set forth by the regulator, which was subsequently reviewed by the RMC and approved by the Board in November 2024. Furthermore, every quarter, a detailed update on ERM, along with significant risk incidents or events that have occurred, is presented and discussed during RMC meetings.

RISK CATEGORIES

The Company''s risk management framework is broadly categorized into 10 risk vectors pertaining to:

a. Business,

b. Technology,

c. Cyber Security,

d. People,

e. Regulatory and Compliance,

f. Reputation,

g. Fraud,

h. Operations,

I. Finance,

j. Physical Security and Infrastructure.

In addition to the aforementioned points, external risks arising from environmental, macroeconomic, and geopolitical factors are also recognized for evaluation.

RISK MANAGEMENT PROCEDURE Risk Identification

The risk identification uses Risk and Controls Self-Assessment (RCSA) which involves identifying, recognizing, and describing risks that obstruct the attainment of the strategic and business goals of the organisation. BSE has in place, the system, and measures to identify high-level risks related to operational, technological, regulatory and compliance, reputational, infrastructural, environmental, and Strategic, etc. aspects of the organisation.

Risk Assessment

Each risk is assessed for impact (materiality of the risk if it occurs) and likelihood (at an agreed level of impact, the probability of the event taking place). This shall provide the inherent risk of the particular risk activity. Based on the impact and likelihood the risk exposure is categorized into categories based on defined matrix. Residual Risk is derived after assessing the impact of the mitigation plan.

Risk Mitigation Measures

Mitigation actions are prepared and finalised, owners are identified and the progress of mitigation actions are monitored and reviewed. The Risk Management Committee periodically reviews and monitors the mitigation actions, its effectiveness and provides its advice and insights to the mitigation teams.

The management along with risk and control owners remain vigilant in mitigating the risks that may come with changes in internal and external environment.

Risk Reporting

The primary risks identified in the risk registers, along with their mitigation strategies, the regular assessment of processes, and any new risks arising from these evaluations, are provided in a comprehensive update on Enterprise Risk Management (ERM) and are discussed during the quarterly meetings of the Risk Management Committee (RMC).

The risks recognized by the risk management function or roles across various levels within the organization are displayed at the suitable level of the governance structure. Critical risks or cross-functional risks at each tier are escalated to the subsequent level in the governance framework. Critical

risks categorized under different types of risks at the entity level are examined by the Chief Risk Officer, Chief Financial Officer, Chief Business Officer, Chief Information Officer, and Chief Regulatory Officer, and are subsequently reviewed by the Managing Director & Chief Executive Officer.

Risk Management Framework for the year

During the year, as a part of a fresh perspective to Risk Management and monitoring the key risks, the following activities were undertaken by the risk management function during the year:

a) In accordance with the SECC Regulations and the revised Terms of Reference (TOR) established by SEBI, a thorough update of the Risk Management Policy and framework was submitted for evaluation and subsequently approved by both the Risk Management Committee and the Board in November 2024.

b) Comprehensive deep-dive sessions were conducted with all major organizational functions to ensure the alignment of their respective Risk Registers with the standardized format, facilitating a cohesive and consistent approach to risk management.

c) Review of Incident Reporting and escalation mechanism whereby incidents that occurred and could have posed potential risk to the enterprise are escalated and reported on a timely basis to ensure required remediation and change in processes to strengthen the risk mechanism.

d) Identification of major risk vectors impacted, and risks involved in processes followed by the departments.

e) Review of the existing Business Continuity Plan and enhancing the existing BCP with non-IT scenarios to develop a holistic BCP at enterprise level.

Given the intrinsic risks associated with the Company''s operations, it is essential for BSE to continuously enhance its risk management practices in order to fortify the organization through well-informed strategic and business decisions. BSE''s strategic objective for the Enterprise Risk Management (ERM) function is to integrate ERM into processes, business strategy, and critical decision-making, thereby contributing substantial and strategic value to the organization.

11. COMPANY''S POLICIES

A. POLICY ON NOMINATION AND REMUNERATION

The Company''s Nomination and Remuneration Policy (NRC Policy) outlines the criteria for assessing the qualifications, positive traits, and independence of a director. The NRC Policy offers direction regarding the appointment and dismissal of Directors & Key Managerial Personnel/ Key Management Personnel / Senior Management (‘KMPs''), as well as the remuneration for Directors, KMPs, and employees of the Company. During the year, in accordance with amendments to SECC Regulations and other relevant laws/Regulations, necessary modifications were implemented in the policy.

The NRC policy can be accessed on the Company''s website at https://www.bseindia.com/investor relations/corporategovernance.html

B. POLICY ON CORPORATE SOCIAL RESPONSIBILITY (“CSR”)

The Company has constituted a Committee in accordance with Section135 of the Act. The Annual Report on CSR activities as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been annexed to this Report as Annexure C.

The CSR policy is available on the website of the Company at httDs://www.bseindia.com/static/investor relations/corporatesocialrespons. html

C. VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has in place a Vigil Mechanism / Whistle Blower Policy

pursuant to Regulation 22 of the Listing Regulations and Section 177(10) of the Act and SECC Regulations, enabling stakeholders to report any concern of unethical behaviour, suspected fraud, or violation.

The said policy inter alia provides safeguard against victimization of the Whistle Blower. Stakeholders including Directors and Employees have direct access to the Chairperson of the Audit Committee.

During the year under review, no stakeholder was denied access to the Chairperson of the Audit Committee.

The Whistle Blower Policy is available on the website of the Company at https://www.bseindia.com/investor relations/corporategovernance.html

D. POLICY ON RELATED PARTY TRANSACTIONS

All Related Party Transactions (“RPT”) that were entered during the FY were on arm''s length basis and in the ordinary course of business and were in compliance with the applicable provisions of the Act and the Listing Regulations. There was no material significant RPT transacted by the Company during the year that required Shareholders'' approval under Regulation 23 of the Listing Regulations. None of the transactions with related parties fell under the scope of Section 188(1) of the Act. The disclosure of RPTs as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for FY 2024-25 and hence does not form part of this report.

The RPT Policy is available on the website of the Company at https://www.bseindia.com/investor relations/corporategovernance.html

E. POLICY ON MATERIAL SUBSIDIARY

As required under Regulation 16(1)(c) of Listing Regulations, the Company has in place and adopted a policy for determining Material Subsidiaries.

For FY 2024-25, Indian Clearing Corporation Limited (“ICCL”) is the material subsidiary of the Company. As per Regulation 24A of Listing Regulations, the Secretarial Audit Report of ICCL is annexed as Annexure D.

The Material Subsidiary policy is available on the website of the Company at https://www.bseindia.com/investor relations/corporategovernance.html

F. INSIDER TRADING REGULATIONS

Pursuant to the provisions of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (as amended from time to time), the Company has formulated a Code of Conduct for Prevention of Insider Trading (“Insider Trading Code”) and Code of Practices and Procedures for fair disclosure of Unpublished Price Sensitive Information (“UPSI”).

The Code of Practices and Procedures for fair disclosure of UPSI is available on the website of the Company at

https://www.bseindia.com/investor relations/corporategovernance.html

G. DIVIDEND DISTRIBUTION POLICY

The Dividend Distribution Policy containing the requirements of Regulation 43A of Listing Regulations is annexed as Annexure E and is also available on the website of the Company at

https://www.bseindia.com/investor relations/corporategovernance.html

12. DISCLOSURE AS REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has always believed in providing a safe and harassment free workplace for every individual working in its premises through various policies and practices. The Company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment.

The Company has adopted a policy on Prevention of Sexual Harassment (POSH) at Workplace which aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of undesired behaviour. An Internal Complaints Committee (“ICC”) is already in place wherein the senior management (with women employees constituting the majority) personnel are its members. The ICC is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the Policy.

The Company had conducted workshops on POSH for the employees on periodic basis. During the FY ended March 31,2025, no complaint pertaining to sexual harassment was received.

13. RESOURCES COMMITTED TOWARDS STRENGTHENING REGULATORY FUNCTIONS AND TOWARDS ENSURING COMPLIANCE WITH APPLICABLE REGULATORY REQUIREMENTS

The Company being a recognised Stock Exchange is governed by SEBI. The Company ensures compliances with various regulations and guidelines issued by SEBI from time to time and strives to implement the best governance practices.

During the year under review, the Company''s regulatory division comprised of departments, handling various critical aspects of regulatory compliances, as under:

i. CRO''s Office

ii. Listing Operations & Compliance

iii. Member Oversight

iv. Online Surveillance & Investigation

v. Membership Operations & Compliance

vi. Investor Services

vii. Financial Surveillance

viii. Enforcement

ix. Exchange Compliance

There are 295 resources in these functions at various designations. Each such function is headed by the Chief Regulatory Officer, who in turn reports to the MD & CEO and Regulatory Oversight Committee.

The Company has ensured to make disclosures of various mandatory regulatory requirements along with reporting of the same to various regulatory authorities in addition to informing the same to the Board of Directors and respective Committee.

For the FY ending on March 31, 2025, BSE incurred direct and indirect expenses amounting to ? 4,692 Lakhs as per activity-based accounting methodology towards strengthening regulatory functions and towards ensuring compliance with regulatory requirements.

14. COMMUNICATIONS Strategic Communication

Through its communication strategy, BSE continued to play a vital role in producing and disseminating timely information to all its stakeholders-both internal and external. The approach was multi-pronged, incorporating new tactics in response to evolving market demands.

Digital Strategy

BSE actively pursued a digital communications strategy aimed at promoting brand BSE as well as investor education and awareness. Distinct branding strategies were implemented to differentiate between brand-building initiatives and investor awareness campaigns.

To enhance brand visibility, strategic partnerships were established with media outlets and publications, increasing both presence and share of voice. The brand continued to mark occasions such as events, anniversaries, and festivals-spreading joy and positivity.

For investor education and awareness, BSE collaborated with leading publications such as The Economic Times and Hindustan Times, while also exploring emerging platforms like podcasts and short-format videos to engage the growing digital audience. Special focus was placed on regional language outreach via Lokmat, and on engaging women investors through a collaboration with SheThePeople. This partnership aligns with BSE''s

commitment to fostering gender diversity in investing. As part of this effort, BSE co-hosted the “Ring the Bell for Gender Diversity” event on International Women''s Day, alongside SheThePeople, UN Women, MSCI Inc., and Women in ETFs (WE).

These digital strategies and amplification methods led to a substantial increase in followers across BSE''s social media platforms-Facebook, Instagram, X (formerly Twitter), and LinkedIn-during FY 2024-25. The exchange ended the financial year with nearly 35 lakh followers in total across all the major social media platforms, a percentage gain of 36% over the previous financial year.

Offline Content Strategy

An active strategy was also adopted for offline content and printed literature aimed at both internal and external stakeholders. Key updates included revisions to presentations and brochures related to brand BSE, the BSE SME platform, and the BSE Start-up platform.

Additionally, content and design creatives were revamped for stall installations at various events to reflect a more contemporary, data-driven aesthetic. These were used across multiple investor awareness programs (IAPs), including Shiksit se Viksit, the CII Chandigarh Fair, Mega-RISA (Regional Investor Seminar for Awareness), the IAP stall at the India International Trade Fair (IITF) in Delhi, the Kolkata Book Fair, and the Khasdar Audyogik Mahotsav, among others. Innovative designs were also deployed at international exhibitions such as the Futures Industry Association (FIA) events held in Chicago and Singapore.

Efforts were made to rebrand creative content for the Mumbai Investor Service Centre (ISC), with similar work underway for the Delhi ISC.

Events and Engagements

During FY 2024-25, BSE hosted a wide range of delegations and high-level visits, enhancing its domestic and international profile.

Highlights included:

• A visit from New Zealand Prime Minister Christopher Luxon for the signing of an MoU between BSE Institute and Quality New Zealand Education.

• A visit by H.E. Marisa Gerards, Ambassador of the Netherlands, and Consul General Nabil Taouat.

Other international delegations welcomed by BSE included representatives from:

• Kubota Corporation (Japan)

• Bloomberg (Singapore)

• Royal College of Defence Studies (UK)

• Swedish Parliamentary Delegation

• Hanoi Stock Exchange (Vietnam)

• Zimbabwe

• Securities Board of Nepal (SEBON)

Additional visitors included:

• Nepal Stock Exchange (NEPSE)

• Social media influencers and journalists from Sri Lanka, Nepal, and ASEAN countries (including a delegation facilitated by India''s Ministry of External Affairs)

• Securities and Exchange Commission of Ghana (SEC Ghana)

• Naval and Industrial Tour of the Higher Command Course

• Delegates from the Independent Director Programme for Senior Defence Personnel

BSE also hosted multiple student delegations from the National Institute of Securities Markets (NISM), IIT Mumbai, and participants from the InternNation Leadership Tours (Chaatra Sansad and 2025 cohort).

These interactions underscore BSE''s growing stature as a hub for financial learning, policy discourse, and cross-border collaboration.

Product Launches, Explainer Content, and Anniversaries

FY 2024-25 saw the launch of several new products, supported by integrated communications strategies. Notable launches included:

• Sensex Next 30

• Select IPO

• Indian Sector Leaders indices

A major milestone was the launch of Sensex Futures trading at India International Exchange (India INX), located at the GIFT International Financial Services Centre (IFSC). The inauguration, led by the Hon''ble Chief Minister of Gujarat, Shri Bhupendra Patel, represented a significant step toward widening global investor access to India''s benchmark index.

There was renewed focus on content and communication strategies for BSE''s Social Stock Exchange (SSE), aimed at simplifying product understanding for the general public. BSE also celebrated key milestones, including the anniversary of the relaunch of its flagship index derivative contracts-Sensex and Bankex. The long-standing Muhurat Trading Day, a tradition observed since 1957 to coincide with Diwali, continued this year as well. Finally, the communication strategy incorporated the production of product explainer videos for the SEBI symposium. These videos aimed to simplify complex concepts through clear, user-friendly audio-visual content.

16. OTHER DISCLOSURES

A. MANAGEMENT DISCUSSION & ANALYSIS

Pursuant to Regulation 34(2)(e) of the Listing Regulations, the Management Discussion and Analysis Report forms part of this Annual Report.

B. BUSINESS RESPONSIBILITY AND SUSTAINIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility and Sustainability Report forms part of this Annual Report.

C. CORPORATE GOVERNANCE

Pursuant to the SECC Regulations, Listing Regulations and the Act, report on Corporate Governance as on March 31,2025, forms part of this Annual Report. A Certificate from Practicing Company Secretary, confirming status of compliances of the conditions of Corporate Governance is annexed to the Corporate Governance Report.

D. THE DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 DURING THE YEAR ALONG WITH THEIR STATUS AS AT THE END OF THE FINANCIAL YEAR

During the FY 2024-25, no proceeding has been initiated under Insolvency and Bankruptcy Code for default in payment of debt. Further, the Company has also not initiated any proceedings against the defaulting entities. However, it had lodged its claim with the resolution professional/liquidator appointed for defaulting listed companies.

E. THE DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONETIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF

During the period under review, Company has not taken any loans from the banks or financial institutions. Accordingly, there has been no one time settlement or valuation done for this purpose.

F. INVESTOR PROTECTION FUND (“IPF”)

The Company, through its IPF, regularly conducts Investor Awareness Programs (“IAPs”) throughout the country. IPF was instrumental in conducting 12,486 IAPs during FY 2024-25. Out of this, 381 IAPs were conducted through IPF while 12,105 IAPs were conducted through the Investors Services Fund (“ISF”) that also has similar objectives. Similarly, 8530 IAPs were conducted physically while 3,956 were conducted online (webinars) out of the above. Additionally, during the year, IPF officials conducted 381 Regional Investor Seminars for Awareness (RISA) jointly with SEBI across different parts of the country. IPF also publishes TV, print, digital and online advertisements regarding Do''s and Don''ts for investors, in order to educate them and enable them to safeguard their interests. During the year, several educational and other capital market awareness events were supported by IPF to raise awareness about investor centric areas such as investing early, power of compounding, diversification of investment, goal-based investing, retirement investment ideas, etc.

MAJOR INITIATIVES Digital Initiatives

To achieve higher reach amongst the investor community, IPF enhanced its usage of digital media platforms and social media channels. In coordination with the Corporate Communications team, we crossed 34 lakh followers cumulatively across all of BSE''s social media platform handles (Facebook, Instagram, X, LinkedIn and YouTube). Beyond the periodic posting of investor awareness and protection content under the IPF banner, eight new videos were created in Hindi featuring the popular character Mr. Mane. These videos were dubbed in 9 languages while five of the relevant ones were also converted into sign language to make these videos accessible to all audience groups. The overall video views of Mr. Mane video series across the social media platforms have crossed 18.75 crore as of date.

Further, multiple media partnerships across different content formats, such as interviews, podcasts, informative posts in regional languages and targeted content for groups such as women and youth investors were created to reach out to niche investor segments. There was also special focus on investor awareness and protection during the world investor week (WIW) in October 2024 where folk stories were converted into interesting bits of education and awareness for investor; it was one of its kind initiatives done during that week.

World Investor Week (WIW) 2024

BSE IPF celebrated the globally popular event for investors called World Investor Week (WIW 2024) under the aegis of SEBI and International Organisation of Securities Commissions (IOSCO), from October 14-20, 2024.

WIW is a week-long global celebration promoted by the IOSCO to raise awareness about the importance of investor education and protection. In India, SEBI had worked with all the Market Infrastructure Institutions to make this a memorable and enriching week for all investors.

To mark the beginning of WIW 2024, on the first of day of the week i.e. October 14, 2024, BSE IPF conducted a bell ringing ceremony at BSE International Convention Hall which was attended by Shri G. P. Garg, Executive Director, SEBI and various other senior dignitaries from SEBI.

Certain key activities undertaken by IPF to celebrate WIW 2024 are:

• Investor Awareness Programs (IAPs)

Conducted 782 IAPs in one week through our network of resource persons, regional officials (some jointly with SEBI officials), creating

awareness and educating the investors about various aspects of investments through securities market at pan India level and in various regional languages as applicable.

• Creating Microsite

A Microsite of WIW 2024 was created, listing various activities conducted during WIW, access for which was provided through popular BSE India website.

• QUIZ programs General Quiz for Investors

A series of general Quiz programs for the general public from Monday, October 14, 2024 to Friday, October 18, 2024 (5 consecutive days) was conducted during WIW. The Quiz was conducted online, wherein participants were required to answer multiple choice answer questions on the capital market in a time bound manner. Winners were decided at the end of every day''s Quiz and were awarded with the winners'' certificates as well as suitable cash prizes. All other participants were given participation certificates. Out of those participants who have played all the 5 day''s quizzes and answered questions correctly, 2 winners were selected from across all daily quizzes and were awarded as “Quiz Ka Champion”.

A Total of 23000 participants attended the Quiz program with overall accuracy of 64%.

• Organizing Human Chain

This is yet another unique activity which will be conducted during WIW. On the first day of WIW i.e. October 14, 2024, BSE IPF in association with Krisha Foundation, organized a Human Chain, at Vidyalankar School of Information & Technology wherein more than 350 students participated. The students wearing uniform T-shirts and caps formed a shape of a big WIW. To capture the essence of the Human Chain event comprehensively, a video shoot from a drone camera was done by a professional photographer capturing an aerial view of the entire event.

• Street Plays

BSE IPF in co-ordination with one of the resource persons, performed 16 Nukkad nataks in Madhya Pradesh (Indore, Bhopal, Ujjain) and Nagpur at various busy locations to propagate the message of Digital finance and prevention from online frauds.

• Jingle Making Competition

Conducted a jingle making competition, a creative way to engage with participants. A jingle competition was a unique way to engage with the audience and create a memorable experience. Purpose of the competition was to encourage investor engagement to create a jingle based on capital markets. More than 2000 participants submitted jingle videos (not more than 1 minute) either individually or in teams which was evaluated based on quality, content and overall effectiveness. Selected winners were awarded with cash prize and recognition on BSE''s social media handles.

• Story Telling Competition

Conducted a storytelling competition through video submission on the theme of explaining investment jargons, a creative way to educate people about investing.

Theme: “Demystifying Investment Jargon” or “Simplifying Investment Related Terms”

Objective: To create engaging stories that explain complex investment terms in simple language.

Participants were asked to create a short video (max 2-3 minutes) that tells a story about an investment concept or terminology either in English or Hindi.

By this activity we were able to host a successful storytelling competition that educates people about investment jargons, making complex concepts more accessible and fun to learn. More than 1300 people participated in this activity.

• Digital Activities

BSE conducted following digital activities through social media handles.

Nava Rasa - In this activity, we engaged the online audience with an interactive social media campaign during WIW 2024 that connects the Nav Rasa (emotions) with investor behaviour.

BSE ran campaigns around this Nav Rasa throughout the entire week, playing one rasa (emotion) card every day and asking the investors to quote a song, record their video or tag a YouTube song depicting the emotion of the day. This encouraged engagement among the viewers while also understanding the behavioural relation of the rasa (emotion) with the investor.

Best songs and interactions of the investors were pinned and rewarded with cash prizes.

Interactive quiz campaigns - BSE hosted interactive quiz campaigns during all 7 days of week, online through its social media handles on various facets of investing to educate as well as engage audience during WIW 2024. The topics revolved around the investor awareness campaigns and theme of WIW viz., digital finance and technology with subtext around frauds, scams and basics of investing.

Right answers were pinned and rewarded.

Amplification of offline and online content - In addition to the above social media activities, BSE also amplified all the offline and online contents through its social media handles. This included promoting the offline activities which were held during the week to inform the audience and improve engagement.

Further, to promote our investor awareness videos including the popular #ManekiMano series were made and posted in the interest of general investors in the capital market. These videos were sent out to all social media handles of BSE i.e., Facebook, LinkedIn, Twitter and Instagram during the entire length of the WIW.

Educational initiatives in collaboration with leading newspapers.

BSE worked with leading digital publications such as Economic Times and Lokmat to educate investors about investor protection, fraud, digital finance and basics of investing through their digital channels. These included podcast, advertorial, infographics, and short reels.

Startup Event in IIM Ahmedabad, with our Exchange in IFSC, Gift City

Indian Institute of Management Alumni Association Ahmedabad Chapter (IIMAAAAC) hosted one event in IIM Ahmedabad premises to create Investor awareness in association with India International Exchange (IFSC) Ltd. (India INX) and BSE Investor Protection Fund (IPF) on October 18, 2024. Senior IFSC officials attended this half day event.

The participants in the events were IIMA Alumni, some startups, Angel and VC investors and audience from IIM. The event focused on creating awareness among the investors on Direct Listing, Bond listing, products available for investment in GIFT IFSC, investment opportunities in Global Market through direct access, Tax benefits in IFSC etc. The objective was to enthuse and encourage investors and young entrepreneurs to start

their own ventures or get their ventures listed, thereby promoting vibrancy in the IFSC, which is a priority for the Centre.

Grand Finale of The Hindu Businessline Cerebration Business Quiz

The BSE IPF collaborated with reputed The Hindu Business Line Group which conducted its 21^st Edition of the Cerebration Business Quiz 2024. The quiz saw a range of participants which included Business Professionals, Corporate Executives, students from prominent B-schools and MBA aspirants, packaged as the country''s toughest corporate business Quiz, it was held virtually across six cities - Chennai, Hyderabad, Delhi, Kochi, Bengaluru and grand finale in Mumbai.

National final was held on ground at BSE International Convention Hall on last day of WIW 2024.

• BSE building illumination

This year also we lit up the face of the iconic BSE Building during all days of WIW 2024 carrying the logos of SEBI, BSE and WIW 2024 on the face of the building.

G. GREEN INITIATIVE

In order to address the environmental concerns, the Company is undertaking steps to promote sustainability, by disseminating all agenda items of Board and Committee meetings electronically on a real time basis, by uploading them on a secured online application specifically designed for this purpose, thereby eliminating circulation of printed agenda papers.

As a part of its green initiative, the Company has taken necessary steps to send documents viz. notice of the general meeting, annual report, etc. at the registered email addresses of shareholders. Those who have not yet registered their email ids are requested to register the same with the Registrar & Transfer Agent (RTA) in case of physical holdings and Depository Participants in case of electronic holdings with Depositories, to enable the Company to send the documents by the electronic mode.

17. ACKNOWLEDGMENTS

The Board sincerely thanks the Government of India, SEBI, RBI, IRDA, GIFT City Ltd., CERC, the Government of Maharashtra, other State Governments, and various government agencies for their continued support, co-operation, and advice.

The Board places on record its sincere appreciation and gratitude to the former Directors and those who concluded their tenure during the year, for their valuable contributions and expert guidance that played a significant role in the Company''s Success.

The Board places on record its gratitude to the members of various committees for their guidance and leadership and for providing valuable contribution towards the functioning of respective committees during the year.

The Board also acknowledges the support extended by trading members, issuers, investors in the capital market and other market intermediaries and associates.

The Board expresses sincere thanks to all its business associates, consultants, bankers, vendors, auditors, solicitors and lawyers for their continued partnership and confidence in the Company.

The Board further extend its sincere appreciation to all the employees for their dedication and contribution and to all the shareholders for their trust and confidence in the management of the Company. The Board is also deeply touched by the efforts, sincerity and loyalty displayed by the employees for their commitment, co-operation, and collaboration in advancing the mission and vision of the Company towards achieving its goals.

The Acknowledgement serves to demonstrate Transparency, Accountability and Appreciation for the collective efforts that contribute to the Company''s Performance and Sustainability.

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Mar 31, 2024

The Board of Directors ("Board”) present the 19^th Annual Report of BSE Limited ("the Company” or "BSE” or "Exchange”) together with audited financial statements for the Financial Year ended March 31,2024.

1. STATE OF COMPANY’S AFFAIRSA. FINANCIAL SUMMARY AND HIGHLIGHTS:

The financial performance for Financial Year ("FY”) 2023-24 is summarised in the following table:

(Rs. in Lakhs)
Particulars	Standalone		Consolidated
	2023-24 |	2022-23	2023-24 |	2022-23
Total revenue	1,29,180	74,239	1,61,790	95,394
Total expenses	87,733	50,479	1,10,082	70,591
Profit before exceptional items and tax	41,447	23,760	51,708	24,803
Exceptional items (income)	50,417	-	40,662	-
Profit before tax and share of profits of associates	91,864	23,760	92,370	24,803
Share of profits of associates	-	-	7,182	4,923
Profit before tax	91,864	23,760	99,552	29,726
Tax expenses	16,525	7,069	22,386	9,161
Net profit for the year	75,339	16,691	77,166	20,565
Net profit attributable to the Shareholders of the Company	75,339	16,691	77,839	22,067
Net profit attributable to the non-controlling interest	-	-	(673)	(1,502)
Other comprehensive income	67	44	321	1,994
Total comprehensive income for the year	75,406	16,735	77,487	22,559
Total comprehensive income attributable to the Shareholders of the Company	75,406	16,735	78,039	23,294
Total comprehensive income attributable to the non-controlling interest	-	-	(552)	(735)
Basic and diluted EPS before exceptional items ''	20.99	12.15	29.91	16.06
Basic and diluted after exceptional items ''	54.84	12.15	56.66	16.06

I. Consolidated Results

The total income of the Company during FY 2023-24 on a consolidated basis was '' 1,61,790 Lakh reflecting an increase of '' 66,396 Lakh (up by 70%) over previous FY. The total expenses for the year were higher by '' 39,491 Lakh (up by 56%) at '' 1,10,082 Lakh.

During the FY, the income was higher mainly due to increase in income from securities services (up by 118%); investments income (up by 85%); income from corporate services (up by 20%) and data dissemination (up by 11%). Increase in expenses are mainly due to increase in employee benefits expense (up by 14%); clearing and settlement expense (up by 426%); administration and other expenses (up by 34%); regulatory fees (up by 188%); computer technology related expenses (up by 11%); depreciation (up by 58%) partly offset by liquidity enhancement scheme expenses (down by 82%) and decrease in finance cost (down by 45%).

The net profit after tax excluding exception item was higher by '' 19,849 Lakh (up by 97%) from '' 20,565 Lakh in previous FY to '' 40,414 Lakh in the current FY.

II. Standalone results

The total income of the Company during the FY 2023-24 on a standalone basis was '' 1,29,180 Lakh reflecting an increase of '' 54,941 Lakh (up by 74%) over previous FY. The total expenses for the FY were higher by '' 37,254 Lakh (up by 74%) at '' 87,733 Lakh.

During the FY the income was higher mainly due to increase in income from securities services (up by 133%); investments (up by 116%), income from services to corporates (up by 20%); data dissemination (up by 11%) and other income (up by 3%). Increase in expenses are mainly due to increase in regulatory fees (up by 311%); clearing and settlement expense (up by 235%); administration and other expenses (up by 20%); employee

benefit expenses (up by 18%); computer technology related expenses (up by 8%) and depreciation and amortisation expenses (up by 53%) partly offset by decrease in liquidity enhancement scheme expenses (down by 100%).

The net profit after tax excluding exceptional item was higher by '' 12,141 Lakh (up by 73%) from '' 16,691 Lakh in the previous FY to '' 28,832 Lakh in current FY.

B. DIVIDEND

The Board of the Company, in its meeting held on May 8, 2024, has recommended a final dividend of '' 15/- per equity share of the face value of '' 2/- each fully paid up for the FY ended March 31, 2024, subject to the approval of the Shareholders at the Annual General Meeting ("AGM”).

The said dividend is in line with the Dividend Distribution Policy of the Company.

The final dividend on equity shares for FY 2023-24, if approved, would result in a cash outflow of approximately '' 20,598.95 Lakh.

In view of the changes made under the Income-Tax Act, 1961, by the Finance Act, 2020, dividends paid or distributed by the Company shall be taxable in the hands of the Shareholders. The Company shall, accordingly, make the payment of the Final Dividend after deduction of tax at source. For more clarity on deduction of tax, please refer para on ‘Tax Deducted at Source ("TDS”) on Dividend’ as mentioned in the notes to the Notice of 19^th AGM.

Under Clause 5.3 of the BSE (Corporatisation and Demutualisation) Scheme, 2005, the allotment of equity shares to 10 Trading Members of the erstwhile BSE has been kept in abeyance for various reasons as on March 31, 2024. All corporate benefits including dividend as may be declared by the Company from time to time are being provided for and would be payable on the allotment of these shares. Brief details about the shares being kept in abeyance by the Company are given in ‘Share Capital’ section.

C. TRANSFER TO RESERVES

The Company was not required to transfer any amount of profits to general reserves for FY 2023-24 pursuant to the provisions of Companies Act, 2013 ("the Act”).

D. INVESTOR RELATIONS

The Company believes in leading from the front with emerging best practices in investor relations and building a relationship of mutual understanding with International and Domestic investors. To this end, the Company continuously strives for excellence in its Investor Relations engagement with investors through physical, video and audio meetings through structured conference-calls and periodic investor/ analyst interactions like one-on-one meetings, participation in investor conferences, quarterly earnings calls, and analyst meet from time to time. The Company’s leadership team, including the Managing Director and Chief Executive Officer ("MD & CEO"), Chief Financial Officer,

and Investor Relations Officer, spent significant time to interact with investors to communicate the strategic direction of the business in 99 one-on-one meetings and 13 investor conference meets organized by reputed Global and Domestic Broking Houses, during the year under consideration. The Company conducted four quarterly earnings calls during the year, which were well attended by investors and analysts. No unpublished price sensitive information is discussed in such meetings. The Company ensures that critical information about the Company is available to all the investors, by uploading all such information on the Company’s website.

2. MAJOR EVENTS OCCURRED DURING THE YEARA. MATERIAL CHANGES FROM END OF FINANCIAL YEAR TILL DATE OF REPORT

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.

B. CHANGE IN NATURE OF BUSINESS

During the FY 2023-24, there was no change in the nature of business of the Company.

C. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the FY 2023-24, no significant and material orders have been passed by the Regulators or Courts or Tribunals against the Company.

3. SHARE CAPITAL

Pursuant to clause 5 of BSE (Corporatisation and Demutualisation) Scheme, 2005 ("BSE Demutualisation Scheme”) approved by SEBI, vide its notification dated May 20, 2005, every Trading Member having membership right of the Exchange or his nominee, as the case may be, as on record date, decided for the purpose, was entitled to 10,000 equity shares of the face value of '' 1/- per share, against membership right of erstwhile BSE. It may be noted that the entitlement against membership rights post consolidation of share capital stands changed to 5,000 equity shares of face value '' 2/- per share. As on March 31, 2024, entitlement of 10 Trading Members of erstwhile BSE, against their membership rights, continue to remain in abeyance for various reasons. All corporate benefits including dividend as may be declared by the Company from time to time on the shares which remain in abeyance, are being provided for and would be payable on the allotment of these shares.

TRANSFER OF SHARES

Pursuant to the provisions of IEPF Rules, all equity shares in respect of which dividend has not been paid or claimed for last seven consecutive years shall be transferred by the Company to the designated Demat Account of the IEPF Authority ("IEPF Account”) within a period of thirty days of such shares becoming due to be transferred.

Accordingly, 171 equity shares of '' 2/- each on which the dividend remained unpaid or unclaimed for last seven consecutive years with reference to the due date of July 24, 2023, were transferred during the FY 2023-24 to the IEPF Account after following the prescribed procedure.

Further, 2,980 equity shares of '' 2/- each on which the dividend remained unpaid or unclaimed for last seven consecutive years with reference to the due date of March 16, 2024, were transferred to IEPF Account within prescribed timelines, after following the prescribed procedure.

Members may note that both the unclaimed dividend and the shares transferred to IEPF Authority can be claimed back by them from IEPF Authority after following the procedure prescribed under the Rules. Please note that no claim shall lie against the Company in respect of unclaimed dividend(s) and Shares transferred to IEPF Authority.

Any Shareholder whose dividend / shares are transferred to IEPF can claim the shares by making an online application in Form IEPF-5 as available on www.iepf.gov.in.

DETAILS OF NODAL OFFICER

Name : Shri Vishal Bhat, Company Secretary and Compliance

Officer

Email address : [email protected]

DETAILS OF THE RESULTANT BENEFITS ARISING OUT OF SHARES ALREADY TRANSFERRED TO THE IEPF:

CHANGE IN PAID-UP SHARE CAPITAL BUYBACK OF SHARES:

Based on the recommendation of the Board of Directors of the Company at their meeting held on July 6, 2023, the Shareholders of the Company at the 18^th AGM, inter-alia, had approved the proposal for buyback of up to 45,93,137 Equity Shares (representing 3.39% of the total number of Equity Shares in the total paid-up equity capital of the Company) at a price of '' 816/- (Rupees Eight Hundred and Sixteen Only) per Equity Share, through the "tender offer” route, on a proportionate basis as prescribed in the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018, the Act and other applicable laws and regulations.

Subsequently, as per Regulation 5(via) of Securities and Exchange Board of India (Buyback of Securities Regulations, 2018, the Board of Directors at their meeting held on September 1, 2023, revised the Buyback Offer Price to '' 1080/- (Rupees One Thousand and Eighty Only) and reduced the quantum of Shares to be bought back to 34,70,370 Equity Shares (representing 2.56% of the total number of Equity Shares in the total paid-up equity capital of the Company).

Pursuant to the same, the Company bought back 86,532 Equity Shares at '' 1080/- per Equity Share resulting in a cash outflow of '' 9,34,54,560 (excluding expenses towards buyback).

An amount of '' 9,34,54,560 was utilised from free reserves of the Company. Further, Capital Redemption Reserve of '' 1,73,064 (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. Post Buyback, the revised paid-up equity share capital of the Company as on March 31, 2024, stood at '' 27,07,52,718/- (Rupees Twenty-Seven Crores Seven Lakhs Fifty Two Thousand Seven Hundred and Eighteen Only) consisting of 13,53,76,359 equity shares of face value of '' 2/- each.

4. INVESTOR EDUCATION AND PROTECTION FUND TRANSFER OF UNCLAIMED/UNPAID DIVIDEND

Pursuant to the provisions of Section 124 of the Act read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules”), and relevant circulars and amendments thereto, the amount of dividend remaining unpaid or unclaimed for a period of seven years from the date of transfer of such amount to Unpaid Dividend Account, is required to be transferred to the Investor Education and Protection Fund ("IEPF”), constituted by the Central Government.

The Company had, accordingly transferred the following amount to IEPF during the year under review:

Sr. No.	Dividend	Financial Year	Cumulative No. of Shares	Amount ('')
1.	Interim Dividend	2017-18	225	1,125
2.	Thirteenth Final Dividend	2017-18	225	6,975
3.	Interim Dividend	2018-19	448	2,240
4.	Fourteenth Final Dividend	2018-19	448	11,200
5.	Fifteenth Final Dividend	2019-20	760	12,920
6.	Sixteenth Final Dividend	2020-21	1058	22,218
7.	Bonus shares (2:1)	2021-22	3060	---
8.	Seventeenth Final Dividend	2021-22	4590	59,285
9.	Eighteenth Final Dividend	2022-23	5859	68,288

Sr. No.	Type of Dividend	Dividend Date of Per Share Declaration	Date of Transfer	Amount Transferred
1.	Final Dividend for FY 2015-16	'' 4/- June 24, 2016	August 17, 2023	'' 2,09,668
2.	Interim Dividend for FY 2016-17*	'' 5/- February 14, 2017	April 3, 2024	'' 4,04,515
* Pursuant to the provisions of the Act, the Amount was required to be transferred within 30 days from the end of March 16,2024, and same was transferred on April 3,2024.

Year wise amount of Unpaid/Unclaimed Dividend lying in the unpaid account up to March 31,2024, and the corresponding shares, which are liable to be transferred to the IEPF, and the due dates for such transfer:
Sr. Date of declaration of Dividend No.	Number of Shareholders against whom Dividend amount is unpaid	Number of shares against whom Dividend amount is unpaid	Amount Unpaid as on March 31, 2024 O	Due date of transfer of Unpaid and Unclaimed Dividend to IEPF*
1 12th Final Dividend (FY 2016-17) AGM held on September 4, 2017	2,230	80,363	18,48,349.00	October 5, 2024
2 Interim Dividend (FY 2017-18) Board Meeting held on February 2, 2018	3,112	1,86,262	9,31,310.00	March 6, 2025
3 13th Final Dividend (FY 2017-18) AGM held on August 2, 2018	2,202	84,632	26,23,592.00	September 3, 2025
4 Interim Dividend (FY 2018-19) Board Meeting held on November 30, 2018	2,582	1,03,159	5,15,795.00	December 30, 2025
5 14th Final Dividend (FY 2018-19) AGM held on July 15, 2019	1,896	70,992	17,74,800.00	August 18, 2026
6 15th Final Dividend (FY 2019-20) AGM held on July 30, 2020	2,056	99,104	15,36,654.00	August 30, 2027
7 16th Final Dividend (FY 2020-21) AGM held on August 24, 2021	2,234	1,15,353	22,00,285.00 September 23, 2028
8 17th Final Dividend (FY 2021-22) AGM held on July 14, 2022	2,869	1,95,932	25,21,834.00	August 16, 2029
9 18th Final Dividend (FY 2022-23) AGM held on August 31,2023	2,640	1,96,393	22,43,579.00	October 2, 2030
The unclaimed and unpaid amount as on the due date will be transferred within 30 days.

5. MANAGEMENTA. DIRECTORS AND KEY MANAGERIAL PERSONNEL

As on March 31, 2024, the Board of the Company consisted of nine Directors. Being a Stock Exchange, the Board comprises of seven Public Interest Directors ("PIDs”), one Non-Independent Director ("NID”) and one Managing Director (Included in the category of NID).

CHANGES DURING THE YEAR APPOINTMENT/RE-APPOINTMENT

Shri T. C. Suseel Kumar, NID, was liable to retire by rotation and being eligible, was re-appointed at the 18^th AGM held on August 31, 2023, and same was approved by the SEBI.

Based on the recommendation of Nomination and Remuneration committee ("NRC”), Board of Directors and approval of SEBI, Shri Pramod Agrawal, and Shri Nandkumar Saravade were appointed as PIDs w.e.f. November 29, 2023, and February 7, 2024, respectively, for period of three years each. Shri Pramod Agrawal was subsequently appointed as Chairperson of the Board of BSE Limited w.e.f. January 17, 2024.

Shareholders through Postal Ballot dated January 2, 2024, approved the appointment of Shri Jagannath Mukkavilli who was nominated on the Board of the Company by Life Insurance Corporation of India ("LIC") as NID, in place of Shri T. C. Suseel Kumar, subject to approval of SEBI. Accordingly, upon receipt of SEBI''s approval on February 13, 2024. Shri Jagannath Mukkavilli was appointed as NID w.e.f. February 13, 2024. Shri Jagannath Mukkavilli is liable to retire by rotation and has offered himself for re-appointment at the 19^th AGM.

Cessation/Resignation

Shri S. S. Mundra, PID & Chairperson, completed his second term w.e.f. closure of working hours on January 16, 2024.

Pursuant to the appointment of Shri Jagannath Mukkavilli on the Board of the Company, Shri T.C. Suseel Kumar ceased to be the NID w.e.f. February 13, 2024.

Shri David Wright, PID, completed his second term w.e.f. the closure of working hours of March 15, 2024.

B. DECLARATIONS BY PUBLIC INTEREST DIRECTORS

The Company has received declarations from all the PIDs, under Section 149(7) of the Act that they have met the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16(1)(b) of SEBI (Listing Regulations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations”). Further, all PIDs have also given the declarations that they satisfy "fit and proper” criteria as stipulated under Regulation 20 of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 ("SECC Regulations”). All PIDs have also complied with Code for Independent Directors prescribed in Schedule IV to the Act. They have also given their annual affirmation on compliance with the Code of Conduct for the Board of Directors and Senior Management of the Company.

Further, there has been no change in the circumstances affecting their status as PIDs of the Company.

C. DECLARATION BY THE COMPANY

None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 164(2) of the Act read with Rule 14 of Companies (Appointment and Qualifications of Directors) Rules, 2014.

D. MEETINGS OF THE BOARD

During the FY 2023-24, ten meetings of the Board of Directors were held. The details of meetings of the Board, are provided in the Corporate Governance Report forming part of this Annual Report.

Separate meetings of the PIDs were held on May 10, 2023, August 9, 2023, November 10, 2023, and February 5, 2024.

E. BOARD COMMITTEES

The Board has constituted various Committees in accordance with the provisions of the Act, Listing Regulations and SECC Regulations.

The details pertaining to composition, terms of reference, meetings held and attendance thereat of Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship/Share Allotment Committee, Risk Management Committee and Investment, Corporate Social Responsibility & Environment, Social, Governance Committee for the year have been enumerated in Corporate Governance Report forming part of this Annual Report.

F. AUDIT COMMITTEE RECOMMENDATIONS

All recommendations of Audit Committee were accepted by the Board of Directors during the year.

G. PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES, INDIVIDUAL DIRECTORS AND INDEPENDENT EXTERNAL PERSONS

Pursuant to the provisions of the Act, Listing Regulations, SECC Regulations read with SEBI guidance note dated January 5, 2017, SEBI circular dated February 5, 2019, and Board Evaluation policy of the Company, the Performance of the Board and Board Committees was evaluated on various parameters such as composition, diversity, experience, corporate governance competencies, performance of specific duties and obligations, quality of decision-making and overall Board effectiveness. Performance of individual Directors & Independent External Persons was evaluated on parameters, such as meeting attendance, participation and contribution, engagement with colleagues on the Board and Committees, responsibility towards stakeholders and independent judgement. All the Directors were subjected to peer-evaluation.

All the Directors participated in the evaluation process. The results of evaluation were discussed in the Board meeting held in the month of May 2024. The Board discussed the performance evaluation reports of the Board, Board Committees, Individual Directors, and Independent External Persons and noted the suggestions/inputs of the Directors. Recommendations arising from this entire process was deliberated upon by the Board to augment its effectiveness and optimize individual strengths of the Directors.

The detailed procedure followed for the performance evaluation of the Board, Committees and individual Directors & Independent External

Persons is enumerated in the Corporate Governance Report forming part of this Annual Report.

H. REMUNERATION OF DIRECTORS AND EMPLOYEES

In compliance with the requirements of Section 197(12) of the Act, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and SECC Regulations, a statement containing the remuneration details of Directors and employees is annexed as Annexure A.

I. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Act, with respect to the Directors’ Responsibility Statement, it is hereby confirmed that:

a) In the preparation of the annual accounts for the financial year ended March 31, 2024, the applicable Accounting Standards had been followed along with proper explanation relating to material departures for the same;

b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2024 and of the profit of the Company for the financial year ended March 31, 2024;

c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the annual accounts on a going concern basis;

e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

J. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has maintained adequate internal financial controls over financial reporting. These includes policies and procedures -

a) Pertaining to the maintenance of records that is reasonably detailed, accurately, and fairly reflects the transactions and dispositions of the assets of the Company.

b) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Indian Accounting Standards notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time

to time, and that receipts and expenditures of the Company are being made only in accordance with authorization of management and Directors of the Company, and

c) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material impact on the financial statements. Such internal financial controls over financial reporting were operating effectively as of March 31, 2024, based on the criteria established in the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

K. COMPLIANCE WITH SECRETARIAL STANDARD 1 AND SECRETARIAL STANDARD 2

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards ("SS”) issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively. During the year under review, the Company has complied with the Secretarial Standards i.e., SS-1 and SS-2, relating to "Meetings of the Board of Directors” and "General Meetings”, respectively.

L. IMPLEMENTATION OF CORPORATE ACTION

During the year under review, the Company has complied with the specified time limit for implementation of Corporate Actions.

M. ANNUAL RETURN

Pursuant to the provision of Section 92(3) of the Act, Annual Return in Form MGT-7 for the FY 2023-24 is available on the website of the Company at www.bseindia.com/static/investor relations/annualreport. html.

6. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

Details of subsidiaries / associates and joint ventures of the Company are provided in notes to financial statements.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Company’s subsidiaries, associates & joint ventures in Form AOC-1 is attached to the financial statements of the Company.

Further, pursuant to the provisions of Section 136 of the Act, the standalone and consolidated financial statements of the Company, along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company at https://www.bseindia.com/investor relations/ annualreport.html.

7. PUBLIC DEPOSITS

The Company has not accepted any public deposits during the FY ended March 31,2024, and as such, no amount of principal or interest on public deposits was outstanding as on the date of the balance sheet.

8. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Particulars of investments made by the Company are provided in Note Nos. 7, 8 & 9 of the Notes to the Standalone Financial Statements.

The Company has not provided any guarantee or security to any person or entity and has not made any loans and advances in the nature of loans to firms / companies in which directors of the Company are interested.

9. AUDITORSA. STATUTORY AUDIT AND STATUTORY AUDITOR’S REPORT

M/s S.R. Batliboi & Co. LLP, Chartered Accountants (Firm Registration No. 301003E/E300005), Mumbai, are the Statutory Auditors of the Company and are appointed for a term of five years till the conclusion of 22^nd AGM.

Statutory Auditor’s Report

The Statutory Auditor’s report dated May 8, 2024, on the financial statements of the Company for FY 2023-24 is unmodified and does not have any reservations, qualifications, or adverse remarks.

Details in respect of frauds reported by Auditors

No fraud has been reported by the Auditors to the Audit Committee or the Board.

B. SECRETARIAL AUDIT AND SECRETARIAL AUDITOR’S REPORT

The Board appointed M/s DM & Associates Company Secretaries LLP Mumbai (Firm Reg No. L2017MH003500) to conduct Secretarial Audit of the Company for FY 2023-24.

The Secretarial Auditor’s report for the year ended March 31, 2024, as provided by M/s. DM & Associates, Company Secretaries is enclosed as Annexure B.

The Secretarial Auditor’s report does not contain any qualifications, reservations, or adverse remarks.

C. INTERNAL AUDITOR

Internal Audit for the year ended March 31, 2024, was conducted by M/s Rodi Dabir & Co., Chartered Accountants and Internal Audit reports were placed before the Audit Committee and Board of Directors at periodic intervals.

D. COST RECORDS AND COST AUDIT

Maintenance of cost records and requirement of Cost Audit as prescribed under the provisions of Section 148(1) of the Act, are not applicable for the business activities carried out by the Company.

10. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOA. CONSERVATION OF ENERGY

I. The steps taken and their impact on conservation of energy:

We regularly replace high energy consuming electrical equipment with modern efficient devices such as replacing the induction ballasts with electronic ballasts and the fluorescent lights with LED lights. We conserve energy by switching off lights & other equipment when they are not required. We have installed motion sensors in certain areas thereby automatically switching off the lights when not in use. Our offices are painted in brighter colours to maximize lighting efficiency besides using natural light in most places. We have coated the glass windows to reduce the heat entering the building which reduces the air-conditioning load. The Company continuously strives to optimize its energy usage and efficiency. We have replaced few AHU coils which has resulted in increase in efficiency and energy savings. We have installed energy saving devices for operation of AHU’s.

11. The steps taken by the Company for utilising alternate sources of energy:

Our building has glass windows all around and we also use the ambient light for lighting purposes as much as possible. This reduces the electricity consumption due to lesser need of lighting during the day.

III. The capital investment on energy conservation equipment:

No capital investment was made on energy conservation equipment in the FY 2023-24.

B. TECHNOLOGY ABSORPTION

BSE has emerged as a cornerstone of India’s financial landscape, fostering economic growth, and attracting investments both domestically and internationally. In an era defined by rapid technological advancements, BSE has continuously adapted to the changing landscape, harnessing the power of technology to drive innovation, enhance operational efficiency, and ensure market stability. This annual report aims to highlight the pivotal role technology has played in BSE’s growth and resilience.

I. Advanced Trading Infrastructure:

BSE’s cutting-edge trading infrastructure has been instrumental in facilitating seamless and efficient trading activities. The Exchange has invested significantly in high-performance servers, state-of-the-art networks, and robust data centers to ensure ultra-low latency, high availability, and resilience. BSE has also increased its co-location data centre capacity to service more customers.

II. Strengthening Risk Management:

With the aim of ensuring market integrity and stability, BSE has prioritized the development and implementation of robust risk management systems. Sophisticated technological solutions, including real-time surveillance systems, algorithmic monitoring, and anomaly detection mechanisms, have been deployed to detect and prevent market manipulation, fraud,

and irregularities. BSE’s strong risk management framework has bolstered investor confidence and fostered a safe and secure trading environment.

To further enhance the Business Continuity of the Risk Management System of the Clearing Corporation (CC), a SaaS (Software as a Service) setup has been provided by both major CCs to each other.

Functioning of the SaaS setup was effectively demonstrated in a Special Live Trading session held on Saturday, March 2, 2024. The Risk Management System of ICCL switched over to the SaaS setup on this day (March 2, 2024) and continued from the SaaS setup for the rest of the day.

III. Agility in DR operations

When it comes to BCP/DR the Company’s regulator had been very proactive in setting improved guidelines on a regular basis. Last year (FY 2022-23) the regulator had established a series of joint exercise between all Mil’s where multiple coordinated intraday switchovers were performed.

The purpose of these coordinated exercise was to prepare all Mils as well as market participants to be agile in its operations in case a DR switchover was triggered by any Mil during Live trading. Several scenarios were tested during these mocks. Some of these were:

1. All Exchanges switching to DR at the same time

2. Exchange at DR and Clearing Corporation at PR

3. Graceful and non-graceful shutdown at PR

4. Creation of data loss scenarios and recovering missing data at DR

5. Interop data verification and recovery

6. Maintaining the prescribed RTO and RPO

The Company was able to consistently showcase its ability switchover with prescribed RTO and RPO. It was also able to recover missing data during non-graceful shutdowns. Overall, the Company was able to perform all the mandated tests successfully.

The testament of effectiveness of the DR setup is that the Company was able to switch-over to the DR site intraday within the prescribed RTO & RPO in a Special Live Trading session held on Saturday, March 2, 2024.

Further, like the previous years, as per the regulatory mandate, the Company had successfully completed 2 full-day Live DR sessions twice during the FY.

IV. Technology upgrades in StAR MF platform

The Company had been continuously in the process of technically and functionally upgrading its products. This year the Company’s mutual fund platform StAR MF has undergone major updates to keep up its competitive edge in the market and meet regulatory requirements.

The Company has introduced automated reconciliation of funds received before settlement of Mutual Fund SIP and Purchase orders, leading to better controls and surety of allotment of units. Furthermore, the Company has enhanced the cut-off time to process Mutual Fund orders to 2:40 P.M. from earlier 2:00 P.M. thereby moving closer to the AMFI cut-off time.

Further, the StAR MF Platform now also provides proactive push notifications to members on order status, thereby enhancing the experience of members and investors.

New SEBI Defined Category of Execution Only Platform (EOP) for Mutual Funds was introduced on the StAR MF Platform, thereby enabling a new category of service providers to register and transact in Mutual Funds.

V. Other Notable References

• There were no major incidents affecting Exchange operations during the year.

• Various regulatory initiatives have taken up such as Market Price Impact, Limit Price Protection, T 0 Settlement and Encryption of Data.

• BSE has successfully and seamlessly completed the hardware refresh of servers older than 5 years.

C. CYBER SECURITY TECHNOLOGY ABSORPTION AND CERTIFICATION

In the ever-shifting landscape of Information and Cyber Security, staying ahead of the curve is not just a choice but a necessity. Cyber threats are ever growing, and new threat vectors are ever evolving. To ensure BSE’s information assets are resilient to such information and cyber security threats, the 24X7 Information and Cyber Security Operation Centre (SOC) continuously aims to evolve and adapt our defences with the state-of-the-art technologies implemented.

I. SOAR (Security Orchestration, Automation and Response)

BSE uses SOAR to step-up the Company’s Cyber security operation centres’ response capability by enabling orchestration and automation by combining SIEM and other technologies. SIEM use-case playbooks has been created in SOAR along with required integrations. Security Orchestration has enabled the threat intelligence feed from multiple sources and streamlined the threat response workflows. It helped to reduce the turnaround time on security alerts and enabled cyber security analysts to act on alerts quickly through defined cyber security alert playbooks.

II. Technology for Phishing Simulation and Employee awareness training

Humans are considered one of the weakest and most vulnerable links in Information and Cybersecurity. It is important to ensure continuous awareness, training, and assessment of human aspect for strong cybersecurity. The Company conducts periodic cybersecurity training and assessment exercises for employees and vendors. With phishing simulation and Learning Management System (LMS) based training, awareness, and assessment technology, it will help to cover all employees and ensure each employee and vendors who are working at the Company premises are going through the assigned trainings and clear the assessments.

III. Threat Intel Platform, External Risk Exposures and Brand Monitoring Service

To ensure continuous digital risk assessment and mitigation of possible threats, the Company has subscribed for services which provides external

threat intel for cyber threats where the threats are discovered by research and threat intel provider companies. Brand monitoring services to discover the threats pertaining to the Company’s information assets and to avoid the misuse of the Company’s digital assets and brand name. Surface and Dark web are monitored to identify possible and related cyber threats and exposures being planned or surfaced for the Company.

IV. Certification

The Company has successfully achieved the Information Security Management System ISO 27001:2022 and Business Continuity Management System ISO 22301:2019 certifications and surveillance audits for FY 2023-24.

Conclusion:

BSE’s continues to innovate and enhance its technology stack in order to create a resilient marketplace for investors. It also undertakes timely refresh of technologies thereby keeping pace with a fast-moving landscape.

During FY 2023-24, it has augmented its infrastructure significantly, thereby allowing it to keep pace with growing volumes in the Derivatives, Equities and Mutual Fund Segments. BSE remains committed to investing in technology as a key driver towards achieving business and excellence.

Disclosures

a) The efforts made towards technology absorption:

The Company continued with passion looking for path-breaking technologies & adopt them. The year had seen a tremendous increase in volumes requiring the Company to invest in adopting new technologies.

The Company has taken the lead for implementation of:

• Upgradation and enhancements in infrastructure

• Implementation of newer technologies to meet key business and regulatory requirements

• Enhancing the security posture across infrastructure and applications

• Improvising the operational capabilities & high availability

• Effective utilisation is made of available indigenous technology team expertise and develop home grown applications.

Needless to mention, the efforts put in by the Company have shown results in the form of a robust platform supporting exponential growth in volumes. All departments within the Company are equipped with tech-enabled solutions and applications to deliver best of the services to all its customers.

b) The benefits derived like product improvement, cost reduction, product development or import substitution:

While the Company continues to invest in technology, it is conscious of costs pushing itself to build and adopt efficient technology solutions. There is significant focus on innovation in deployment of technology while supporting business growth and a fast-evolving regulatory landscape.

c) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) - Not

Applicable.

a) The details of technology imported - Not Applicable

b) The year of import - Not Applicable

c) Whether the technology been fully absorbed - Not Applicable

d) If not fully absorbed, areas where absorption has not taken place, and the reasons thereof - Not Applicable

d) The expenditure incurred on Research and Development - Not

Applicable

D. FOREIGN EXCHANGE EARNING AND OUTGO

The particulars of Foreign Exchange Earnings and outgo during the year under review are furnished hereunder:

Foreign Exchange Earning: '' 3,464 Lakh (Previous Year: '' 3,073 Lakh) Foreign Exchange Outgo: '' 245 Lakh (Previous Year: '' 229 Lakh)

11. RISK MANAGEMENT AND COMPLIANCE

Risk Management is one of the critical elements of operating framework at BSE. Enterprise Risk Management ("ERM”) framework encompasses practices relating to the identification, evaluation, mitigation, and monitoring of strategic, operational, financial, compliance risks and emerging risks to achieve key business objectives, and to minimise the adverse impact of risks.

The Board of Directors of the Company has constituted a Risk Management Committee ("RMC”) to oversee the ERM Framework, risk mitigation, monitoring the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls.

BSE’s management identifies key risks (existing as well as emerging) and prioritises the mitigation actions based on the potential adverse impact on operations and/or shareholder value. As the Exchange operates in a dynamic environment, these risks are reviewed regularly and assessed for their potential impact/ exposure. A comprehensive enterprise-wide Risk Management Policy has been created which was last reviewed by the RMC in August 2023. Further, every quarter a detailed update on ERM along with important risk incidents/events that occurred, is presented, and deliberated upon in the meetings of the RMC.

Overview

Risk Management is an enterprise-wide function at BSE which covers major business and functional objectives including Strategy, Operations, Technology and Compliance and stipulates the risk management framework of the Company / principles adopted by the Company for the achievement of business objectives through risk identification, evaluation, monitoring and minimisation of identifiable risks and improved resiliency towards unknown risks. The approach uses RCSA (Risk Control and SelfAssessment) tool for evaluating and mitigating risks.

RISK CATEGORIES

The Company’s risk management framework is broadly categorized into 10 risk vectors pertaining to:

a) Business,

b) Technology,

c) Cyber Security,

d) People,

e) Regulatory and Compliance,

f) Reputation,

g) Fraud,

h) Operations,

i) Finance,

j) Physical and Infrastructure.

Apart from above, external risks arising from external, environmental, macro-economic and geopolitical factors are also identified for assessment.

RISK MANAGEMENT PROCEDURE Risk Identification

The risk identification uses RCSA which involves identifying, recognizing, and describing risks that obstruct the attainment of the strategic and business goals of the organisation. BSE has in place, the system, and measures to identify high-level risks related to operational, technological, regulatory and compliance, reputational, infrastructural, environmental, and strategic, etc. aspects of the organisation.

Risk Assessment

Each risk is assessed for impact (materiality of the risk if it occurs) and likelihood (at an agreed level of impact, the probability of the event taking place). This shall provide the inherent risk of the particular risk activity. Based on the impact and likelihood the risk exposure is categorized into categories based on defined matrix.

Residual Risk is derived after assessing the impact of the mitigation plan. Risk Mitigation Measures

Mitigation actions are prepared and finalised, owners are identified, and the progress of mitigation actions are monitored and reviewed. The Risk Management Committee periodically reviews and monitors the mitigation actions, its effectiveness and provides its advice and insights to the mitigation teams.

The management along with risk and control owners remain vigilant in mitigating the risks that may come with changes in internal and external environment.

Risk Reporting

The top risk from the risk registers, its mitigation plans, periodic review of processes and new risks emanating from such reviews, a detailed update on ERM is presented and deliberated upon in the meetings of the RMC on a quarterly basis.

The risks identified by risk management function or roles at different levels in the organization are presented at appropriate level of governance structure. Critical risks or cross functional risks at each level are escalated to the next level in the governance structure. Critical risks under different categories of risks at group level are reviewed by Chief Risk Officer, Chief Financial Officer, Chief of Business Operations, Chief Information Officer, and Chief Regulatory Officer and reviewed by MD & CEO.

Risk Management Framework for the year

During the year, as a part of a fresh perspective to Risk Management and monitoring the key risks, the following activities were undertaken by the risk management function during the year:

a) Review of the risks arising from external environment such as geopolitical factors, macro-economic factors at global and local level.

b) As per requirement of SECC Regulations, a revised Risk Management Policy for the FY 2023-24 was placed before and was approved by the Risk Management Committee.

c) Standardisation of the format of risk registers for the all the organisational functions.

d) Established the Exception Reporting and Escalation Mechanism whereby exception events which could pose risk to the enterprise are escalated and reported on a timely basis to ensure the required remediation.

e) Established the RCSAAssessment system to achieve a professionalised and industry wide accepted approach to Risk Management.

f) Identification of major risk vectors impacted, and risks involved in processes followed by the departments.

Due to the inherent risks in the Company’s business activities, BSE ensures to risk management practices to strengthen the organisation through informed strategic and business decisions.

BSE’s strategic vision for the ERM function is to embed ERM across processes, business strategy and key decision making to add significant and strategic organisational value.

12. COMPANY’S POLICIESA. POLICY ON NOMINATION AND REMUNERATION

The Company’s policy on Nomination and Remuneration includes criteria for determining qualifications, positive attributes, and independence of a Director.

The Nomination and Remuneration Policy of the Company is performance driven and is designed to motivate employees, recognize their achievements, and promote excellence in performance.

The Policy provides guidance on appointment and removal of Directors & KMPs, remuneration of Directors, Key Managerial Personnel/Key Management Personnel/Senior Management, and other employees.

The said policy is available on the website of the Company at https://www. bseindia.com/downloads1/nrcpolicy.pdf

B. POLICY ON CORPORATE SOCIAL RESPONSIBILITY (“CSR”)

The Company has constituted a Committee in accordance with Section 135 of the Act.

The Annual Report on CSR activities as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been annexed to this Report as Annexure C.

The CSR policy is available on the website of the Company at https://www. bseindia.com/downloads1/Corporate Social Responsibility Policy.pdf

C. VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has in place a Vigil Mechanism / Whistle Blower Policy pursuant to Regulation 22 of the Listing Regulations and Section 177(10) of the Act, enabling stakeholders to report any concern of unethical behaviour, suspected fraud, or violation.

The said policy inter alia provides safeguard against victimization of the Whistle Blower. Stakeholders including Directors and Employees have direct access to the Chairperson of the Audit Committee.

During the year under review, no stakeholder was denied access to the Chairperson of the Audit Committee.

The said policy is available on the website of the Company at https://www. bseindia.com/downloads1/766e08fe-2fb1-4501-90b5-a4888738e42f. pdf.

D. POLICY ON RELATED PARTY TRANSACTIONS

All Related Party Transactions ("RPT”) that were entered during the FY were on arm’s length basis and in the ordinary course of business and were in compliance with the applicable provisions of the Act and the Listing Regulations. There was no material significant RPT transacted by the Company during the year that required Shareholders’ approval under Regulation 23 of the Listing Regulations. None of the transactions with related parties fell under the scope of Section 188(1) of the Act. The disclosure of RPTs as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for FY 2023-24 and hence does not form part of this report.

The Policy on RPT is available on the website of the Company at https://www. bseindia.com/downloads1/13b0fdbf-fa4e-4b4d-9d9b-bedade5e70c2.pdf

E. POLICY ON MATERIAL SUBSIDIARY

As required under Regulation 16(1)(c) of Listing Regulations, the Company has in place and adopted a policy for determining Material Subsidiaries.

For FY 2023-24, Indian Clearing Corporation Limited ("ICCL”) is the material subsidiary of the Company. As per Regulation 24A of Listing Regulations, the Secretarial Audit Report of ICCL is annexed as Annexure D.

The policy on Material Subsidiary is available on the website of the Company at https://www.bseindia.com/downloads1/Policy on Material Subsidiaries.pdf

F. INSIDER TRADING REGULATIONS

Pursuant to the provisions of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (as amended from time to time), the Company has formulated a Code of Conduct for Prevention of Insider Trading ("Insider Trading Code”) and Code of Practices and Procedures for fair disclosure of Unpublished Price Sensitive Information ("UPSI”).

The Code of Practices and Procedures for fair disclosure of UPSI is available on the website of the Company at https://www.bseindia.com/downloads1/ Code of fair disclosure of UPSI.pdf

G. DIVIDEND DISTRIBUTION POLICY

The Dividend Distribution Policy containing the requirements of Regulation 43A of Listing Regulations is annexed as Annexure E and is also available on the website of the Company at https://www.bseindia.com/downloads1/ BSE Dividend Distribution Policy.pdf

13. DISCLOSURE AS REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has always believed in providing a safe and harassment free workplace for every individual working in its premises through various policies and practices. The Company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment.

The Company has adopted a policy on Prevention of Sexual Harassment (POSH) at Workplace which aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of undesired behaviour. An Internal Complaints Committee ("ICC”) is already in place wherein the senior management (with women employees constituting the majority) personnel are its members. The ICC is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the Policy.

The Company had conducted workshops on POSH for the employees on periodic basis. During the FY ended March 31, 2024 no complaint pertaining to sexual harassment was received.

14. RESOURCES COMMITTED TOWARDS STRENGTHENINGREGULATORY FUNCTIONS AND TOWARDS ENSURINGCOMPLIANCE WITH APPLICABLE REGULATORY REQUIREMENTS

The Company being a recognised Stock Exchange is governed by SEBI. The Company ensures compliances with various regulations and guidelines issued by SEBI from time to time and strives to implement the best governance practices.

During the year under review, the Company’s regulatory division comprised of departments, handling various critical aspects of regulatory compliances, as under:

i. Risk management;

ii. Surveillance and investigation;

iii. Listing;

iv. Member registration;

v. Compliance;

vi. Inspection;

vii. Enforcement;

viii. Arbitration and grievance redressal mechanism;

ix. Member default;

x. Investor protection and services.

There are 193 resources in these functions at various designations. Each such function is headed by the Chief Regulatory Officer, who in turn reports to the MD & CEO and Regulatory Oversight Committee.

The Company has ensured to make disclosures of various mandatory regulatory requirements along with reporting of the same to various regulatory authorities in addition to informing the same to the Board of Directors and respective Committee.

For the FY ending on March 31, 2024, BSE incurred direct and indirect expenses amounting to '' 3057.81 Lakhs as per activity-based accounting methodology towards strengthening regulatory functions and towards ensuring compliance with regulatory requirements.

15. COMMUNICATIONS

Over the years, communication at BSE has played a crucial and important role in delivering accurate and timely information to all its stakeholders. Through a wide array of communication channels, we have effectively and efficiently shared comprehensive updates on new product offerings, services, regulatory developments, and investor education initiatives from time to time.

During the year, our collaborative approach with prominent industry bodies and trade associations has enabled joint programs that cultivate a favorable business environment for all. The Memorandum of Understandings with the Government of Maharashtra and Goa, Chamber of Commerce and Industry to promote SME listing during the year is one such step in this direction. Continuing its legacy as a trusted institution in the financial sectors, BSE played host to many international and Indian dignitaries, trade associations, and student organizations in FY 2023-24.

While BSE has strived towards enhancing the visibility for innovative products and new initiatives with the rebranding and launch of the new logo which showcases the Exchange’s dynamic spirit and its embrace of the digital era. The relaunch of Sensex and Bankex and Brand visibility

building events like unveiling of Charging Bull and Common Man sculptures at Horniman Circle are other significant initiatives. The relaunch of Bankex saw a record of over 13 Crore contracts traded with a notional turnover of over '' 100 Lakh Crore while the Sensex Derivatives Turnover rocketed to a new record by reaching '' 13.58 Lakh Crore. The efforts and work done by BSE was recognised as it was awarded as one of ET NOW’s Best BFSI Brands for 2024.

"Mane ki Mano”, the informative videos on investor awareness by BSE received tremendous response from the regulators and public at large. The year also saw the launch of Investor Risk Reduction Access (IRRA) platform by SEBI Chairperson, Ms. Madhabi Puri Buch, celebration of World Investor Week and celebration of Diwali Mahurat Trading.

On International Women’s Day, BSE in collaboration with UN Women, marked a significant moment by hosting the "Ring the Bell for Gender Equality” emphasizing the critical investment in women for accelerating progress towards gender equality.

16. OTHER DISCLOSURESA. MANAGEMENT DISCUSSION & ANALYSIS

Pursuant to Regulation 34(2)(e) of the Listing Regulations, the Management Discussion and Analysis Report forms part of this Annual Report.

B. BUSINESS RESPONSIBILITY AND SUSTAINIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility and Sustainability Report forms part of this Annual Report.

C. CORPORATE GOVERNANCE

Pursuant to the SECC Regulations, Listing Regulations and the Act, report on Corporate Governance as on March 31,2024, forms part of this Annual Report. A Certificate from Practicing Company Secretary, confirming status of compliances of the conditions of Corporate Governance is annexed to the Corporate Governance Report.

D. INVESTOR PROTECTION FUND (“IPF”)

The Company, through its IPF, regularly conducts Investor Awareness Programs ("IAPs”) throughout the country. IPF was instrumental in conducting 13,780 IAPs during FY 2023-24. Out of this, 4,320 IAPs were conducted through IPF while 9,460 IAPs were conducted through the Investors Services Fund ("ISF”). Similarly, 8,542 IAPs were conducted physically while 5,238 were conducted online (webinars) out of the above. Additionally, during the year, IPF officials conducted 324 Regional Investor Seminars for Awareness (RISA) jointly with SEBI across different parts of the country. IPF also publishes TV, print, digital and online advertisements regarding Do’s and Don’ts for investors, to educate them and enable them to safeguard their interests. During the year, several educational and other capital market awareness events were supported by IPF to raise awareness about investor centric areas such as investing early, power of compounding, diversification of investment, goal-based investing, retirement investment ideas, etc.

MAJOR INITIATIVES:Mr. Mane Videos:

This year, IPF resorted largely to digital and social media as a means of spreading awareness as it is the trend seen amongst investors. As a part of digital strategy for investor awareness campaign, BSE IPF in coordination with the Corporate Communications team of BSE, successfully made 11 videos on various topics related to securities market in Hindi language with the videos evolving around one common character called "Mr. Mane”. These videos became very popular in short span of time with total views across social media and YouTube exceeding 10.75 Crore.

Other Digital Initiatives:

BSE IPF released animated films on four topics related to Securities Market for Investor Awareness during the year. Pursuant to discussions with SEBI, BSE IPF had sent investor awareness messages (with an embedded video) through WhatsApp to over 4.5 crore active investors registered with BSE, on various topics related to Securities Market.

World Investor Week (WIW) 2023:

BSE IPF celebrated the globally popular event for investors called World Investor Week (WIW 2023) under the aegis of SEBI and International Organisation of Securities Commissions (IOSCO), from October 9, 2023 to October 15, 2023.

WIW is a week-long global celebration promoted by the IOSCO to raise awareness about the importance of investor education and protection. In India, SEBI had worked with all the Market Infrastructure Institutions to make this a memorable and enriching week for all investors.

To mark the beginning of WIW 2023, on the first of day of the week i.e. October 9, 2023, BSE IPF conducted a bell ringing ceremony at BSE International Convention Hall which was attended by Shri G. P Garg, Executive Director, SEBI, and various other senior dignitaries from SEBI.

Certain key activities undertaken by IPF to celebrate WIW 2023 are:

1) Investor Awareness Programs (IAPs):

BSE IPF conducted 928 IAPs in the week, through its network of resource persons, regional officials and jointly with SEBI officials, creating awareness and educating the investors about various aspects of investments through securities market. As desired by SEBI, the Exchange focused on bringing participation for these IAPs from the investors who have newly entered the market in last 2 years, in addition to the general investors.

2) Creating Microsite:

A microsite of WIW 2023 was created which can be accessed from BSE IPF website. Additionally, a WIW 2023 banner was displayed on the BSE website.

3) QUIZ programs:

a) General Quiz

BSE IPF conducted series of general Quiz programs for capital market investors on 5 consecutive days during WIW 2023. The Quiz was

conducted online, wherein participants were required to answer multiple choice answer questions in a time bound manner. Winners were awarded with the certificates as well as suitable cash prizes. All other participants were given participation certificates. Total 12,744 people participated in the Quiz program out of which 10 daily winners were announced and 2 winners were selected amongst the daily winners who were awarded as "Quiz Ka Shahenshah”.

b) National level Quiz for students at Institute of Company Secretaries of India (“ICSI”)

Keeping the importance of governance and knowledge of regulations in mind, BSE IPF conducted a special nation-wide Quiz for the students of ICSI, in coordination with the ICSI, on October 11, 2023. Majority of the questions were based on the regulatory framework governing listed securities and specifically Listing Regulations. Total 846 students from the institute participated in the Quiz, out of which 10 winners were awarded with the cash prizes and others were given participation certificates.

4) Nukkad Natak on Financial Literacy:

Nukkad Natak aims at shaping investors in India to become more aware, responsible, and thinking adults and have an opinion on issues of financial literacy. This activity was conducted during WIW 2023, wherein the participants (in groups) performed skit to create awareness about investments in the capital market. This activity received overwhelming response from the participants and more than 11,000 entries were received. The best 5 teams were awarded cash prizes.

5) Organizing Human Chain:

This is yet another unique activity which was conducted during WIW 2023. On the first day of WIW 2023 i.e. October 9, 2023, BSE IPF in co-ordination with one of the resource person organized a Human Chain at Shishuvan School, Matunga, Mumbai, where more than 300 students participated. The students wore T-shirts and caps given by BSE IPF and formed a human chain shape of WIW 2023. This was captured on video showing a captivating aerial view of the event. A photo frame of the event was also presented to SEBI Executive Director.

6) Street Plays:

BSE IPF in co-ordination with one of the resource person performed 11 street plays at various busy locations at Mumbai to propagate the message of Investor Resilience and Sustainable Finance during the WIW 2023. One such play was performed near SEBI office at BKC, which was attended by the senior SEBI officials and was well appreciated.

7) Katputali Dance:

BSE IPF in co-ordination with one of the resource person successfully conducted a new activity - 10 Katputali Dance events at Tier II and Tier III cities in Rajasthan to spread the knowledge about financial planning and investments in securities market through these activities. Each program was for a duration of 60 to 90 minutes which was mixture of dance and speech by a Trainer in the regional language, on investor education.

8) Social media campaign:

We have created some short videos for Investment Inspiration giving messages from well-known investors like Mr. Vijay Kedia, Mr. Neeraj Choksey & Mr. Ramdev Agarwal, etc., who shared their stories of Investment journey over a period to encourage the investors. We have also created static messages on the theme called "The Right Tip” for investors’ awareness, covering messages on different topics in the interest of general investors in the capital market. These videos and messages were sent out to all social media handles of BSE i.e. Facebook, LinkedIn, X, and Instagram during the entire length of the WIW 2023, which garnered a total reach of more than 19 million people.

9) BSE building illumination:

The iconic BSE Building was lit up during all days of WIW 2023, displaying the logos of SEBI, BSE, and WIW 2023.

E. RAINWATER HARVESTING

In order to address the environmental concerns, the Company is undertaking steps to promote sustainability, by disseminating all agenda items of Board and Committee meetings electronically on a real time basis, by uploading them on a secured online application specifically designed for this purpose, thereby eliminating circulation of printed agenda papers.

Further, in order to make effective use of rainwater, rainwater harvesting system is implemented for BSE buildings situated in Mumbai. The rainwater harvested will be stored and used for chiller plant after due treatment. Additionally, the harvested rainwater will also help in recharging existing ring wells situated in the premises.

F. THE DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 DURING THE YEAR ALONG WITH THEIR STATUS AS AT THE END OF THE FINANCIAL YEAR.

During the year, no proceeding has been initiated under Insolvency and Bankruptcy Code for default in payment of debt. Further, the Company has also not initiated any proceedings against the defaulting entities. However, it had lodged its claim with the resolution professional/liquidator appointed for defaulting listed companies.

G. THE DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONETIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF.

During the period under review, Company has not taken any loans from the banks or financial institutions. Accordingly, there has been no one time settlement or valuation done for this purpose.

17. ACKNOWLEDGEMENTS

The Board sincerely thanks the Government of India, SEBI, RBI, IRDA, GIFT City Ltd., CERC, the Government of Maharashtra, other State Governments, and various government agencies for their continued support, co-operation, and advice.

The Board places on record its gratitude to the members of various committees for their guidance and leadership and for providing valuable contribution towards the functioning of respective committees during the year.

The Board also acknowledges the support extended by trading members, issuers, investors in the capital market and other market intermediaries and associates.

The Board expresses sincere thanks to all its business associates, consultants, bankers, vendors, auditors, solicitors and lawyers for their continued partnership and confidence in the Company.

The Board further extend its sincere appreciation to all the employees for their dedication and contribution and to all the shareholders for their trust and confidence in the management of the Company. The Board

is also deeply touched by the efforts, sincerity and loyalty displayed by the employees for their commitment, co-operation, and collaboration in advancing the mission and vision of the Company towards achieving its goals.

The Acknowledgement serves to demonstrate Transparency, Accountability and Appreciation for the collective efforts that contribute to the Company’s Performance and Sustainability.

---

Mar 31, 2023

The Board of Directors ("Board”) present the 18^th Annual Report of BSE Limited ("the Company” or "BSE” or "Exchange”) together with audited financial statements for the Financial Year ended March 31, 2023.

1. STATE OF COMPANY’S AFFAIRSA. FINANCIAL SUMMARY AND HIGHLIGHTS:

The financial performance for Financial Year ("FY”) 2022-23 is summarised in the following table:

('' in Lakh)
Particulars	Standalone		Consolidated
	2022-23 |	2021-22	2022-23 |	2021-22
Total revenue	74,239	72,402	95,394	86,353
Total expenses	50,479	46,292	70,591	60,045
Profit before tax and share of profits of associates	23,760	26,110	24,803	26,308
Share of profits of associates	-	-	4,923	6,418
Profit before tax	23,760	26,110	29,726	32,726
Tax expenses	7,069	6,598	9,161	8,233
Net profit for the year	16,691	19,512	20,565	24,493
Net profit attributable to the Shareholders of the Company	16,691	19,512	22,067	25,433
Net profit attributable to the non-controlling interest	-	-	(1,502)	(940)
Other comprehensive income	44	107	1,994	639
Total comprehensive income for the year	16,735	19,619	22,559	25,132
Total comprehensive income attributable to the Shareholders of the Company	16,735	19,619	23,294	25,895
Total comprehensive income attributable to the non-controlling interest	-	-	(735)	(763)
Basic and diluted EPS (''	12.15	14.20	16.06	18.51

I. Consolidated Results

The total income of the Company during FY 2022-23 on a consolidated basis was '' 95,394 Lakh reflecting an increase of '' 9,041 Lakh (up by 10%) over previous FY. However, the total expenses for the year were higher by '' 10,546 Lakh (up by 18 %) at '' 70,591 Lakh.

During the FY, the income was higher mainly due to increase in income from securities services (up by 12%); income from corporate services (up by 1%); data dissemination (up by 8%); income from training institute (up by 39%); income from sale of software licenses, development, customisation & maintenance of software (up by 74%); investments income (up by 12%) and other income (up by 27%). Increase in expenses are mainly due to increase in employee benefits expense (up by 2%); computer technology related expenses (up by 28%); administration and other expenses (up by 25%); depreciation (up by 25%); finance cost (up by 24%) and liquidity enhancement scheme expenses (up by 4%).

The net profit after tax was lower by '' 3,928 Lakh (down by 16%) to '' 20,565 Lakh as against '' 24,493 Lakh in the previous FY.

II. Standalone results

The total income of the Company during the FY 2022-23 on a standalone basis was '' 74,239 Lakh reflecting an increase of '' 1,837 Lakh (up by 3%) over previous FY. However, the total expenses for the year were higher by '' 4,187 Lakh (up by 9 %) at '' 50,479 Lakh.

During the FY, the income was higher mainly due to increase in income from Investments (up by 20%), other income (up by 28%), income from corporate services (up by 2%) and data dissemination (up by 8%). Increase in expenses are mainly due to Increase in computer technology expenses (up by 20%); administration and other expenses (up by 7%); liquidity enhancement scheme (up by 5%); depreciation and amortisation expenses (up by 18%) and tax expenses (up by 7%).

The net profit after tax was lower by '' 2,821 Lakh (down by 14%) to '' 16,691 Lakh as against '' 19,512 Lakh in the previous FY.

B. DIVIDEND

The Board of the Company, in its meeting held on May 11, 2023, has recommended a final dividend of '' 12/- per equity share of the face value

of '' 2/- each fully paid up for the financial year ended March 31, 2023, subject to the approval of the Shareholders at the Annual General Meeting (AGM).

The said dividend is in line with the Dividend Distribution Policy of the Company.

The final dividend on equity shares for FY 2022-23, if approved, would result in a cash outflow of approximately '' 16,490 Lakh, resulting in a pay out of 98.8% of the standalone profits of the Company.

In view of the changes made under the Income-Tax Act, 1961, by the Finance Act, 2020, dividends paid or distributed by the Company shall be taxable in the hands of the Shareholders. The Company shall, accordingly, make the payment of the Final Dividend after deduction of tax at source. For more clarity on deduction of tax, please refer para on ‘Tax Deducted at Source ("TDS”) on Dividend’ as mentioned in the notes to the Notice of 18^th AGM.

Under Clause 5.3 of the BSE (Corporatisation and Demutualisation) Scheme, 2005, the allotment of equity shares to 10 Trading Members of the erstwhile BSE has been kept in abeyance for various reasons as on March 31, 2023. All corporate benefits including dividend as may be declared by the Company from time to time are being provided for and would be payable on the allotment of these shares. Brief details about the shares being kept in abeyance by the Company are given in ‘Share Capital’ section.

C. TRANSFER TO RESERVES

The Company was not required to transfer any amount of profits to general reserves for FY 2022-23 pursuant to provisions of Companies Act, 2013.

D. INVESTOR RELATIONS

The Company believes in leading from the front with emerging best practices in investor relations and building a relationship of mutual understanding with International and Domestic investors. To this end, the Company continuously strives for excellence in its Investor Relations engagement with investors through physical, video and audio meetings through structured conference-calls and periodic investor/analyst interactions like one-on-one meetings, participation in investor conferences, quarterly earnings calls, and analyst meet from time to time. The Company’s leadership team, including the Managing Director and Chief Executive Officer (MD & CEO), Chief Financial Officer, and Chief Business Officer, spent significant time to interact with investors to communicate the strategic direction of the business in a number of investors meets organized by reputed Global and Domestic Broking Houses, during the previous financial year. All the four quarterly earnings calls conducted during the year were also well attended by investors and analysts. No unpublished price sensitive information is discussed in these meetings. The Company ensures that critical information about the Company is available to all the investors, by uploading all such information on the Company’s website.

2. MAJOR EVENTS OCCURRED DURING THE YEARA. MATERIAL CHANGES FROM END OF FINANCIAL YEAR TILL DATE OF REPORT

There are no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report.

B. CHANGE IN NATURE OF BUSINESS

During the FY 2022-23, there was no change in the nature of business of the Company.

C. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the Year following orders were passed

i. SEBI had passed an Order dated April 12, 2022, against BSE imposing a penalty of '' 3 crores in the matter of supervision and inspection of Karvy Stock Broking Ltd. BSE had filed an appeal before Hon’ble Securities Appellate Tribunal challenging the SEBI’s Order. The Hon’ble Securities Appellate Tribunal has stayed the said Order vide its Order dated November 14, 2022, and the appeal is pending.

ii. SEBI had passed an Order dated July 29, 2022, against BSE imposing a penalty of '' 3 lakhs for alleged violation of Regulation 38 (2) of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018. BSE had challenged the said Order before Hon’ble Securities Appellate Tribunal by filing an appeal. The Hon’ble Securities Appellate Tribunal, vide its Order dated January 30, 2023, has stayed the said SEBI Order and the appeal is pending.

3. SHARE CAPITAL

Pursuant to clause 5 of BSE (Corporatisation and Demutualisation) Scheme, 2005 ("BSE Demutualisation Scheme”) approved by Securities Exchange Board of India ("SEBI”), vide its notification dated May 20, 2005, every Trading Member having membership right of the Exchange or his nominee, as the case may be, as on record date, decided for the purpose, was entitled to 10,000 equity shares of the face value of '' 1/- per share, against membership right of erstwhile BSE. It may be noted that the entitlement against membership rights post consolidation of share capital stands changed to 5,000 equity shares of face value '' 2/- per share. As on March 31, 2023, entitlement of 10 Trading Members of erstwhile BSE, against their membership rights, continue to remain in abeyance for various reasons. All corporate benefits including dividend as may be declared by the Company from time to time on the shares which remain in abeyance, are being provided for and would be payable on the allotment of these shares.

CHANGE IN PAID-UP SHARE CAPITAL Allotment of shares held in Abeyance:

During the FY 2022-2023, the Company allotted 1,95,000 equity shares of face value of '' 2/- per share, along with the corporate benefits to one

of the abeyance case whose entitlement to shares was kept in abeyance pursuant to BSE Demutualisation Scheme, to the bank account(s) of BSE.

4. INVESTOR EDUCATION AND PROTECTION FUND TRANSFER OF UNCLAIMED/UNPAID DIVIDEND

Pursuant to the provisions of Section 124 of the Companies Act, 2013 ("the Act”) read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules”), and relevant circulars and amendments thereto, the amount of dividend remaining unpaid or unclaimed for a period of seven years from the date of transfer of such amount to Unpaid Dividend Account, is required to be transferred to the Investor Education and Protection Fund ("IEPF”), constituted by the Central Government.

The Company had, accordingly transferred the following amount to IEPF during the year under review:

Sr.	Type of	Dividend	Date of	Date of	Amount
No.	Dividend	per share	Declaration	Transfer	Transferred
1.	Final Dividend	'' 5/-	September 25,	November 14,	'' 5,09,535/-
	for FY 2014-15		2015	2022
2.	Interim	'' 3.50/-	February 03,	March 31,	'' 4,49,292/-
	Dividend for FY 2015-16		2016	2023

TRANSFER OF SHARES

Pursuant to the provisions of IEPF Rules, all equity shares in respect of which dividend has not been paid or claimed for last seven consecutive years shall be transferred by the Company to the designated Demat Account of the IEPF Authority ("IEPF Account”) within a period of thirty days of such shares becoming due to be transferred.

Accordingly, 336 equity shares of '' 2/- each on which the dividend remained unpaid or unclaimed for last seven consecutive years with reference to the due date of October 27, 2022, were transferred during the FY 2022-23 to the IEPF Authority after following the prescribed procedure.

Further, 933 equity shares of '' 2/- each on which the dividend remained unpaid or unclaimed for last seven consecutive years with reference to the due date of March 7, 2023, were transferred to IEPF Authority within prescribed timelines, after following the prescribed procedure.

All equity shares in respect of which dividend has not been paid or claimed for last seven consecutive years shall be transferred by the Company to IEPF Authority in accordance with provisions of the Act and IEPF Rules made thereunder. Members who have not encashed any of their dividends, which have not been transferred to IEPF Authority, are advised to claim their dividends.

Any Shareholder whose dividend/shares are transferred to IEPF can claim the shares by making an online application in Form IEPF-5 (available on www.iepf.gov.in).

DETAILS OF NODAL OFFICER

Name : Shri Vishal Bhat, Company Secretary and

Compliance Officer

Email address : [email protected]

DETAILS OF THE RESULTANT BENEFITS ARISING OUT OF SHARES ALREADY TRANSFERRED TO THE IEPF:

Sr. No.	Dividend	Financial Year	Cumulative No. of Shares	Amount ('')
1.	Interim Dividend	2017-18	225	1,125
2.	Thirteenth Final Dividend	2017-18	225	6,975
3.	Interim Dividend	2018-19	448	2,240
4.	Fourteenth Final Dividend	2018-19	448	11,200
5.	Fifteenth Final Dividend	2019-20	760	12,920
6.	Sixteenth Final Dividend	2020-21	1058	22,218
7.	Bonus shares (2:1)	2021-22	3060	---
8.	Seventeenth Final Dividend	2021-22	4590	59,285

Year wise amount of Unpaid/Unclaimed Dividend lying in the unpaid account upto March 31, 2023, and the corresponding shares, which are liable to be transferred to the IEPF, and the due dates for such transfer
Sr ..'' Date of declaration of Dividend No.	Number of Number of Amount Unpaid Shareholders against shares against as on March whom Dividend whom Dividend 31, 2023 amount is unpaid amount is unpaid (?)			Due date of transfer of Unpaid and Unclaimed Dividend to IEPF
1 11th Final Dividend (FY 2015-16) AGM held on June 24, 2016	295	1,09,141	4,36,564.00*	July 24, 2023
2 Interim Dividend (FY 2016-17) Board Meeting held on February 14, 2017	2,140	81,767	4,08,835.00	March 16, 2024
3 12th Final Dividend (FY 2016-17) AGM held on September 4, 2017	2,233	80,899	18,60,677.00	October 5, 2024
4 Interim Dividend (FY 2017-18) Board Meeting held on February 2, 2018	3,119	1,86,866	9,34,330.00	March 6, 2025
5 13th Final Dividend (FY 2017-18) AGM held on August 2, 2018	2,208	84,727	26,26,537.00	September 3, 2025
6 Interim Dividend (FY 2018-19) Board Meeting held on November 30, 2018	2,587	1,03,350	5,16,750.00	December 30, 2025
7 14th Final Dividend (FY 2018-19) AGM held on July 15, 2019	1,900	71,083	17,77,075.00	August 18, 2026
8 15th Final Dividend (FY 2019-20) AGM held on July 30, 2020	2,061	99,208	15,38,422.00	August 30, 2027
9 16th Final Dividend (FY 2020-21) AGM held on August 24, 2021	2,244	1,44,033	27,42,925.00 September 23, 2028
10 17th Final Dividend (FY 2021-22) AGM held on July 14, 2022	2,886	2,10,957	27,05,706.50	August 16, 2029
*The unclaimed and unpaid amount as on the due date will be transferred within 30 days

5. MANAGEMENTA. DIRECTORS AND KEY MANAGERIAL PERSONNEL

The current strength of Board of the Company is nine. Being a Stock Exchange, the Board comprises of seven Public Interest Directors ("PIDs”), one Shareholder Director/Non-Independent Director and one Managing Director (considered as the Shareholder Director/ Non-Independent Director).

CHANGES DURING THE YEAR APPOINTMENT/RE-APPOINTMENT

Based on internal and external performance evaluation, recommendation of Nomination and Remuneration Committee ("NRC”) and Board of Directors of the Company, SEBI had approved re-appointment of Sushri Jayshree Vyas for second term w.e.f. April 25, 2022, as PID of the Company.

Shri T. C. Suseel Kumar, Shareholder Director/ Non-Independent Director was liable to retire by rotation and being eligible, was re-appointed at the 17^th Annual General Meeting ("AGM”) held on July 14, 2022, and the same was approved by SEBI. Shri T. C. Suseel Kumar, liable to retire by rotation, has offered himself for re-appointment at the 18^th AGM.

Based on the recommendation of NRC, Board of Directors and approval of SEBI, Prof. Subhasis Chaudhuri and Justice Shiavax Jal Vazifdar were appointed as PIDs for a period of three years w.e.f. May 19, 2022, and Dr. Padmini Srinivasan as PID for a period of three years w.e.f. February 14, 2023.

SEBI approved the appointment of Shri Sundararaman Ramamurthy as Managing Director and CEO (MD & CEO) of the Company on November 28, 2022. NRC and Board of Directors approved his appointment along with other terms and conditions including remuneration, with effect from his joining the office for a period of 5 years or till he attains the age of 65, whichever is earlier. Shri Sundararaman Ramamurthy assumed the office

as MD & CEO of the Company w.e.f., January 4, 2023. Subsequently, Shareholders ratified his appointment along with other terms and conditions including remuneration through Postal Ballot on January 16, 2023.

Cessation/Resignation

Justice Vikramajit Sen, PID & Chairman; and Shri Sumit Bose, PID completed their second term w.e.f. the closure of working hours of May 18, 2022.

Shri Ashishkumar Chauhan, resigned as Managing Director and CEO w.e.f. the closure of working hours of July 25, 2022.

B. DECLARATIONS BY PUBLIC INTEREST DIRECTORS

The Company has received declarations from all the PIDs, under Section 149(7) of the Act that they have met the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16(1)(b) of SEBI (Listing Regulations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations”). Further, all PIDs have also given the declarations that they satisfy "fit and proper” criteria as stipulated under Regulation 20 of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 ("SECC Regulations”). All PIDs have also complied with Code for Independent Directors prescribed in Schedule IV to the Act. They have also given their annual affirmation on compliance with the Code of Conduct for the Board of Directors and Senior Management of the Company.

Further, there has been no change in the circumstances affecting their status as PIDs of the Company.

C. DECLARATION BY THE COMPANY

None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 164 (2) of the Act read with Rule 14 of Companies (Appointment and Qualifications of Directors) Rules, 2014.

D. MEETINGS OF THE BOARD

During the FY 2022-23, ten meetings of the Board of Directors were held. The details of meetings of the Board, are provided in the Corporate Governance Report forming part of this Annual Report.

Separate meetings of the PIDs were held on May 10, 2022, August 2, 2022, November 7, 2022, and February 7, 2023.

E. BOARD COMMITTEES

The Board has constituted various Committees in accordance with the provisions of the Act, Listing Regulations and SECC Regulations. The Board has also constituted various voluntary Committees comprising of Board members.

The details pertaining to composition, terms of reference, meetings held and attendance thereat of Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship/Share Allotment Committee, Risk Management Committee and Corporate Social Responsibility & Environment, Social, Governance Committee for the year have been enumerated in Corporate Governance Report forming part of this Annual Report.

F. AUDIT COMMITTEE RECOMMENDATIONS

All recommendations of Audit Committee were accepted by the Board of Directors during the year.

G. PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

Pursuant to the provisions of the Act, Listing Regulations, SECC Regulations read with SEBI guidance note dated January 5, 2017, and SEBI circular dated February 5, 2019 on performance review of Public Interest Directors, Performance of the Board and Board Committees was evaluated on various parameters such as composition, diversity, experience, corporate governance competencies, performance of specific duties and obligations, quality of decision-making and overall Board effectiveness. Performance of individual Directors & Independent External Persons was evaluated on parameters, such as meeting attendance, participation and contribution, engagement with colleagues on the Board, responsibility towards stakeholders and independent judgement. All the Directors were subjected to peer-evaluation.

All the Directors participated in the evaluation process. The results of evaluation were discussed in the Board meeting held in the month of May 2023. The Board discussed the performance evaluation reports of the Board, Board Committees, Individual Directors and Independent External Persons and noted the suggestions/inputs of the Directors. Recommendations arising from this entire process was deliberated upon by the Board to augment its effectiveness and optimize individual strengths of the Directors.

The detailed procedure followed for the performance evaluation of the Board, Committees and individual Directors & Independent External

Persons is enumerated in the Corporate Governance Report forming part of this Annual Report.

H. REMUNERATION OF DIRECTORS AND EMPLOYEES

In compliance with the requirements of Section 197(12) of the Act, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and SECC Regulations, a statement containing the remuneration details of Directors and employees is annexed as Annexure A.

I. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134 (5) of the Act, with respect to the Directors’ Responsibility Statement, it is hereby confirmed that:

a) In the preparation of the annual accounts for the financial year ended March 31, 2023, the applicable Accounting Standards had been followed along with proper explanation relating to material departures for the same;

b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2023 and of the profit of the Company for the financial year ended March 31,2023;

c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the annual accounts on a going concern basis;

e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

J. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has maintained adequate internal financial controls over financial reporting. These includes policies and procedures -

a. Pertaining to the maintenance of records that is reasonably detailed, accurately, and fairly reflects the transactions and dispositions of the assets of the Company.

b. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Indian Accounting Standards notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time,

and that receipts and expenditures of the Company are being made only in accordance with authorization of management and Directors of the Company, and

c. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material impact on the financial statements. Such internal financial controls over financial reporting were operating effectively as of March 31, 2023, based on the criteria established in the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

K. COMPLIANCE WITH SECRETARIAL STANDARD 1 AND SECRETARIAL STANDARD 2

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards ("SS”) issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively. During the year under review, the Company complied with the Secretarial Standards i.e., SS-1 and SS- 2, relating to "Meetings of the Board of Directors” and "General Meetings”, respectively.

L. IMPLEMENTATION OF CORPORATE ACTION

During the year under review, the Company has complied with the specified time limit for implementation of Corporate Actions.

M. ANNUAL RETURN

Annual Return in Form MGT - 7 is available on the website of the Company at www.bseindia.com/static/investor relations/annualreport.html.

6. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

Details of subsidiaries / associates of the Company are provided in notes to financial statements.

BSE Sammaan CSR Limited, wholly owned Subsidiary of the Company was liquidated w.e.f November 22, 2022.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Company’s subsidiaries, associates & joint ventures in Form AOC-1 is attached to the financial statements of the Company.

Further, pursuant to the provisions of Section 136 of the Act, the standalone and consolidated financial statements of the Company, along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company at www.bseindia.com/static/investor relations/annualreport.html.

7. PUBLIC DEPOSITS

The Company has not accepted any public deposits during the financial year ended March 31, 2023, and as such, no amount of principal or interest on public deposits was outstanding as on the date of the balance sheet.

8. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Particulars of investments made by the Company are provided in Note Nos. 7, 8 & 9 of the Notes to the Standalone Financial Statements.

The Company has not provided any guarantee or security to any person or entity and has not made any loans and advances in the nature of loans to firms / companies in which directors of the Company are interested.

9. AUDITORSA. STATUTORY AUDIT AND STATUTORY AUDITOR’S REPORT

M/s S.R. Batliboi & Co. LLP, Chartered Accountants (Firm Registration No. 301003E/E300005), Mumbai, were re-appointed as Statutory Auditor of the Company for a term of five years till conclusion of 22^nd Twenty Second AGM.

Statutory Auditor’s Report

The Statutory Auditor’s report dated May 11, 2023, on the financial statements of the Company for FY 2022-23 is unmodified and does not have any reservations, qualifications, or adverse remarks.

Details in respect of frauds reported by auditors

No fraud has been reported by the Auditors to the Audit Committee or the Board.

B. SECRETARIAL AUDIT AND SECRETARIAL AUDITOR’S REPORT

The Board appointed M/s Dhrumil M. Shah & Co., LLP, Practicing Company Secretaries (CP No.: 8978/ FCS No.: 8021) to conduct Secretarial Audit of the Company for FY 2022-23.

The Secretarial Auditor’s report for the year ended March 31, 2023, as provided by M/s Dhrumil M. Shah & Co., Practicing Company Secretaries is enclosed as Annexure B.

The Secretarial Auditor’s report does not contain any qualifications, reservations or adverse remarks.

C. INTERNAL AUDITOR

Internal Audit for the year ended March 31, 2023, was conducted by M/s S. Panse & Co. LLP and Internal Audit reports were placed before the Audit Committee and Board of Directors at periodic intervals.

D. COST RECORDS AND COST AUDIT

Maintenance of cost records and requirement of Cost Audit as prescribed under the provisions of Section 148(1) of the Act, are not applicable for the business activities carried out by the Company.

10. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOA. CONSERVATION OF ENERGY

I. The steps taken and their impact on conservation of energy:

We regularly replace high energy consuming electrical equipment with modern efficient devices such as replacing the induction ballasts with electronic ballasts and the fluorescent lights with LED lights. We conserve energy by switching off lights & other equipment when they are not required. We have installed motion sensors in certain areas thereby

automatically switching off the lights when not in use. Our offices are painted in brighter colours to maximize lighting efficiency besides using natural light in most places. We have coated the glass windows to reduce the heat entering the building which reduces the air-conditioning load. The Company continuously strives to optimize its energy usage and efficiency. We have replaced few AHU coils which has resulted in increase in efficiency and energy savings.

II. The steps taken by the Company for utilising alternate sources of energy:

Our building has glass windows all around and we also use the ambient light for lighting purposes as much as possible. This reduces the electricity consumption due to lesser need of lighting during the day.

III. The capital investment on energy conservation equipment:

No capital investment was made on energy conservation equipment in the FY 2022-2023.

B. TECHNOLOGY ABSORPTION

BSE has emerged as a cornerstone of India’s financial landscape, fostering economic growth, and attracting investments both domestically and internationally. In an era defined by rapid technological advancements, BSE has continuously adapted to the changing landscape, harnessing the power of technology to drive innovation, enhance operational efficiency, and ensure market stability. This annual report aims to highlight the pivotal role technology has played in BSE’s growth and resilience.

I. Advanced Trading Infrastructure:

BSE’s cutting-edge trading infrastructure has been instrumental in facilitating seamless and efficient trading activities. The exchange has invested significantly in high-performance servers, state-of-the-art networks, and robust data centers to ensure ultra-low latency, high availability, and resilience. BSE has also increased its co-location data centre capacity to service more customers.

BSE further enhanced Business Continuity posture by creating a Near Disaster Recovery Site and implemented zero data loss architecture.

II. Strengthening Risk Management:

With the aim of ensuring market integrity and stability, BSE has prioritized the development and implementation of robust risk management systems. Sophisticated technological solutions, including real-time surveillance systems, algorithmic monitoring, and anomaly detection mechanisms, have been deployed to detect and prevent market manipulation, fraud, and irregularities. BSE’s strong risk management framework has bolstered investor confidence and fostered a safe and secure trading environment.

To further enhance the Business Continuity of the Risk Management System of the Clearing Corporation (CC), the regulator suggested to build temporary portability of Risk management system. In case of a software failure and in case when the backup plan of switching to Disaster Recovery (DR) site is also not working, this temporary portability will help. This model of portability of risk management system is denoted as SaaS, whereby software as a service and redundancy is provided to one CC by the other CC.

BSE has provided a SaaS setup to the other CC where BSE has provided its software (Risk Management) on the hardware and data centre provided by the other CC.

III. Agility in DR operations

When it comes to BCP/DR the Company’s regulator had been very proactive in setting improved guidelines on a regular basis. This year the regulator had established a series of joint exercise between all Mil’s where multiple coordinated intraday switchovers were performed.

The purpose of these coordinated exercise was to prepare all Mils as well as market participants to be agile in its operations in case a DR switchover was triggered by any Mil during Live trading. Several scenarios were tested during these mocks. Some of these were:

1. All exchanges switching to DR at the same time

2. Exchange at DR and Clearing Corporation at PR

3. Graceful and non-graceful shutdown at PR

4. Creation of data loss scenarios and recovering missing data at DR

5. Interop data verification and recovery

6. Maintaining the prescribed RTO and RPO

The Company was able to consistently showcase its ability switchover with prescribed RTO and RPO. It was also able to recover missing data during non-graceful shutdowns. Overall, the Company was able to perform all the mandated tests successfully.

IV. Technology upgrades in StarMF platform

The Company had been continuously in the process of technically and functionally upgrading its products. This year the Company’s mutual fund platform StarMF has undergone major updates to keep up its competitive edge in the market.

The Company has updated its database to its latest version and in the process has enhanced its high availability. Business logic-based alerts have been incorporated and a dedicated team is now monitoring these alerts. These alerts can help identify if there is any delay or fundamental issues in the path of a successful execution of a transaction. This helps the Company take pro-active steps to rectify the issue before it impacts the market.

The Company has moved its mobility app technology from Native to Flutter. This will bring efficiency, consistency and improve time to market. The Company has also provided bank integrations, new API’s and other functionalities to its members.

C. CYBER SECURITY TECHNOLOGY ABSORPTION AND CERTIFICATION

Information and Cyber Security threats are ever growing, and new threat vectors are ever evolving. To ensure BSE’s information assets are resilient to such information and cyber security threats, The 24X7 Next Generation Information and Cyber Security Operation Centre (SOC) has undergone a technology refresh and following major technologies were implemented.

I. Technology for Governance, Risk and Compliance (GRC)

GRC technology will enable the seamless and systematic tracking and reporting of internal audits, risks and regulatory compliances.

II. Secure Access Service Edge (SASE)

Conventional security measures presumed that applications and users would be inside the network perimeter, which is no longer true, as with the adoption of cloud-based solutions such as Office 365. The corporate data is moving to the cloud, employees are working remotely and from sustenance, cost, and management point of view the cloud is becoming more suitable for business opportunities. Due to this, the traditional network perimeter is dissolving and new models for access control, data protection, and threat protection has become necessary. To meet this, SASE framework-based technology helps us to unify networking and security services to protect users, applications, and data wherever it moves.

III. SOAR (Security Orchestration, Automation and Response)

It is used to step-up the company’s Cyber security operation centres response capability by enabling orchestration and automation by combining SIEM and other technologies. It helps to reduce the turnaround time on security alerts and enables cyber security analysts to act on alerts quickly through defined cyber security alert playbooks.

IV. Technology for Phishing Simulation and Employee awareness training

Humans are considered one of the weakest and most vulnerable links in Information and Cybersecurity. It is important to ensure continuous awareness, training, and assessment of human aspect for strong cybersecurity. The company is already conducting periodic cybersecurity training and assessment exercises for employees. With phishing simulation and Learning Management System (LMS) based training, awareness, and assessment technology, it will help to cover all employees and ensure each employee and vendors who are working at the company premises are going through the assigned trainings and clear the assessments.

V. Key Management Solution using HSM based security

Company ensured that its database systems are secured and encrypted. To ensure the encryption keys are maintained and rotated periodically, the company has deployed Key Management solution with HSM module to securely store the master keys and rotate the keys.

VI. Threat Intel Platform, External Risk Exposures and Brand Monitoring Service

To ensure continues digital risk assessment and mitigation of possible threats to the company, the company has subscribed for services which provides external threat intel for cyber threats where the threats are discovered by research and threat intel provider companies. Brand monitoring services to discover the threats pertaining to company’s information assets and to avoid the misuse of company’s digital assets and brand name. Surface and Dark web monitoring to identify possible and related cyber threats or exposures being planned or surfaced for the company.

VII. Certification

The Company has successfully cleared the Information Security Management System ISO 27001:2013 and Business Continuity Management System ISO 22301:2012 certifications and surveillance audits for year 2022 - 23.

Awards & Recognition:

The continuous efforts to remain abreast of technology advancements, its adoption and implementation has been recognised by the industry and different forums. These recognitions were felicitated with the below mentioned prestigious awards during the year.

• Excellence in DATA ANALYTICS & INSIGHTS by The Centre for Digital Transformation (CDT) (December 13, 2022)

• CEO’s Choice Award, SKOCH Group (December 19, 2022)

• ‘India Risk Management Awards Season 9’ in the specialized category of ‘Cyber Security Risk Management’ by CNBC-TV18 and ICICI Lombard

• ‘Enterprise Security’ in the ‘5^th Edition of BFSI Technology Conclave & Awards’ by The Indian Express Group

• DSCI Excellence awards 2022-Best Security Practices in Critical Information Infrastructure

Conclusion:

BSE’s relentless pursuit of technological innovation has enabled it to navigate challenges, drive growth, and provide a resilient marketplace for investors. By leveraging advanced trading infrastructure, implementing cutting-edge trading platforms, strengthening risk management, efficient disaster recovery and prioritizing cybersecurity, BSE has consistently raised the bar for market excellence. As the financial landscape continues to evolve, BSE remains committed to harnessing technology’s transformative power to drive sustainable growth and foster investor confidence in the Indian capital markets.

1. DISCLOSURES

i. The efforts made towards technology absorption:

The Company continued with passion looking for path-breaking technologies & adopt them. The year has been challenging and appealing for the Company’s technology team to continue its journey in exploring and implementation of newer technologies, however, the Company’s technology team was successful in implementing them as planned.

The Company has taken the lead for implementation of;

• Upgradation and enhancements in infrastructure

• Implementation of newer technologies

• Enhancing the security posture across infrastructure and applications

• Improvising the operational capabilities & high availability

• Effective utilisation is made of available indigenous technology team expertise and develop home grown applications.

Needless to mention, the efforts put in by the Company reasserts that it is the fastest Exchange of the World. All departments within the Company are equipped with tech-enabled solutions and applications to deliver best of the services to all its customers.

ii. The benefits derived like product improvement, cost reduction, product development or import substitution:

The IT strategy and approach adopted by the Company has ensured uninterrupted services and trading facility. The Company thrives to remain competitive and has provided best in class products and services to all its market participants. The market participants are the beneficiaries of technology upgrade and newer rollouts made by the Company during the year. The Company’s technology offerings are built as a service model, thereby reducing the cost for its market participants.

iii. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) - Not

Applicable

a) the details of technology imported - Not Applicable

b) the year of import - Not Applicable

c) whether the technology been fully absorbed - Not Applicable

d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof - Not Applicable

iv. The expenditure incurred on Research and Development - Not

Applicable

D. FOREIGN EXCHANGE EARNING AND OUTGO

The particulars of Foreign Exchange Earnings and outgo during the year under review are furnished hereunder:

Foreign Exchange Earning: '' 3,793 Lakh (Previous Year: '' 3,110 Lakh) KEY COMPONENTS OF BSE’S RISK MANAGEMENT FRAMEWORK

Foreign Exchange Outgo: '' 297 Lakh (Previous Year: '' 163 Lakh)

11. RISK MANAGEMENT AND COMPLIANCE

Risk Management is one of the critical elements of operating framework at BSE. Enterprise Risk Management ("ERM”) framework encompasses practices relating to the identification, evaluation, mitigation and monitoring of strategic, operational, financial, compliance risks and emerging risks to achieve key business objectives, and to minimise the adverse impact of risks.

The Board of Directors of the Company has constituted a Risk Management Committee ("RMC”) to oversee the ERM Framework, risk mitigation, monitoring the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls.

BSE’s Management identifies key risks (existing as well as emerging) and prioritises the mitigation actions based on the potential adverse impact on operations and/or shareholder value. As the Exchange operates in a dynamic environment, these risks are reviewed regularly and assessed for their potential impact/ exposure. Every quarter, a detailed update on ERM is presented and deliberated upon in the meetings of the RMC of the Board.

OVERVIEW

Risk Management is an enterprise-wide function at BSE which covers major business and functional objectives including Strategy, Operations, Technology and Compliance. The ERM of BSE stipulates the risk management framework of the company and principles adopted by the company for the achievement of business objectives through risk identification, evaluation, monitoring and minimisation of identifiable risks and improved resiliency towards unknown risks.

RISK CATEGORIES

The Company’s risk management framework is broadly categorized as risk vectors pertaining to (a) Business, (b) Technology & Cyber Security, (c) People (d) Regulatory and Compliance, (e) Reputation, (f) Fraud, (g) Operations, (h) Finance (i) Physical and Infrastructure and (j) Environmental Social and Governance (ESG).

RISK MANAGEMENT PROCEDURE Risk Identification

The risk identification involves identifying, recognizing, and describing risks that obstruct the attainment of the strategic and business goals of the organisation. BSE has in place, the system and measures to identify high-level risks related to operational, technological, regulatory and compliance, reputational, infrastructural, environmental and Strategic, etc. aspects of the organisation.

Risk Assessment

Each risk is assessed for impact (materiality of the risk if it occurs) and likelihood (at an agreed level of impact, the probability of the event taking place). This shall provide the inherent risk of the particular risk activity. Based on the impact and likelihood the risk exposure is categorized into categories based on defined matrix.

Residual Risk is derived after assessing the impact of the mitigation plan. Risk Mitigation Measures

Mitigation actions are prepared and finalised, owners are identified, and the progress of mitigation actions are monitored and reviewed. The Risk Management Committee periodically reviews and monitors the mitigation actions, its effectiveness and provides its advice and insights to the mitigation teams.

The management along with risk and control owners remain vigilant in mitigating the risks that may come with changes in internal and external environment.

Risk Reporting

The top risk from the risk registers, its mitigation plans, periodic review of processes and new risks emanating from such reviews, a detailed update on ERM is presented and deliberated upon in the meetings of the RMC on a quarterly basis.

The risks identified by risk management function or roles at different levels in the organization are presented at appropriate level of governance structure. Critical risks or cross functional risks at each level are escalated to the next level in the governance structure. Critical risks under different categories of risks at group level are reviewed by Chief Risk Officer, Chief Executive Officer, Chief Financial Officer, Chief of Business Operations, Chief Information Officer, and Chief Regulatory Officer.

Risk Management Framework for the year

During the year, as a part of monitoring the key risks, the risk management function:

a) Reviewed Technology, Information security risks including cyberattacks and threat intelligence and continue to monitor the progress of mitigation actions, Update on vulnerabilities assessment penetrations testing etc. In addition to this, mitigation plan is executed for data access, its preservation and monitoring measures for internal users is implemented.

b) Reviewed the Environmental, Social and Governance related initiatives and the roadmap for BSE’s ESG framework.

c) Reviewed people related risk areas like medical insurance coverage, tracking of employee health report related to COVID - 19 and vaccination status, review of attrition count, vacant positions, and analysis of exit interviews of the junior management, comparison with peers and steps to make BSE as a preferred employer.

d) Reviewed the operational and compliance related risk areas like adequacy of Insurance coverage, fund shortage, margin adequacy, settlement delays and member defaults, effectiveness of collateral application, review of listed companies related litigation matters etc.

e) Reviewed key operational risks and actions based on inputs from internal risk register, external assessment, internal audit findings and incidents.

f) Monitoring by regulatory department, the key developments in the regulatory environment.

Due to the inherent risks in the Company’s business activities, it is vital that BSE keeps improving risk management practices to strengthen the organisation through informed strategic and business decisions.

BSE’s strategic vision for the ERM function is to embed ERM across processes, business strategy and key decision making to add significant and strategic organisational value.

12. COMPANY’S POLICIES

A. POLICY ON NOMINATION AND REMUNERATION

The Company’s policy on Nomination and Remuneration includes criteria for determining qualifications, positive attributes and independence of a Director.

The Nomination and Remuneration Policy of the Company is performance driven and is designed to motivate employees, recognize their achievements and promote excellence in performance.

The Policy provides guidance on:

(1) Selection and nomination of Directors to the Board of the Company;

(2) Appointment of the Senior Management Personnel of the Company; and

(3) Remuneration of Directors, Key Managerial Personnel and other employees.

The said policy is available on the website of the Company at https://www. bseindia.com/downloads1/nrcpolicy.pdf

B. POLICY ON CORPORATE SOCIAL RESPONSIBILITY (“CSR”)

The Company has constituted a CSR Committee in accordance with Section 135 of the Act.

The Annual Report on CSR activities as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been annexed to this Report as Annexure C.

The Company primarily works through BSE CSR Integrated Foundation towards supporting the projects in the areas of health, sanitation, technology incubators, eradicating hunger & poverty and various sectors covered under Schedule VII of the Act.

The CSR policy is available on the website of the Company at https://www. bseindia.com/downloads1/Corporate Social Responsibility Policy.pdf

C. VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has formulated a Vigil Mechanism / Whistle Blower Policy pursuant to Regulation 22 of the Listing Regulations and Section 177(10) of the Act, enabling stakeholders to report any concern of unethical behaviour, suspected fraud or violation.

The said policy inter alia provides safeguard against victimization of the Whistle Blower. Stakeholders including Directors and Employees have access to the Managing Director & CEO and Chairperson of the Audit Committee.

During the year under review, no stakeholder was denied access to the Chairperson of the Audit Committee.

The said policy is available on the website of the company at https://www. bseindia.com/downloads1/Whistle Blower policy.pdf

D. POLICY ON RELATED PARTY TRANSACTIONS

All Related Party Transactions ("RPT”) that were entered during the financial year were on arm’s length basis and in the ordinary course of business and were in compliance with the applicable provisions of the Act and the Listing Regulations. There were no materially significant RPTs transacted by the Company during the year that required Shareholders’ approval under Regulation 23 of the Listing Regulations. None of the transactions with related parties fell under the scope of Section 188(1) of the Act. The disclosure of related party transactions as required under Section 134(3) (h) of the Act in Form AOC-2 is not applicable to the Company for FY 202223 and hence does not form part of this report.

The Policy on RPT is available on the website of the company at https://

www.bseindia.com/downloads1/13b0fdbf-fa4e-4b4d-9d9b-

bedade5e70c2.pdf

E. POLICY ON MATERIAL SUBSIDIARY

As required under Regulation 16(1)(c) of Listing Regulations, the Company has formulated and adopted a policy for determining Material Subsidiaries.

For FY 2022-23, Indian Clearing Corporation Limited ("ICCL”) is the material subsidiary of the Company. As per Regulation 24A of Listing Regulations, the Secretarial Audit Report of ICCL is annexed as Annexure D.

The policy on Material Subsidiary is available on the website of the company at https://www.bseindia.com/downloads1/Policy on Material Subsidiaries.pdf

F. INSIDER TRADING REGULATIONS

Pursuant to the provisions of SEBI (Prohibition of Insider Trading) Regulations, 2015 (as amended from time to time), the Company has formulated a Code of Conduct for Prevention of Insider Trading ("Insider Trading Code”) and Code of Practices and Procedures for fair disclosure of Unpublished Price Sensitive Information ("UPSI”).

The Code of Practices and Procedures for fair disclosure of UPSI is available on the website of the company at https://www.bseindia.com/ downloads1/Code of fair disclosure of UPSI.pdf

G. DIVIDEND DISTRIBUTION POLICY

The Dividend Distribution Policy containing the requirements of Regulation 43A of Listing Regulations is annexed as Annexure E and is also available on the website of the company at https://www.bseindia.com/ downloads1/BSE Dividend Distribution Policy.pdf

13. DISCLOSURE AS REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has always believed in providing a safe and harassment free workplace for every individual working in its premises through various policies and practices. The Company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment.

The Company has adopted a policy on Prevention of Sexual Harassment (POSH) at Workplace which aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of undesired behaviour. An Internal Complaints Committee ("ICC”) is already in place wherein the senior management (with women employees constituting the majority) personnel are its members. The ICC is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the Policy.

The Company had conducted a workshop on POSH which was attended by all the employees. During the financial year ended March 31,2023, no complaints pertaining to sexual harassment have been received.

14. RESOURCES COMMITTED TOWARDS STRENGTHENING REGULATORY FUNCTIONS AND TOWARDS ENSURING COMPLIANCE WITH APPLICABLE REGULATORY REQUIREMENTS

The Company being a recognised Stock Exchange is governed by SEBI. The Company ensures compliances with various regulations and guidelines issued by SEBI from time to time and strives to implement the best governance practices.

During the year under review, the Company’s regulatory division comprised of departments, handling various critical aspects of regulatory compliances, as under:

A. Listing Compliance

B. Member Compliance

C. Surveillance

D. Inspection

E. Investor Services

F. Financial Surveillance

G. Legal Regulatory

H. Regulatory Correspondence

I. Compliance monitoring and corporate relations

There are 155 resources in these functions at various designations. Each such function is reported to the Chief Regulatory Officer, who in turn reports to the Managing Director & CEO and Regulatory Oversight Committee.

The Company has ensured to make disclosures of various mandatory regulatory requirements along with reporting of the same to various

regulatory authorities in addition to informing the same to the Board of Directors and respective Committee.

For the financial year ending on March 31,2023, BSE incurred direct and indirect expenses amounting to '' 2,176.01 Lakh as per activity-based accounting methodology towards strengthening regulatory functions and towards ensuring compliance with regulatory requirements.

15. COMMUNICATIONS

As the metaphoric voice of BSE, communication assumes a pivotal role in delivering precise and timely information to all stakeholders. Through an extensive range of communication channels, we have effectively disseminated comprehensive updates on newly introduced product offerings, services, regulatory developments, and investor education. Our collaborative approach with prominent industry bodies and trade associations has facilitated joint programs, fostering a business environment that benefits all participants. BSE has also established itself as a significant hub, hosting numerous international and Indian dignitaries, trade associations, and student organizations. These interactions further solidify our position as a trusted and influential institution within the financial landscape. Noteworthy recent events encompassed the visit of His Excellency Ibrahim Mohamed Solih, President of Maldives; the Women Director’s Conclave graced by Smt. Nirmala Sitharaman, Hon’ble Union Minister of Finance & Corporate Affairs; and the launch of ‘Finempower’ -a financial literacy program conducted jointly with UN Women.

16. OTHER DISCLOSURESA. MANAGEMENT DISCUSSION & ANALYSIS

Pursuant to Regulation 34(2)(e) of the Listing Regulations, the Management Discussion and Analysis Report forms part of this Annual Report.

B. BUSINESS RESPONSIBILITY AND SUSTAINIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility and Sustainability Report forms part of this Annual Report.

C. CORPORATE GOVERNANCE

Pursuant to the SECC Regulations, Listing Regulations and the Act, report on Corporate Governance as on March 31,2023, forms part of this Annual Report. A Certificate from Practicing Company Secretary, confirming status of compliances of the conditions of Corporate Governance is annexed to the Corporate Governance Report.

D. INVESTOR PROTECTION FUND (“IPF”)

The Company, through its IPF, regularly conducts Investor Awareness Programmes ("IAPs”) throughout the country. IPF was instrumental in Conducting 12,398 IAPs during FY 2022-23. Out of this, 4926 IAPs were conducted through the IPF while 7472 IAPs were conducted through the Investors Services Fund ("ISF”). During the year, IPF conducted 190 Regional Investor Seminars jointly with SEBI across different parts of the country. IPF also periodically publishes TV, print, digital and online advertisements regarding Do’s and Don’ts for investors, in order to educate them and enable them to safeguard their interests. During the year, several educational and other capital market awareness events were sponsored by IPF to raise awareness about corporate best practices. During the year,

IPF has managed 27 Investor Service Centres across India covering all the major state capitals, including Mumbai.

MAJOR INITIATIVES:

World Investor Week (WIW) 2022:

BSE IPF celebrated the globally popular event for investors called World Investor Week (WIW 2022) under the aegis of SEBI and International Organisation of Securities Commissions (IOSCO), from October 10-16, 2022.

WIW is a week-long global celebration promoted by the IOSCO to raise awareness about the importance of investor education and protection. In India, SEBI had worked with all the Market Infrastructure Institutions to make this a memorable and enriching week for all investors.

To mark the beginning of WIW celebrations, a Bell Ringing Ceremony was held on October 10, 2022, in BSE’s International Convention Hall with Shri G P Garg, Executive Director, SEBI, as the Chief Guest, Shri Neeraj Kulshrestha, Chief Regulatory Officer, BSE along with Shri Bhavesh Vora, IPF Trustee and several senior dignitaries from SEBI and leading investor associations.

During the said Bell Ringing Ceremony, following key activities were undertaken by BSE IPF to celebrate WIW 2022 were launched: .

1. Launch of Financial Housie game called “FINHOUSIE”.

It was an interesting fun and learn activity which was conducted during WIW.

It was a learning and gamification tool used for investor education and awareness which help the participants to test their knowledge about securities market in a fun and engaging way.

2. Investors Awareness Programs (IAPs):

To spread the knowledge and education about investing in securities market by observing the qualities of a prudent investor, BSE IPF an aggregate of 1168 IAPs during the WIW 2022, including 8 IAPs conducted jointly with SEBI and CDSL, 22 IAPs in partnership with CDSL and balance 1138 conducted by various resource persons affiliated with BSE IPF/ISF. The total number of investors which were reached out through these programs was 67,424.

3. Quiz Programs:

A series of Quiz programs were held on each day of the WIW 2022, as under:

i. For first 5 days an Online Nationwide Investor Quiz on capital markets was conducted free of cost wherein 3219 contestants participated. A Referral Guidebook was provided to all the registered participants to educate them on the various aspects of the securities market and help them prepare for the Quiz. The Quiz was conducted every day from 3:00 pm to 6:00 pm. Top 10 winners were selected for each day and were awarded with gift vouchers. Further, the top two winners from all the 5 days were awarded with a special Certificate and a gift voucher.

ii. Special Quiz program on Commodity Derivatives Segment:

To spread awareness about Commodity Derivatives as advised by SEBI, a Quiz program was conducted exclusively on questions based on the Commodity Derivatives Segment. In view of the same, a set of Multiple-Choice Questions shared by SEBI were sent to all the registered participants, wherein 2039 contestants participated in the quiz. Top 10 winners were awarded with gift vouchers.

iii. National level Quiz for students of Institute of Company Secretaries of India (ICSI)

Considering the importance of governance and enhancement of knowledge pertaining to governance framework applicable to listed entities, a nationwide Quiz was conducted for the students of ICSI, in collaboration with ICSI, wherein 2146 students registered and 943 participated. Top 10 winners were awarded gift voucher.

4. Social media campaign

BSE IPF has created 12 videos on investors’ awareness covering messages on 12 different topics in the interest of general investors in the capital market with one video being posted on all social media handles of BSE i.e., Facebook, LinkedIn, Twitter and Instagram during WIW. Further, each month, one new video is emailed to all newly joined investors in securities market in last one year (approx. over 4.5 crore), till WIW 2023.

5. Street plays

BSE IPF arranged Street Plays, performed by professionals at prominent busy locations in Mumbai, spreading awareness messages about various financial frauds. Total 16 street plays were performed during WIW as follows. These street plays received overwhelming response and appreciation from the people at every public location.

6. Special program for Women

In association with one of the resource persons carried out a series of talk shows on 6 days of week during WIW i.e. from October 10 - October 15, 2022, which was live on YouTube. Each show was of half an hour duration wherein prominent women financial experts discussed on one topic related to investment and financial wellbeing, on each day.

7. National Level Ad-Mad competition titled “Invest Wise Contest”

This was a national level initiative taken by BSE IPF where participants pan India were required to make their own videos based on the basic do’s and don’ts of investment and send at the designated email id. The videos in English/Hindi could use animation, storytelling, skit, etc. to showcase their talent.

The competition received an overwhelming response from the participants from across the country demonstrating a high level of creativity in spreading the messages very effectively. In all 8172 videos were received from which the 10 best videos were selected and awarded cash prizes in the form of Gift vouchers and winner’s certificates.

8. BSE building illumination and display of WIW banner on building.

Finally, we carried forward the unique initiative of last year of lighting up the face of the iconic BSE Building for all the days of WIW 2022 and also displaying the BSE, SEBI and WIW logo on top of the BSE building. Few important investor friendly messages were placed on the running ticker outside BSE’s iconic Rotunda building while images of BSE IPF celebrating WIW 2022 were flashed on the giant TV screen outside the building.

E. GREEN INITIATIVE

In order to address the environmental concerns, the Company is undertaking steps to promote sustainability, by disseminating all agenda items of Board and Committee meetings electronically on a real time basis, by uploading them on a secured online application specifically designed for this purpose, thereby eliminating circulation of printed agenda papers.

F. THE DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (31 OF 2016) DURING THE YEAR ALONG WITH THEIR STATUS AS AT THE END OF THE FINANCIAL YEAR.

During the year, no proceedings has been initiated under Insolvency and Bankruptcy Code for default in payment of debt. Further, Company has also not initiated any proceedings against the defaulting entities. However, it had lodged its claim with the resolution professional/liquidator appointed for defaulting listed companies.

G. THE DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONETIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF.

During the period under review, Company has not taken any loans from the banks or financial institutions. Accordingly, there has been no onetime settlement or valuation done for this purpose.

17. ACKNOWLEDGEMENTS

The Board sincerely thanks the Government of India, SEBI, RBI, IRDA, GIFT City Ltd., CERC, the Government of Maharashtra, other State Governments and various government agencies for their continued support, co-operation and advice.

The Board places on record its gratitude to the members of various committees for their guidance and leadership and for providing valuable contribution towards the functioning of respective committees during the year.

The Board also acknowledges the support extended by trading members, issuers, investors in the capital market and other market intermediaries and associates.

The Board expresses sincere thanks to all its business associates, consultants, bankers, vendors, auditors, solicitors and lawyers for their continued partnership and confidence in the Company.

The Board further extend its sincere appreciation to all the employees for their dedication and contribution and to all the shareholders for their trust and confidence in the management of the Company. The Board is also deeply touched by the efforts, sincerity and loyalty displayed by the employees for their commitment, co-operation and collaboration in advancing the mission and vision of the Company towards achieving its goals.

For and on behalf of the Board of Directors

Date: Mumbai S. S. Mundra

Place: May 11,2023 Chairman

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Mar 31, 2022

The Board of Directors ("Board”) present the Seventeenth Annual Report of BSE Limited ("the Company” or "BSE” or "Exchange”) together with audited financial statements for the Financial Year ended March 31, 2022.

1. STATE OF COMPANY’S AFFAIRSA. FINANCIAL SUMMARY AND HIGHLIGHTS:

The financial performance for Financial Year ("FY”) 2021-22 is summarised in the following table:

('' in Lakh)
Particulars	Standalone		Consolidated
	2021-22 |	2020-21	2021-22 |	2020-21
Total revenue	72,402	56,505	86,353	65,465
Total expenses	46,292	43,453	60,045	53,070
Profit before exceptional items and tax	26,110	13,052	26,308	12,395
Exceptional items (expenses)	-	(1,453)	-	(1,453)
Profit before tax and share of profits of associates	26,110	11,599	26,308	10,942
Share of profits of associates	-	-	6,418	4,315
Profit before tax	26,110	11,599	32,726	15,257
Tax expenses	6,598	1,873	8,233	1,087
Net profit for the year	19,512	9,726	24,493	14,170
Net profit attributable to the Shareholders of the Company	19,512	9,726	25,433	14,490
Net profit attributable to the non-controlling interest	-	-	(940)	(320)
Other comprehensive income	107	277	639	(23)
Total comprehensive income for the year	19,619	10,003	25,132	14,147
Total comprehensive income attributable to the Shareholders of the Company	19,619	10,003	25,895	14,497
Total comprehensive income attributable to the non-controlling interest	-	-	(763)	(350)
Basic and diluted EPS before exceptional items (''	14.20	7.77	18.51	11.23
Basic and diluted EPS after exceptional items (''	14.20	7.08	18.51	10.54

I. Consolidated Results

The total income of the Company during the Financial Year 2021-22 on a consolidated basis was '' 86,353 Lakh reflecting an increase of '' 20,888 Lakh (up by 32%) over previous Financial Year. However, the total expenses for the year were higher by '' 6,975 Lakh (up by 13 %) at '' 60,045 Lakh.

During the Financial Year, the income was higher mainly due to increase in income from securities services (up by 77%); income from corporate services (up by 27%); data dissemination (up by 8%); income from training institute (up by 4%) and income from sale of software licenses, development, customisation & maintenance of software (up by 86%). Increase in expenses are mainly due to increase in employee benefits expense (up by 19%); finance cost (up by 115%); computer technology related expenses (up by 2%); administration and other expenses (up by 19%) and liquidity enhancement scheme expenses (up by 4%).

The net profit after tax was higher by '' 10,323 Lakh (up by 73%) to '' 24,493 Lakh as against '' 14,170 Lakh in the previous Financial Year.

II. Standalone results

The total income of the Company during the Financial Year 2021-22 on a standalone basis was '' 72,402 Lakh reflecting an increase of '' 15,897 Lakh (up by 28%) over previous Financial Year. However, the total expenses for the year were higher by '' 2,839 Lakh (up by 7%) at '' 46,292 Lakh.

During the Financial Year, the income was higher mainly due to increase in income from securities services (up by 73%), income from corporate services (up by 27%) and data dissemination (up by 8%). Increase in expenses are mainly due to Increase in Employee benefits expense (up by 10%), computer technology expenses (up by 10%), administration and other expenses (up by 9%) and liquidity enhancement scheme expenses (up by 14%).

The net profit after tax was higher by '' 9,786 Lakh (up by 101%) to '' 19,512 Lakh as against '' 9,726 Lakh in the previous Financial Year.

B. DIVIDEND

The Board of the Company, in its meeting held on May 11, 2022, has recommended a final dividend of '' 13.50 per equity share of the face value of '' 2/- each fully paid up for the financial year ended March 31, 2022, subject to the approval of the Shareholders at the Annual General Meeting (AGM).

The said dividend is in line with the Dividend Distribution Policy of the Company.

The final dividend on equity shares for FY 2021-22, if approved, would result in a cash outflow of approximately '' 18,551 Lakh, resulting in a payout of 95% of the standalone profits of the Company.

In view of the changes made under the Income-Tax Act, 1961, by the Finance Act, 2020, dividends paid or distributed by the Company shall be taxable in the hands of the Shareholders. The Company shall, accordingly, make the payment of the Final Dividend after deduction of tax at source. For more clarity on deduction of tax, please refer para on ‘Tax Deducted at Source ("TDS”) on Dividend’ as mentioned in the notes to the Notice of Seventeenth Annual General Meeting.

Under Clause 5.3 of the BSE (Corporatisation and Demutualisation) Scheme, 2005, the allotment of equity shares to 11 Trading Members of the erstwhile BSE has been kept in abeyance for various reasons as on March 31, 2022. All corporate benefits including dividend as may be declared by the Company from time to time are being provided for and would be payable on the allotment of these shares. Brief details about the shares being kept in abeyance by the Company are given in ‘Share Capital’ section.

C. TRANSFER TO RESERVES

The Company was not required to transfer any amount of profits to general reserves for FY 2021-22 pursuant to provisions of Companies Act, 2013.

D. INVESTOR RELATIONS

The Company believes in leading from the front with emerging best practices in investor relations and building a relationship of mutual understanding with International and Domestic investors. To this end, the Company continuously strives for excellence in its Investor Relations engagement with investors through physical, video and audio meetings through structured conference-calls and periodic investor/analyst interactions like one-on-one meetings, participation in investor conferences, quarterly earnings calls, and analyst meet from time to time. The Company’s leadership team, including the Managing Director, Chief Financial Officer, and Chief Business Officer, spent significant time to interact with investors to communicate the strategic direction of the business in a number of investors meet

organized by reputed Global and Domestic Broking Houses, during the previous financial year. All the four quarterly earnings calls conducted during the year were also well attended by investors and analysts. No unpublished price sensitive information is discussed in these meetings. The Company ensures that critical information about the Company is available to all the investors, by uploading all such information on the Company’s website.

2. MAJOR EVENTS OCCURRED DURING THE YEARA. MATERIAL CHANGES FROM END OF FINANCIAL YEAR TILL DATE OF REPORT

There are no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report.

B. CHANGE IN NATURE OF BUSINESS

During the FY 2021-22, there was no change in the nature of business of the Company.

C. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the year, there are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company’s operations.

3. SHARE CAPITAL

Pursuant to clause 5 of BSE (Corporatisation and Demutualisation) Scheme, 2005 ("BSE Demutualisation Scheme”) approved by Securities Exchange Board of India ("SEBI”), vide its notification dated May 20, 2005, every Trading Member having membership right of the Exchange or his nominee, as the case may be, as on record date, decided for the purpose, was entitled to 10,000 equity shares of the face value of '' 1/- per share, against membership right of erstwhile BSE. It may be noted that the entitlement against membership rights post consolidation of share capital stands changed to 5,000 equity shares of face value '' 2/- per share. As on March 31, 2022, entitlement of 11 Trading Members of erstwhile BSE, against their membership rights, continue to remain in abeyance for various reasons. All corporate benefits including dividend as may be declared by the Company from time to time on the shares which remain in abeyance, are being provided for and would be payable on the allotment of these shares.

CHANGE IN PAID-UP SHARE CAPITAL

i. Allotment of shares in case of Abeyance:

On December 12, 2021, the Company allotted 65,000 equity shares of face value of '' 2/- per share, along with corporate benefits accrued thereon to one Trading Member of erstwhile BSE, whose entitlement to shares was kept in abeyance pursuant to BSE Demutualisation Scheme. The allotment of 65,000 equity shares to the said trading member

comprised of 5,000 equity shares towards initial entitlement and 60,000 bonus equity shares issued by the Company in the year 2009.

ii. Bonus Issue:

The Board of Directors at their meeting held on February 8, 2022, recommended issue of bonus equity shares, in the ratio of 2:1, i.e., 2 (Two) bonus equity shares of '' 2/- each for every 1 (One) fully paid-up equity share held. Accordingly, the Shareholders’ approved issue of 9,16,08,594 bonus equity shares through postal ballot on March 14, 2022. Subsequently, the company allotted 9,01,78,594 bonus equity shares on March 24, 2022, to the Shareholders holding shares as on March 22, 2022, being the record date fixed for this purpose.

Further, allotment of Bonus equity shares with respect to 14,30,000 equity shares of '' 2/- each held by 11 trading members of erstwhile BSE pursuant to BSE Demutualisation Scheme were kept in abeyance along with their accumulated corporate benefits, and the same forms part of issued capital of the Company.

The above share allotments resulted in an increase in paid-up equity share capital of the Company from 4,50,24,297 shares of '' 2/- each to 13,52,67,891 shares of '' 2/- each as on March 31, 2022.

4. INVESTOR EDUCATION AND PROTECTION FUND TRANSFER OF UNCLAIMED/UNPAID DIVIDEND

Pursuant to the provisions of Section 124 of the Companies Act, 2013 ("the Act”) read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules”), and relevant circulars and amendments thereto, the amount of dividend remaining unpaid or unclaimed for a period of seven years from the due date is required to be transferred to the Investor Education and Protection Fund ("IEPF”), constituted by the Central Government.

The Company had, accordingly transferred the following amount to IEPF during the year under review:

TRANSFER OF SHARES

Pursuant to the provisions of IEPF Rules, all equity shares in respect of which dividend has not been paid or claimed for last seven consecutive years shall be transferred by the Company to the designated Demat Account of the IEPF Authority ("IEPF Account”) within a period of thirty days of such shares becoming due to be transferred.

Accordingly, 472 equity shares of '' 2/- each on which the dividend remained unpaid or unclaimed for last seven consecutive years with reference to the due date of September 3, 2021, were transferred during the FY 2021-22 to the IEPF Account, after following the prescribed procedure.

The Company has sent reminders to all such Shareholders who have not claimed their dividends for FY 2014-15 declared by the Company. All equity shares in respect of which dividend has not been paid or claimed for last seven consecutive years shall be transferred by the Company to IEPF Account in accordance with provisions of the Act and IEPF Rules made thereunder. Members who have not encashed Final Dividend for the FY 2014-15 or any subsequent dividend declared by the Company, are advised to write to the Nodal Officer of the Company immediately.

Any Shareholder whose dividend/shares are transferred to IEPF can claim the shares by making an online application in Form IEPF-5 (available on www.iepf.gov.in).

Details of Nodal Officer

Name : Shri Vishal Bhat, Company Secretary and

Compliance Officer

Email address : [email protected]

Details of the resultant benefits arising out of shares already transferred to the IEPF:

Sr. No.	Dividend	Financial Year	Cumulative No. of Shares	Amount ('')
1.	Interim Dividend	2017-18	225	1,125
2.	Thirteenth Final Dividend	2017-18	225	6,975
3.	Interim Dividend	2018-19	448	2,240
4.	Fourteenth Final Dividend	2018-19	448	11,200
5.	Fifteenth Final Dividend	2019-20	760	12,920
6.	Sixteenth Final Dividend	2020-21	1,058	22,218

Sr.	Type of	Dividend	Date of	Date of	Amount
No.	Dividend	per share	Declaration	Transfer	Transferred
1.	Final Dividend for FY 2013-14	'' 4/-	August 1, 2014	September 9, 2021	'' 122,736/-

Year wise amount of Unpaid/Unclaimed Dividend lying in the unpaid account upto March 31, 2022 and the corresponding shares, which are liable to be transferred to the IEPF, and the due dates for such transfer
Sr. No.	Date of declaration of Dividend	Number of Number of Amount Unpaid Shareholders against shares against as on March whom Dividend whom Dividend 31, 2022 amount is unpaid amount is unpaid (?)			Due date of transfer of Unpaid and Unclaimed Dividend to IEPF
1.	10th Final Dividend (FY 2014-15) AGM held on September 25, 2015	280	1,10,617	5,53,085	October 27, 2022
2.	Interim Dividend (FY 2015-16) Board Meeting held on February 3, 2016	362	2,40,449	8,41,571.50	March 7, 2023
3.	11th Final Dividend (FY 2015-16) AGM held on June 24, 2016	297	1,09,441	4,37,764	July 24, 2023
4.	Interim Dividend (FY 2016-17) Board Meeting held on February 14, 2017	2,142	82,317	4,11,585	March 16, 2024
5.	12th Final Dividend (FY 2016-17) AGM held on September 4, 2017	2,236	81,467	18,73,741	October 5, 2024
6.	Interim Dividend (FY 2017-18) Board Meeting held on February 2, 2018	3,123	1,87,484	9,37,420	March 6, 2025
7.	13th Final Dividend (FY 2017-18) AGM held on August 2, 2018	2,211	85,327	26,45,137	September 3, 2025
8.	Interim Dividend (FY 2018-19) Board Meeting held on November 30, 2018	2,591	1,03,441	5,17,205	December 30, 2025
9.	14th Final Dividend (FY 2018-19) AGM held on July 15, 2019	1,906	72,212	18,05,300	August 18, 2026
10.	15th Final Dividend (FY 2019-20) AGM held on July 30, 2020	2,067	99,873	15,49,025	August 30, 2027
11.	16th Final Dividend (FY 2020-21) AGM held on August 24, 2021	2,266	1,47,614	28,11,105 September 23, 2028

5. MANAGEMENTA. DIRECTORS AND KEY MANAGERIAL PERSONNEL

The current strength of Board of the Company is eight. Being a Stock Exchange, the Board comprises of six Public Interest Directors ("PIDs”) nominated by SEBI, one Shareholder Director nominated by Life Insurance Corporation of India (LIC) and one Managing Director (considered in the Shareholder Director category).

Changes during the year

Shri T. C. Suseel Kumar, Shareholder Director was liable to retire by rotation and being eligible, was re-appointed at the Sixteenth Annual General Meeting (AGM) held on August 24, 2021, and the same was approved by SEBI. Shri T. C. Suseel Kumar, liable to retire by rotation, has offered himself for re-appointment at the Seventeenth AGM.

SEBI approved the extension of tenure of Shri Umakant Jayaram as PID for a further period of three years w.e.f. February 4, 2022.

Smt. Prajakta Powle, ceased to be the Company Secretary and Compliance Officer of the Company w.e.f., March 14, 2022.

Shri Vishal Bhat has been appointed as the Company Secretary and Compliance Officer of the Company w.e.f., March 15, 2022.

B. DECLARATIONS BY PUBLIC INTEREST DIRECTORS

The Company has received declarations from all the PIDs, under Section 149(7) of the Act that they have met the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16(1)(b) of SEBI (Listing Regulations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations”). Further, all PIDs have also given the

declarations that they satisfy "fit and proper” criteria as stipulated under Regulation 20 of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 ("SECC Regulations”). All PIDs have also complied with Code for Independent Directors prescribed in Schedule IV to the Act. They have also given their annual affirmation on compliance with the Code of Conduct for the Board of Directors and Senior Management of the Company.

Further, there has been no change in the circumstances affecting their status as PIDs of the Company.

C. DECLARATION BY THE COMPANY

None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 164 (2) of the Act read with Rule 14 of Companies (Appointment and Qualifications of Directors) Rules, 2014.

D. MEETINGS OF THE BOARD

During the FY 2021-22, five meetings of the Board of Directors were held. The details of meetings of the Board, are provided in the Corporate Governance Report forming part of this Annual Report.

Separate meetings of the PIDs were held on May 12, 2021, August 6, 2021, November 12, 2021 and February 7, 2022.

E. BOARD COMMITTEES

There are various Board constituted Committees as stipulated under the Act and Listing Regulations namely Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship/ Share Allotment Committee, Risk Management Committee and Corporate Social Responsibility Committee. Brief details pertaining

to composition, terms of reference, meetings held and attendance thereat of these Committees during the year have been enumerated in Corporate Governance Report forming part of this Annual Report.

Additionally, Company being an Exchange, has also constituted other Regulatory Committees as stipulated under SECC Regulations.

F. AUDIT COMMITTEE RECOMMENDATIONS

All recommendations of Audit Committee were approved by the Board of Directors during the year.

G. BOARD EVALUATION

Performance of the Board and Board Committees was evaluated on various parameters such as structure, composition, diversity, experience, corporate governance competencies, performance of specific duties and obligations, quality of decision-making and overall Board effectiveness. Performance of individual Directors & Independent External Persons was evaluated on parameters, such as meeting attendance, participation and contribution, engagement with colleagues on the Board, responsibility towards stakeholders and independent judgement. All the Directors were subjected to peer-evaluation.

All the Directors participated in the evaluation process. The results of evaluation were discussed in the Board meeting held in May 2022. The Board discussed the performance evaluation reports of the Board, Board Committees, Individual Directors and Independent External Persons and noted the suggestions / inputs of the Directors. Recommendations arising from this entire process were deliberated upon by the Board to augment its effectiveness and optimize individual strengths of the Directors.

The detailed procedure followed for the performance evaluation of the Board, Committees and individual Directors & Independent External Persons is enumerated in the Corporate Governance Report.

H. REMUNERATION OF DIRECTORS AND EMPLOYEES

In compliance with the requirements of Section 197(12) of the Act, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and SECC Regulations, a statement containing the remuneration details of Directors and employees is annexed as Annexure A.

I. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134 (5) of the Act, with respect to the Directors’ Responsibility Statement, it is hereby confirmed that:

a) in the preparation of the annual accounts for the financial year ended March 31, 2022, the applicable Accounting Standards had been followed along with proper explanation relating to material departures for the same;

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates

that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2022 and of the profit of the Company for the financial year ended March 31, 2022;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) t he Directors have prepared the annual accounts on a going concern basis;

e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

J. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has maintained adequate internal financial controls

over financial reporting. These includes policies and procedures -

(a) pertaining to the maintenance of records that is reasonably detailed, accurately and fairly reflects the transactions and dispositions of the assets of the Company.

(b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Indian Accounting Standards notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time, and that receipts and expenditures of the Company are being made only in accordance with authorization of management and Directors of the Company, and

(c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material impact on the financial statements. Such internal financial controls over financial reporting were operating effectively as of March 31, 2022, based on the criteria established in the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

K. COMPLIANCE WITH SECRETARIAL STANDARD 1 AND SECRETARIAL STANDARD 2

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards ("SS”) issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively. During the year under review, the Company complied with the Secretarial Standards i.e., SS-1 and SS- 2, relating to "Meetings of the Board of Directors” and "General Meetings”, respectively.

L. IMPLEMENTATION OF CORPORATE ACTION

During the year under review, the Company has complied with the specified time limit for implementation of Corporate Actions.

M. ANNUAL RETURN

Annual Return in Form MGT - 7 is available on the website of the Company at www.bseindia.com/static/investor relations/annualreport.html.

6. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

Details of subsidiaries / associates of the Company are provided in notes to financial statements.

BSE Sammaan CSR Limited, wholly-owned Subsidiary of the Company is under the process of voluntary liquidation pursuant to Special Resolution dated June 11,2021, passed in the Extra-Ordinary General Meeting of the said Company.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Company’s subsidiaries, associates & joint ventures in Form AOC-1 is attached to the financial statements of the Company.

Further, pursuant to the provisions of Section 136 of the Act, the standalone and consolidated financial statements of the Company, along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company at www.bseindia.com/static/investor relations/annualreport.html.

7. PUBLIC DEPOSITS

The Company has not accepted any public deposits during the financial year ended March 31, 2022, and as such, no amount of principal or interest on public deposits was outstanding as on the date of the balance sheet.

8. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Particulars of investments made by the Company are provided in Note Nos. 7, 8 & 9 of the Notes to the Standalone Financial Statements.

The Company has not provided any guarantee or security to any person or entity and has not made any loans and advances in the nature of loans to firms / companies in which directors of the Company are interested.

9. AUDITORS

A. STATUTORY AUDIT AND STATUTORY AUDITOR’S REPORT

M/s S.R. Batliboi & Co. LLP, Chartered Accountants (Firm Registration No. 301003E/E300005), Mumbai, were appointed as Statutory Auditor for a term of five years till conclusion of Seventeenth AGM.

M/s S.R. Batliboi & Co. LLP, have expressed their willingness for reappointment and have furnished a certificate of eligibility and consent under Section 139 and 141 of the Act.

The Board, based on the recommendation of the Audit Committee, has recommended re-appointment of M/s S.R. Batliboi & Co. LLP, as the Statutory Auditor of the Company for a further term of five years from the conclusion of Seventeenth AGM till the conclusion of the Twenty Second AGM.

Statutory Auditor’s Report

The Statutory Auditor’s report dated May 11, 2022, on the financial statements of the Company for FY 2021-22 is unmodified and does not have any reservations, qualifications, or adverse remarks.

Details in respect of frauds reported by auditors

No fraud has been reported by the Auditors to the Audit Committee or the Board.

B. SECRETARIAL AUDIT AND SECRETARIAL AUDITOR’S REPORT

The Board appointed M/s Dhrumil M. Shah & Co., Practicing Company Secretaries (CP No.: 8978/ FCS No.: 8021) to conduct Secretarial Audit of the Company for FY 2021-22.

The Secretarial Auditor’s report for the year ended March 31, 2022, as provided by M/s Dhrumil M. Shah & Co., Practicing Company Secretaries is enclosed as Annexure B.

The Secretarial Auditor’s report does not contain any qualifications, reservations or adverse remarks.

C. INTERNAL AUDITOR

Internal Audit for the year ended March 31, 2022, was conducted by M/s S. Panse & Co. LLP and Internal Audit report at periodic intervals were placed before the Audit Committee.

D. COST RECORDS AND COST AUDIT

Maintenance of cost records and requirement of Cost Audit as prescribed under the provisions of Section 148(1) of the Act, are not applicable for the business activities carried out by the Company.

10. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

A. CONSERVATION OF ENERGY

I. The steps taken and their impact on conservation of energy:

We regularly replace high energy consuming electrical equipment with modern efficient devices such as replacing the induction ballasts with electronic ballasts and the fluorescent lights with LED lights. We

conserve energy by switching off lights & other equipment when they are not required using sensing technology where feasible. Our offices are painted in brighter colours to maximize lighting efficiency besides using natural light in most places. We have coated the glass windows to reduce the heat entering the building which reduces the airconditioning load. The Company continuously strives to optimize its energy usage and efficiency. We have replaced few AHU coils which has resulted in increase in efficiency and energy savings.

II. The steps taken by the Company for utilising alternate sources of energy:

Our building has glass windows all around and we also use the ambient light for lighting purposes as much as possible. This reduces the electricity consumption due to lesser need of lighting during the day.

III. The capital investment on energy conservation equipment:

The Company has not done any capital investment on energy conservation equipment during the year.

B. TECHNOLOGY ABSORPTION

The global pandemic, COVID-19, continued to impact the socioeconomic life in the year 2021-22, besides the challenges it posed on the health system. Companies had to inevitably bring in change in their technology approach and process in order to embrace ‘working remotely’ and ‘increased use of digital medium’.

The Company was agile and implemented various steps in the previous year 2020-21 with the help of which the Company continued its Businesses and Operations non-stop, without a single day of disruption during the entire COVID-19 period in last two years. It was ‘Business-as-Usual’.

The Company continued its technology journey and implementation during the year 2021-22, while maintaining the balance between the team working remotely alongside maintaining the team on site.

The key takeaways of the year 2021-22, were

• Maintaining the competitive edge and improving on the market share

• Continuously upgrade and introduce new features in the products and services offered to our Trading community

• Upgrade and/ or migrate existing products to new technology stack

• Acquire newer projects by the technology arm of the Company

• Meeting regulatory requirements, some of them major in terms of technology design

I. Unified Trading Interface

The Company’s trading terminal popularly known as BoltPlus On Web -BOW and BSE Electronic Smart Trader - BEST is designed for both frequent traders as well as beginners. In today’s competitive financial environment, to trade effectively is a key part of any trading strategy as well as to ensure that end users experience the best trading platform they deserve. The Company’s trading terminals are designed with an edge on the market, equipped with advanced and simple tools to help meet profiles of different types of investors. Both BOW and BEST supports trading on the multiple domestic exchanges, BOW and BEST are the Company’s hosted, multi-exchange, multi-segment, multi-tenant scalable and reliable solution offering Order and Trade Management (OMS), Real time order-based Risk Management ("RMS”) and Order Routing Services (ORS). These platforms Support trading using leased lines as well as internet. The Company vision is to continually provide solutions that streamline operations so that Trading members can focus their resources on their business growth. These products are offered Free of cost to all our trading members and investing community.

Value Proposition for Members:

S Completely Exchange Hosted Application.

S No IT infrastructure cost to the Member.

S No BOD and EOD Operations required on the member end.

S Single Application for all Users Types.

S Trade commencement in one day.

S Real time support services.

Key Features & Benefits

• Trading Capabilities

• A single multi-functional desktop

• Send orders electronically (Multi-Exchange & Multi-segment)

• Track the status of executions

• Advanced trading features (basket trading)

• Technical analysis and charting

• Optimize trading strategy with pre and post-trade analytics

Market Dissemination

• Top volume, gainers, losers

• Market indices

• Time and Sales

• Daily Lows and Highs

• Market alerts

Speed and Simplicity

• Optimizes bandwidth management

• Profile based Trading terminal as per trading needs

• Provides one-click access to key features

• Multiple layouts

Risk Management

• Portfolio risk management - real-time valuation

• Pre-trade risk filters

• Credit limits management at multiple levels (HQ, branch, dealers, clients)

Security

• 2 FA

• Secure Socket Layer

• IP Based Login Restrictions

MarketWatch

• Real Time Quotes on ALL Versions i.e. Exe, Browser & Mobile

• User Defined Market Watch

• Formulae Based MWs

• MWs for DPs, Top Gainers /Losers, Value, Volume

• Real Time Charts

• Extremely Low Bandwidth Usage

Order and Trade Management

• Supports all Exchange Order types

• Customizable Reports - Order, Trade Book

• Order entry from MW, MBP etc

• Multileg Orders

User Management

• N Tier Hierarchy for Users based on roles

• Support, Multi Admin, Branch Admin

• Dealers, Administrators, Investors

Integrated Risk Management

• Order Based Risk Management

• Span Margining

• Template based profiles for Dealer, Investor and Admins

• Trading Rights Definitions for All Levels - Exchange / Segment/ User/Security Level

• Access Controls at the Exchange / Segment/User/Security Level

• MTM controls on Risk Management

• Real-time Surveillance with additional features of Square Offs

Enhancements during the year BOW

BOW new Desktop based Front End: - New Desktop based front end completely rollout in market with new user-friendly interface & memory-based application for faster performance. Provided Fast Order Entry feature for all Exchange-Segments.

Days Net Position Display: - Option of displaying Day’s Net position separately in Net position window of Dealer and Admin User.

Enhancement in Risk Control and Risk Management: - Manual collateral & other deposit fields have been added along with existing cash and ad-hoc deposits which helps flexibility in controls. Administrator can also assign deposit preference for their clients at segment-product level.

BOW database load balance: - Change in database architecture to manage transaction and query load which significantly improved the load handling capacity of Application.

BOW Mobile: - Additional security of biometric/pin no. authentication for BOW Mobile Application.

Global Dealer Functionality: - Dealers will have option of view of orders placed by other dealer or to view orders placed by own only.

Upload facility: Flexible upload format for user creation/modification, Activate/Deactivate users so that no changes required in back-office application for members. Reports for uploaded users. Flexible format for Deposits uploads.

BEST

Replacement of IML with ETI: Migrated to ETI API to connect to BSE Exchange directly instead of IML for BSE Derivatives and BSE Commodities segments. BSE Cash and BSE Currency ETI are in pipeline and will soon be migrated to ETI API.

BOW and BEST being hosted solutions, was instrumental for trading members in addressing their business needs during this pandemic period, as all users were forced to work or operate remotely. The Company saw a surge in the new user requests. The Company ensured 100% uptime to all its stakeholders of BOW and BEST and have been operating and managing all its critical infrastructure and systems. In order to address the continuous change in market and regulatory requirements, the Company’s technology team is vigilant and continuously enhancing the features and the service offerings as highlighted above.

II. Upgradation of Network Equipment & Technology enhancements

The Company recognises that IT (Information Technology) is not seen as a cost to run businesses, but that IT drives the businesses fact that new era technologies are data-driven business models. The Company understands that certain existing infrastructure has reached a maturity level and they cannot further support or fuel the new business requirements. Therefore, every year the Company undertakes technology upgrades, migration of key infrastructure or software resources. It is equally important to have operational efficiencies as per business needs, customer expectation and support advanced technologies and integration that systems and infrastructure are based on newer technology platforms.

Few key initiatives taken to upgrade infrastructure resources during the year are:

(a) Implementation of Micro-segmentation on SDN (Software Defined Network)

Software-Defined Networking (SDN) technology has been instrumental in allowing organizations to deploy applications at a faster rate and reduce

the overall cost of deployment. SDN gives network administrators the ability to manage and provision Software-Defined Networking (SDN) technology has been instrumental in allowing organizations to deploy applications at a faster rate and reduce the overall cost of deployment. SDN gives network administrators the ability to manage and provision network services from a centralized location.

The Company has implemented SDN few years back. There has been substantial change in server and application technologies due to widely used cloud technologies, the network technologies too need to be upgraded to meet the need of modern enterprises. SDN like cloud technologies has become all around necessity that can upscale network infrastructure with minimal disruption.

While data centres continue to play a central role, a growing number of workloads are shifting to cloud and hybrid cloud deployment models. As a result of these shifts, micro-segmentation is the first step to implementing a strong and effective security model. Micro-segmentation is the security practice that divides networks into isolated segments so that traffic can be more easily monitored and controlled.

In phased manner, the Company implemented micro-segmentation. Micro-segmentation has given greater relief on primary firewall and Security operations monitoring by avoiding putting greater pressure on IT security teams to detect and prevent lateral movement among heterogeneous data centre infrastructure assets.

(b) Expansion of Co-Location facility

To meet ongoing demands for an additional co-location facility by members, a new co-location facility has been commissioned. Members have started availing services from February 2022.

(c) Upgrade of Internet trading setup links

To meet growing demand of traffic on Internet trading environment, the Company have upgraded core internet links at Primary and Disaster Recovery site to two-fold with additional burstable bandwidth on demand option. Capacity is continuously monitored, and necessary augmentations are now on demand.

(d) Upgrades of Network infrastructure

The Company has initiated process of technology refresh and upgrade of member network WAN routers. Technical evaluation process is in progress. The proposed new network equipment is expected to be compatible with existing baseline infrastructure as well as meet security related requirements.

III. Financial ERP solution developed by BSE Technologies Private Limited

The Company’s software development arm, BSE Technologies developed financial ERP solution ("Class ERP”) as a substitute to costly third party solutions and thereby save on mammoth AMC (Annual Maintenance Costs). It (BSE Technologies) continued its milestone achievement year

on year. Many enhancements were implemented to keep the products competitive and major modules added during the year.

The suite is now known as EFAS (Enterprise Financial Accounting System), the financial suite implementation for BSE LTD and its group companies. The ingenious developed solution is on the road to establish its own identity in the world of financial accounting system solution.

For the whole year the new solution EFAS was being used by the respective business teams of the Company and its groups.

All transactions recording, fetching reports, data entry and matching are being done in new solution. All tasks and activities that were performed in third party solution are now performed in new application and the same is being running successfully. The old third-party solution is decommissioned.

IV. Agility in DR operations

The year 2021-22, witnessed numerous guidelines by regulatory authority in the area of DR readiness. These guidelines outlined sea-change directions in terms of DR operations compared to earlier guidelines.

The Company has complied with all regulatory requirements laid down from time to time. Regular live trading were conducted during the year under review. Importantly, during last two years of COVID pandemic, the complete operations and management of DR was performed remotely with very limited number of support team available at DR. For the Company and for all market participants, it was ‘business as usual’.

The complete process of switch-over from Primary site to Disaster site and back were conducted using automation tool. All of the DR related tasks and activities were performed remotely. Overall live trading from DR site was seamless with no issues observed. New highs and volatility in trading volumes were observed while live trading from DR site. The infrastructure at DR site was able to sustain the trading volumes and the system performance, responses were normal.

Few of the highlights that the Company demonstrated during the DR switch-over over the year were;

• Unannounced Live trading from DR, when intimated to switch 4 hours in advance.

• Participated in more than 6 Unannounced mock drills invoked by SEBI during the year at an advance intimation of 45 minutes.

All required processes and protocols were followed for unannounced live trading from DR. Communications were done with different stakeholders, mainly trading members, inter-operability participants i.e., other Exchanges and Clearing corporations.

To meet the stringent guideline, the Company continued to optimise the automation tool used for switch-over to DR. Continuous tuning were undertaken and tested during mock trading to improve the RTO values. Strategies were devised to manage switch-over to DR for critical applications.

The Company conducted regular DR dills to continuously monitor, manage and test infrastructure upgrades as well as improvise & check on resiliency testing.

V. Data Security

The Company implemented various steps to secured Data at Rest and Data in Transit.

As more and more emphasis is being highlighted on cyber security and data protection, pro-active steps were taken to implement Data encryption technology for few select application initially in phased manner and based on results other applications were included over a period of time.

The in-built features of underlying databases were used to achieve data encryption requirements. By implementing inbuilt features, the Company is saving costs on third party solutions that would have otherwise been required for data encryption.

On similar lines, data encryption was implemented for Hadoop using third party solution. The encryption activity was performed by the Company’s own Datawarehouse team, which otherwise would have costed substantial amount.

The implementation of data encryption was done with extreme caution and proper testing in order to avoid any disruption in the production environment.

VI. Major Infrastructure upgrades and migration

(a) Virtual Desktop Infrastructure (VDI)

During global pandemic period, almost all teams were working remotely. This suddenly created a huge demand for need to provide individual desktops or laptop for team members to work remotely. Providing desktops and laptops to end-users is a perennial IT challenge. Each of those devices requires constant maintenance and support so that end users can remain productive and secure. This involves support staff, hardware, and software purchases that take time and continuous effort to maintain. Therefore, organisations are significantly moving towards VDI based services to be offered to its team. With VDI, the number of days or weeks to deliver a desktop is converted into few minutes or hours.

The Company has started the journey towards adoption of VDI. Different use cases were tested considering how the VDI system and data is accessed from outside for different teams such as infrastructure support,

operations team, business teams, etc considering existing services and applications being used by different teams.

The Company is in process of finalization of the solution and VDI is expected to be implemented by second quarter of FY 2022-23.

VII. Single Sign On (SSO) Upgrade

The Company is continuously thriving to use open-source technology. Strategically this helps in the long run by restricting the costs. It also enjoys the technology upgrades and support from open-source forums.

In this direction, the Company migrated its Single Sign On (SSO) from OPENIAM to new version Cymmetri in the year 2020. The final migration was completed in May 2021.

Based on the success of SSO adaptability across different set of applications, the Company plans to provide SSO services as a SaaS (Software as Service) model for BSE and its group companies. The major advantage of SaaS model will be the savings on infrastructure investment and maintenance of the application services.

VIII. Newer Business streams ventured and progress in new projects launched in previous year

The Company’s fully owned subsidiary and IT arm, BSE Technologies Pvt. Ltd. (BTPL), has been selected for three major and important projects. BTPL provides end-to-send solution comprising of development of software, customization, SOC (Cyber Security Operations Centre) services and managing the infrastructure of these new projects. The domain expertise and skill set that the BTPL team possesses has helped to garner these milestone projects, each one of them diverse in its entirety. Below mentioned projects are awarded to BTPL.

(a) India International Bullion Exchange (IIBX)

(b) BSE KRA (KYC Registration Agency)

(c) Power Exchange titled as Hindustan Power Exchange Limited

(d) Trade Receivables & Discounting System (TReDS)

(a) India International Bullion Exchange (IIBX)

In the Budget 2020, Finance Minister Smt. Nirmala Sitharaman announced that GIFT city would setup an international bullion exchange as an additional option for trade by global market participants.

For the above, the holding company India International Bullion Holding IFSC Limited (IIBH) has setup the Bullion Exchange through its subsidiary, India International Bullion Exchange IFSC Limited (IIBX), encompassing the Bullion Exchange and the Bullion Clearing Corporation.

As part of the project scope, BTPL implemented solutions pertaining to Exchange Trading platform mainly consisting of Matching engine (MAPS), Trading terminal (BOW), and associated solutions. Similarly

on Clearing corporation front, Real-time Risk Management (RTRMS), Clearing & Settlement system and other required solutions were implemented. In addition, BTPL provided additional software to facilitate backoffice & productivity applications to run day-to-day operations and administrations. Maintenance of overall infrastructure of IIBX in addition to software development and upgrades is being managed by BTPL.

In September 2021, production setup was made ready on India INX Data center at GIFT city and the same is Live.

(b) KYC KRA (KYC Registration Agency)

Looking at the immense opportunity that the KRA system offers and the areas that it can grow in future, BTPL took a step in the direction to become a KRA. This additional service will immediately help trading members of the Company as well as their clients.

As a part of the regulatory requirement and obtaining the regulatory clearance, separately, the setup and application working was demonstrated to regulators. The production setup has been made ready.

(c) Hindustan Power Exchange (“HPX”)

HPX (earlier was referred as Pranurja Solutions Limited - PSL) was incorporated in 2018 as a consortium of PTC India (PTC), BSE Investments, and ICICI Bank. In February 2021, the Commission granted registration to HPX to establish and operate a power exchange. It would make HPX the third power exchange in India.

BTPL has developed and provided software applications required for trading, peripheral and clearing and settlement functions. HPX trading platform is expected to run 24x7x365 days. BTPL has been selected as the technology provider and is responsible for setting up the exchange and clearing applications including Trading, Matching, Trading interface, Risk Management, Market Operations, Public information portal (Website) & Clearing and Settlement system etc. BTPL will also provide the Security Operations Centre (SOC) services to HPX.

BTPL with help of its expert team has been developing an in-house trading and matching engine which is core to Power Exchange and completely different than the securities market. The matching logic is very complex and over a period of last 2 years, the matching engine is undergoing continuous change to fine tune its performance and output.

In addition, BTPL has developed web-based Trading interface to all members and its client for order routing. The Risk management and Clearing & Settlement system will be suitably customized to meet the needs of power exchange.

It is expected that the new exchange may go-live in second quarter of FY 2022-23.

(d) TReDS (Trade Receivables Discounting System)

BTPL acquired in-principle approval from the Reserve Bank of India (RBI) to set up and run the Trade Receivables Discounting System (TReDS).

TReDS is an electronic platform for facilitating the financing/discounting of trade receivables of Micro, Small and Medium Enterprises (MSMEs) through multiple financiers. These receivables can be due from corporates and other buyers, including Government Departments and Public Sector Undertakings (PSUs).

The TReDS platform will bring all the aforesaid participants together for facilitating uploading, accepting, discounting, trading and settlement of the invoices, bills of MSMEs. The platform will facilitate MSME to manage their working capital.

The solutions provided by BTPL for TReDS platform are OMRS (Online Membership Registration System) and the Transaction System.

IX. BSE designated exchange for India’s largest IPO - LIC

Life Insurance Corporation of India (LIC), India’s largest Insurer, came out with one of the mammoth Initial Public Offering (IPO). Prior to start of actual IPO process, various steps were taken by the Company on different front to simulate and manage the load. Continuous testing with various stakeholder involved in IPO process were conducted for months in order to ensure that actual IPO process is conducted seamlessly. During the process of simulation of load and performance, the Company implemented performance tuning and capacity enhancements activities. On continuous basis, prior to actual IPO multiple rounds of testing were performed to maintain the sturdiness of the system.

The LIC IPO process was successfully conducted on BSE platform in the month of May 2022.

Cyber Security Technology absorption and certification

i. Distributed Denial of Service (“DDoS”) Protection replacement

For protection from continues threats and as a first line of Cyber defence, the Company has DDoS Technology protection enabled. The devices responsible to ensure this were end of life and required replacement and upgrade to support the protection from sophisticated and volumetric attacks evolved over the period. It has capability to protect from sophisticated Volumetric, application layer and Secure Socket Layer ("SSL”) based DDoS attacks. During the year the network throughput capacity of the device have increased from 1Gbps to 3Gbps as the volume of network traffic from internet have increased for the company.

ii. Network Intrusion Prevention System (N-IPS) replacement

To protect from known and dynamic cyber security threats, the company has implemented Network Intrusion Prevention System which continuously monitors the traffic request and response flowing through the BSE Network and prevents any malicious request or response which is illegitimate and can harm the respective system. The system was replaced as the existing N-IPS technology devices were getting end of its life and considering the attack volume and penetration attempts we receive for companies’ technology systems

an advance and proven Network Intrusion Prevention System was placed as a replacement.

iii. Vulnerability Management System for Technology Systems

Vulnerability is referred to weakness in technology system which can be exploited by a cyber attacker to gain access, harm the system or perform unauthorized action on technology systems. To ensure such disclosed and applicable vulnerabilities are identified, the company have implemented an fully function Vulnerability Management System Technology. It will help to identify and act on applicable vulnerabilities on the company’s technology systems. To cover all technology assets a vulnerability management calendar is defined and followed quarterly basis to report all open vulnerabilities and then track closure of the same with respective remediation owners. It is also utilized to ensure any new systems are free from vulnerabilities before placing them in company network.

iv. Certification

The Company has successfully cleared the Certification and surveillance audit for Year 2021 - 22 for Information security Management System ISO 27001:2013 and Business Continuity Management System ISO 22301:2012.

Awards & Recognition

The Company’s IT initiatives and contributions were recognised in different forums and awards conferred.

• Transformation Icon by Core Media (May 20, 2021)

• CXO Hall of Fame AWARDS 2021 by CXOTV & Techplus Media Group (August 17, 2021)

• IT Genius Award 2021 & CIO CROWN 2021 by CORE (August 19, 2021)

• CIO100 Special Awards by Checkpoint & IDG (November 11, 2021)

• Innovation in Operations by IDC Industry Innovation Awards (IDCIIA) 2021 (December 8 2021)

I. Disclosures

i. The efforts made towards technology absorption:

The Company continued with passion looking for path-breaking technologies & adopt them. The year has been challenging and appealing for the Company’s technology team to continue its journey in exploring and implementation of newer technologies, however, the Company’s technology team was successful in implementing them as planned.

The Company has taken the lead for implementation of;

• Further enhancements in BOW & BEST Trading interface

• Upgradation and enhancements in infrastructure

• Implementation of newer technologies

• Enhancing the security posture across infrastructure and applications

• Improvising the operational capabilities & high availability

• Effective utilisation is made of available indigenous technology team expertise and develop home grown applications.

Needless to mention, the efforts put in by the Company reasserts that it is the fastest Exchange of the World. All departments within the Company are equipped with tech-enabled solutions and applications to deliver best of the services to all its customers.

ii. the benefits derived like product improvement, cost reduction, product development or import substitution;

The IT strategy and approach adopted by the Company has ensured uninterrupted services and trading facility. The Company thrives to remain competitive and has provided best in class products and services to all its market participants. The market participants are the beneficiaries of technology upgrade and newer rollouts made by the Company during the year. The Company’s technology offerings are built as a service model, thereby reducing the cost for its market participants.

iii. i n case of imported technology (imported during the last three years reckoned from the beginning of the financial year) - Not Applicable

a) the details of technology imported - Not Applicable

b) the year of import - Not Applicable

c) whether the technology been fully absorbed - Not Applicable

d) i f not fully absorbed, areas where absorption has not taken place, and the reasons thereof - Not Applicable

iv. the expenditure incurred on Research and Development - Not ApplicableC. FOREIGN EXCHANGE EARNING AND OUTGO

The particulars of Foreign Exchange Earnings and outgo during the year under review are furnished hereunder:

Foreign Exchange Earning: '' 3,110 Lakh (Previous Year: '' 2,953 Lakh) Foreign Exchange Outgo: '' 163 Lakh (Previous Year: '' 1,657 Lakh)

11. RISK MANAGEMENT AND COMPLIANCE

Risk Management is one of the critical elements of operating framework at BSE. Enterprise Risk Management ("ERM”) framework encompasses practices relating to the identification, evaluation, mitigation and monitoring of strategic, operational, financial, compliance risks and

emerging risks to achieve key business objectives and to minimise the adverse impact of risks.

The Board of Directors of the Company has formed a Risk Management Committee ("RMC”) to oversee the ERM Framework, mitigation and monitoring the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls.

BSE’s Management identifies key risks (existing as well as emerging) and prioritises the mitigation actions based on the potential adverse impact on operations and/or shareholder value. As we operate in a dynamic environment, these risks are reviewed regularly and assessed for their potential impact/ exposure. Every quarter, a detailed update on ERM is presented and deliberated upon in the meetings of the RMC of the Board.

OVERVIEW

Risk Management is an enterprise-wide function at BSE which covers major business and functional objectives including Strategy, Operations, Technology and Compliance. The Enterprise Risk Management (ERM)

enables the achievement of strategic objective by identifying, analysing, assessing, mitigating, monitoring and governing any risk or potential threat to these objectives. Several risks can impact the achievement of a particular business objective. Similarly, a single risk can impact the achievement of several business objectives. The focus of risk management is to assess risks, deploy mitigation measures and review them including risk management policy on a periodic basis along with the top key risk indicators of the organisation. This is done through periodic review meetings of the Risk Management Committee comprising of the Board members.

The risks in relation to internal control over financial recording and reporting is reviewed by the Audit Committee. The Company’s internal control systems commensurate with the nature of its business and the size and complexity of operations. These systems are routinely tested and certified by Statutory as well as Internal Auditor. The Audit Committee reviews adequacy and effectiveness of the Company’s internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Company’s financial risk management policies and systems.

RISK CATEGORIES

The Company’s risk management framework is broadly categorized as risk pertaining to (a) Business and Strategy, (b) Information Technology & Cyber Security, (c) Regulatory and Compliance, (d) Finance,

(e) Operations, (f) Human Resources and (g) Admin and Environmental Health & Safety (EHS) (h) Environmental Social and Governance (ESG).

Risks arising out of the choices we have made in defining our business and strategy and the risks to the successful execution of these strategies are covered in this category - for e.g., risk inherent to our industry and competitiveness are analysed and mitigated through strategic choices of target markets, the Company’s market offerings, business models and talent base. Potential risk to the long-term scalability and sustainability of the organization are also analysed and mitigation plans are actioned. We periodically assess risks to the successful execution of our strategy such as the effectiveness of strategic programs that are being executed, the momentum in new initiatives, the impact of strategy on financial performance, leveraging of inorganic strategies, effectiveness of organisation structure and processes, retention and development of high performing talent and leadership.

Risks arising out of internal and external factors affecting the policies, procedures, people and systems in our support functions thereby impacting services delivery, compromises our core values or not in accordance with generally accepted business practice or impacting the client’s operations are covered in this Operations, IT and Cyber Security Risks. For e.g. risks of business activity disruption due to natural calamities, terrorist attacks or war or regional conflicts, Geo-political changes, or disruption in telecommunications, systems failures, virus attacks or breach of cyber security.

Risks arising out of threats posed to our financial, organisational, or reputational standing resulting from violations or non-conformance with laws, regulations, codes of conducts or organisational prescribed practices or contractual compliances are covered in Regulatory & Compliance Risks. For e.g. risks of potential litigations, breach of contractual agreements, non-compliances to regulations, potential risk arising out of major regulatory changes.

RISK MANAGEMENT PROCEDURE Risk Identification

Risk Management is a continuous interplay of actions that permeate the Company. It is brought in to effect by the Company’s RMC, management and other personnel. The risk management process of the Company aims at providing reasonable assurance regarding achievement of the Company’s objectives.

In order to provide reasonable assurance, the Company’s risk management process endeavours to help:

• I dentify, assess and escalate new risks impacting the objectives

of the Company,

• Define mitigation actions to respond to the new risks effectively,

• Monitor effectiveness of existing risk management mitigation actions and

• Report risks and risk management mitigation actions to the Risk Management Committee on a periodic basis.

The risk analysis and evaluation is carried out using scenario based assessments to decide the potential impact, likelihood of occurrence and in some cases, the detectability of the risk.

Risk Assessment

Each risk is assessed for impact (materiality of the risk if it occurs) and likelihood (at an agreed level of impact, the probability of the event taking place). This shall provide the inherent risk of the particular risk activity. Based on the impact and likelihood the risk exposure is categorized into categories based on defined matrix.

Residual Risk is derived after assessing the impact of the mitigation plan.

Risk Mitigation Measures

Mitigation actions are prepared and finalised, owners are identified and the progress of mitigation actions are monitored and reviewed. The Risk Management Committee periodically reviews and monitors the mitigation actions, its effectiveness and provides its advice and insights to the mitigation teams.

The management along risk and control owners remain vigilant in mitigating the risks that may come with changes in internal and external environment.

Risk Reporting

The top risk from the risk registers, its mitigation plans, periodic review of processes and new risks emanating from such reviews, a detailed update on ERM is presented and deliberated upon in the meetings of the RMC on a quarterly basis.

The risks identified by risk management function or roles at different levels in the organization are presented at appropriate level of governance structure. Critical risks or cross functional risks at each level are escalated to the next level in the governance structure. Critical risks under different categories of risks at group level are reviewed by Chief Risk Officer, Chief Executive Officer, Chief Financial Officer, Chief of Business Operations, Chief Information Officer and Chief Regulatory Officer.

RISK MANAGEMENT FRAMEWORK FOR THE YEAR

During the year, as a part of monitoring the key risks, the risk management office:

a) Reviewed the risk management practices, which were primarily focused on the effectiveness of strategic programs in improving our competitive position and differentiation in market segments.

b) Reviewed the momentum of new initiatives to achieve our longterm business aspirations, our preparedness to address any incident that may cause business disruptions to our physical and technological infrastructure, strengthening operational and internal controls to detect fraudulent activity, leadership development and succession, planning and monitoring possible impact of changes in our regulatory environment.

c) Reviewed Technology, Information security risks including cyber-attacks and threat intelligence and continue to monitor the progress of mitigation actions. In addition to this, mitigation plan is executed for data access, its preservation and monitoring measures for internal users is implemented.

d) Reviewed key operational risks and actions based on inputs from internal risk register, external assessment, internal audit findings and incidents.

e) Reviewed operational risk areas including client service level standards, retentions and engagement of employees, reskilling of employees, brand attractiveness, women’s safety, physical securities, adequacy of insurance coverage, sucession planning, and business continuity management.

f) Monitoring by regulatory department, the key developments in the regulatory environment.

g) Reviewed the risk management practices with distinct focus on impact of COVID - 19 on the organisational performance, physical security, trading operations, cyber and information security and key measures taken for employee well - being,.

Due to the inherent risks in the Company’s business activities, it is vital that BSE keeps improving risk management practices to strengthen the organisation through informed strategic and business decisions.

BSE’s strategic vision for the ERM function is to embed ERM across processes, business strategy and key decision making to add significant and strategic organisational value.

12. COMPANY’S POLICIESA. POLICY ON NOMINATION AND REMUNERATION

The Company’s policy on Nomination and Remuneration includes criteria for determining qualifications, positive attributes and independence of a Director.

The Nomination and Remuneration Policy of the Company is performance driven and is designed to motivate employees, recognize their achievements and promote excellence in performance.

The Policy provides guidance on:

(1) Selection and nomination of Directors to the Board of the Company;

(2) Appointment of the Senior Management Personnel of the Company; and

(3) Remuneration of Directors, Key Managerial Personnel and other employees.

The said policy is available on the website of the Company at https:// www.bseindia.com/downloads1/nrcpolicy.pdf

B. POLICY ON CORPORATE SOCIAL RESPONSIBILITY (“CSR”)

The Company has constituted a CSR Committee in accordance with Section 135 of the Act.

The Annual Report on CSR activities as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been annexed to this Report as Annexure C.

The Company primarily works through BSE CSR Integrated Foundation towards supporting the projects in the areas of health, sanitation, technology incubators, eradicating hunger and poverty and various sectors covered under Schedule VII of the Act.

The CSR policy is available on the website of the Company at https:// www.bseindia.com/downloads1/Corporate Social Responsibility Policy. pdf

C. VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has formulated a Vigil Mechanism / Whistle Blower Policy pursuant to Regulation 22 of the Listing Regulations and Section 177(10) of the Act, enabling stakeholders to report any concern of unethical behaviour, suspected fraud or violation.

The said policy inter alia provides safeguard against victimization of the Whistle Blower. Stakeholders including directors and employees have access to the Managing Director & CEO and Chairperson of the Audit Committee.

During the year under review, no stakeholder was denied access to the Chairperson of the Audit Committee.

The said policy is available on the website of the Compnay at https://www.bseindia.com/downloads1/Whistle Blower policy.pdf

D. POLICY ON RELATED PARTIES TRANSACTIONS

All Related Party Transactions that were entered during the financial year were on arm’s length basis and in the ordinary course of business and is in compliance with the applicable provisions of the Act and the Listing Regulations. There were no materially significant

Related Party Transactions made by the Company during the year that required Shareholders’ approval under Regulation 23 of the Listing Regulations. None of the transactions with related parties fall under the scope of Section 188(1) of the Act. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act in Form AOC 2 is not applicable to the Company for FY 2021-22 and hence does not form part of this report.

The Policy on Related Party Transactions is available on the website of the Company at https://www.bseindia.com/downloads1/13b0fdbf-fa4e-4b4d-9d9b-bedade5e70c2.pdf

E. POLICY ON MATERIAL SUBSIDIARY

As required under Regulation 16(1 )(c) of Listing Regulations, the Company has formulated and adopted a policy for determining ‘Material’ Subsidiaries.

For FY 2021-22, Indian Clearing Corporation Limited ("ICCL”) is the material subsidiary of the Company. As per Regulation 24A of Listing Regulations, the Secretarial Audit Report of ICCL is annexed as Annexure D.

The policy on Material Subsidiary is available on the website of the Company at https://www.bseindia.com/downloads1/Policv on Material Subsidiaries.pdf

F. INSIDER TRADING REGULATIONS

Pursuant to the provisions of SEBI (Prohibition of Insider Trading) Regulations, 2015 (as amended from time to time), the Company has formulated a Code of Conduct for Prevention of Insider Trading ("Insider Trading Code”) and Code of Practices and Procedures for fair disclosure of Unpublished Price Sensitive Information ("UPSI”).

The Code of Practices and Procedures for fair disclosure of UPSI is available on the website of the Company at https://www.bseindia.com/ downloads1/Code of fair disclosure of UPSI.pdf

G. DIVIDEND DISTRIBUTION POLICY

The Dividend Distribution Policy containing the requirements of Regulation 43A of Listing Regulations is annexed as Annexure E and is also available on the website of the Company at https://www.bseindia. com/downloads1/BSE Dividend Distribution Policy.pdf

13. DISCLOSURE AS REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has always believed in providing a safe and harassment free workplace for every individual working in its premises through various policies and practices. The Company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment.

The Company has adopted a policy on Prevention of Sexual Harassment at Workplace which aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of undesired behaviour. An Internal Complaints Committee ("ICC”) is already in place wherein the senior management (with women employees constituting the majority) personnel are its members. The ICC is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the Policy.

During the financial year ended March 31, 2022, no complaints pertaining to sexual harassment have been received.

14. RESOURCES COMMITTED TOWARDS STRENGTHENING REGULATORY FUNCTIONS AND TOWARDS ENSURING COMPLIANCE WITH APPLICABLE REGULATORY REQUIREMENTS

The Company being a recognised Stock Exchange is governed by SEBI. SEBI from time to time has issued various regulations and guidelines applicable to the Company. The Company ensures compliances with the same and aims to remain at the forefront by creating a precedent for others to follow, in terms of compliance by implementing the best governance practices and disclosures.

During the year under review, the Company’s regulatory division comprised of departments, taking care of various critical aspects of regulatory compliances, as under:

A) Listing Compliance

B) Member Compliance

C) Surveillance

D) Inspection

E) Investor Services

F) Financial Surveillance

G) Legal Regulatory

H) Regulatory Correspondence

There are 149 resources in these functions at various designations. Each such department is headed by a senior official of the Company, reporting to the Chief Regulatory Officer, who in turn reports to the Managing Director & CEO and Regulatory Oversight Committee.

The Company has ensured to make disclosures of various mandatory regulatory requirements along with reporting of the same to various regulatory authorities in addition to informing the same to the Board of Directors and Committee members.

For the financial year ending on March 31, 2022, BSE incurred direct and indirect expenses amounting to '' 1,965 Lakh as per activity-based accounting methodology towards strengthening regulatory functions and towards ensuring compliance with regulatory requirements.

15. MARKETING AND COMMUNICATIONS

The company used all possible mediums to reach out to members, investors and general public. Information on latest product offerings, services, regulations and investor education were disseminated on a regular basis. With things slowly getting back to normal, the Company once again started hosting physical events, following all health protocols. The SME platform achieving 350 listings, the World Investor Week, the total number of registered investors (UCC) crossing 10 crores and the record number of transactions of StAR MF platform were some of the key milestones that got prominent coverage in all leading national and regional dailies, television channels and social media.

During the course of the year, the Company hosted several dignitaries across various sectors:

• Shri Piyush Goyal, Hon’ble Minister of Commerce & Industry, Consumer Affairs & Food & Public Distribution and Textiles, Govt. of India

• Shri Ramdas Athawale, Hon’ble Minister of State for Social Justice and Empowerment, Govt. of India

• Shri Arvind Sawant, Member of Parliament, Lok Sabha

• Shri Hemant Patil, Member of Parliament, Hingoli, Maharashtra

• Shri Manoj Kotak, Member of Parliament, Lok Sabha

• Shri Bhupendra Rajnikant Patel, Hon’ble Chief Minister of Gujarat

• Shri Aaditya Thackeray, Hon’ble Minister for Tourism, Environment & Protocol, Govt. of Maharashtra

• Shri Subhash Desai, Hon’ble Minister for Industries & Mining, Govt. of Maharashtra

• Smt. Shakuntala Rawat, Industry, State Enterprises, Devasthan Cabinet Minister Govt. of Rajasthan

• Shri Keyur Rokadia, Hon’ble Mayor of Vadodara

• Shri Shekhar Chaudhary, Director, Ministry of Finance

• Shri J.P.Gupta, Secretary Finance, Govt. of Gujarat

• Smt. Neelam Rani, Senior IFS Officer

• Shri Amstrong Pame, IAS Officer

• Smt. Shalini Agrawal (IAS), Commissioner, Vadodara Municipal Corporation

• Dr. Ashwani Mahajan, Governor, Council for International Economic Understanding

• Shri G.P Garg, Executive Director, SEBI

• Ms. Shyamala Gopinath, Former Deputy Governor of RBI

• Smt. Kishori Pednekar, Former Mayor, Brihanmumbai Municipal Corporation (BMC)

• Shri Ajit Kumbhar Jt. Commissioner, Brihanmumbai Municipal Corporation (BMC)

• Dr. Sudhir Goyal, Former Additional Chief Secretary, Agriculture and Marketing, Govt. of Maharashtra

• Dr. Saurabh Garg, CEO, UIDAI

• Shri Dinesh Kumar Khara, Chairman, SBI

• Shri Anand Rathi, Founder and Chairman, Anand Rathi Wealth Limited

• Shri Vijay Kedia, MD, Kedia Securities

• Shri Vijay Shekhar Sharma, Founder and CEO, Paytm

• Shri Swami Ramdev, Non - Executive Director, Ruchi Soya Industries Limited

• Shri Acharya Balkrishna, Chairman, Ruchi Soya Industries Limited

• Mr. David J. Ranz, Consul General of USA

• Mr. Kobbi Shoshani, Consul General of Israel

• Ms. Anna Lekvall, Consul General of Sweden in Mumbai

• Mr. Cheong Ming Foong, Consul General of Singapore Consulate

in Mumbai

• Mr. Othmar Hardegger, Consul General, Consulate General of Switzerland in Mumbai

• Mr. Peter Truswell, Australian Consul General, Mumbai

• Mr. Agus P. Saptono, Consul General of Indonesia Mumbai

• Mr. Alexei V. Surovtsev, Consul General of the Russian

Federation

• Mr. Hugo Gobbi, Argentina''s Ambassador

• Dr. Ralf Heckner Ambassador of Switzerland

• Mr. Naor Gilon, Israel’s Ambassador to India

• H.E. Ms. Mariana Pacheco Montes, Ambassador of Colombia

• Mr. Burkhard Balz, Member of the Executive Board of the

Bundesbank

• Ms. Maria Ariza, CEO, BIVA the Institutional Stock Exchange in Mexico

• Ms. Bhagyashree Patwardhan, Actress

• Shri Shailesh Lodha, Actor

• Shri Pragyan Ojha, Former Indian Cricketer

16. OTHER DISCLOSURESA. MANAGEMENT DISCUSSION & ANALYSIS

Pursuant to Regulation 34(2)(e) of the Listing Regulations, the

Management Discussion and Analysis Report forms part of this Annual

Report.

B. BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility Report forms part of this Annual Report.

C. CORPORATE GOVERNANCE

Pursuant to the SECC Regulations, Listing Regulations and the Act, report on Corporate Governance as on March 31, 2022, forms part of this Annual Report. A Certificate from Practicing Company Secretary, confirming status of compliances of the conditions of Corporate Governance is annexed to the Corporate Governance Report.

D. INVESTOR PROTECTION FUND (“IPF”)

The Company, through its IPF, regularly conducts Investor Awareness Programmes ("IAPs”) throughout the country. IPF was instrumental in conducting 11585 IAPs during FY 2021-22. Out of this, 4506 IAPs were conducted through the IPF while 7079 IAPs were conducted through the Investors Services Fund ("ISF”). During the year, IPF conducted 19 Regional Investor Seminars exclusively with SEBI across different parts of the country. IPF also periodically publishes TV, print and online advertisements regarding Do’s and Don’ts for investors, in order to educate them and enable them to safeguard their interests. During the year, several educational and other capital market awareness events were sponsored by IPF to raise awareness about corporate best practices, also. IPF is currently managing 27 Investor Service Centres across India covering all the major state capitals, including Mumbai.

Major Initiatives:

World Investor Week (WIW) 2021:

World Investor Week ("WIW”) was a week-long global campaign promoted by the International Organization of Securities Commissions ("IOSCO”) to raise awareness about the importance of investor education and protection and highlight the various initiatives of securities regulators in these two critical areas. In India, SEBI had chosen the week of November 22 - 28, 2021 to celebrate this week. BSE Investors Protection Fund ("BSE IPF”) had taken the initiative under the guidance of SEBI and the aegis of IOSCO to launch investor focused communications, initiatives, promoting contests to increase investor awareness and education and conducting pan India Investor Awareness Programs, including some with SEBI.

BSE IPF undertook some unique initiatives this year such as:

1) Bell Ringing Ceremony at BSE’s iconic International Convention Hall where the SEBI Executive Director Shri G P Garg and his senior team attended, where certain new initiatives given below were launched.

2) Launch of a"Market Simulation Package” www.virtualmarketlab. com - a simulation module created especially for teaching

students/investors the mechanics of trading, margining, settlement.

3) Launch of a "Certificate Program on Basics of Capital Market” - this was executed jointly with BSE Institute Ltd (BIL) - one of India’s leading capital market institutes. The Certificate Program is targeted at college students.

4) For 5 days starting from November 22, 2021, to November 26, 2021 a general nationwide Investor Quiz was conducted.

5) To spread awareness about Commodity Derivatives, a Quiz program was conducted on November 26, 2021, exclusively on questions based on the Commodity Derivatives Segment.

6) Considering the increasing number of new women investors and the overall increasing participation of women in the Stock Market, BSE IPF decided to conduct a Quiz exclusively for Women on November 23, 2021, as part of the WIW.

7) On November 27, 2021, an all-women panel discussion featuring financial experts, was arranged in co-ordination with one of the Bengaluru based resource person affiliated with BSE IPF.

8) Keeping the importance of governance and knowledge of regulations in mind, a special nation-wide Quiz was conducted for students of the Institute of Company Secretaries of India (ICSI), in coordination with ICSI, on November 28, 2021.

9) Holding interesting Webinars & Web based IAPs etc. for our investors.

10) Historic and iconic BSE building illumination and display of WIW banner on building, was one of the highlights of celebration of WIW.

a) Webinars:

To spread the knowledge and education about the investing in securities market by observing the qualities of a prudent investor, BSE IPF conducted various IAPs covering investors from pan India. Total 943 IAPs were conducted by the BSE IPF during the WIW 2021, including 7 IAPs conducted jointly with SEBI and CDSL, 20 IAPs in partnership with CDSL and balance 916 conducted by various resource persons affiliated with BSE IPF/ISF.

b) Dedicated microsite:

IPF had also placed a Banner on BSE website at a prominent place with click thru to a specially created microsite showcasing all events of WIW on BSE IPF website. Also links to SEBI Chairman’s message on

the occasion of WIW were made available on this page on both BSE and BSE-IPF websites.

c) Ringing of Opening Bell:

To mark the beginning of World Investor Week (WIW) celebrations, a Bell Ringing Ceremony was held on November 22, 2021 in BSE’s International Convention Hall with Shri G P Garg, Executive Director, SEBI, as the Chief Guest. Shri Ashishkumar Chauhan, MD & CEO, BSE, Chief Regulatory Officer and BSE IPF Trustee Shri Neeraj Kulshrestha and Shri Khushro Bulsara, Chief General Manager BSE and Head - IPF, welcomed several senior dignitaries from SEBI and leading investor associations.

d) General Quiz Contest:

Starting from November 22, 2021, to November 26, 2021 a general nationwide Investor Quiz was conducted with 20 questions on capital markets selected at random from a database, for each User logging in and participating. The participation was free of cost and every registered participant was provided with a "Referral Guidebook”. Top 10 winners were selected for each day and were awarded with cash prize of '' 2000/- each in the form of Amazon Gift Vouchers. In addition to these daily prizes, the top two winners from all the 5 days’ quizzes put together were awarded with a special "Quiz Ka Badshah” title with the winner of this title getting an Amazon Gift voucher of '' 10,000/- and the runner-up an Amazon Gift voucher of '' 5,000/. The overall accuracy rate was more than 64% and 75 participants answered all the questions on all the 5 days correctly.

e) Quiz program exclusively for Women:

Considering the increasing participation of women in the Stock Market, BSE IPF decided to conduct a Quiz exclusively for Women on November 23, 2021, which was similar to the above 5 day Quiz program. Total 390 women participants registered for the Quiz and 161 played the Quiz. Top 5 winners were awarded with cash prize of ''5000/- each and all the participants were given Participation Certificate and winners were given Winners Certificate.

f) National level Quiz for students at Institute of Company Secretaries of India (ICSI)

Keeping the importance of governance and knowledge of regulations in mind, a special nation-wide Quiz was conducted for students of Institute of Company Secretaries of India (ICSI) in coordination with ICSI on November 28, 2021 where the majority of questions were based on the regulatory framework governing listed securities and specifically Listing Regulations. All the procedure and rules of 5-day Quiz program were applicable to this Quiz also. Total 2474 students registered for the Quiz where the Top 10 winners were awarded with '' 3000/- each through Amazon Gift voucher. All the participants were given participation certificate and winners were given winners

certificate. The overall accuracy of all the participants was more than 63%.

g) Special Quiz program on Commodity Derivatives Segment:

To spread awareness about Commodity Derivatives, a Quiz program was conducted on November 26, 2021, exclusively on questions based on the Commodity Derivatives Segment. All the procedure and rules of 5-day Quiz program were applicable to this Quiz also. Top 10 winners were awarded with cash prize of '' 2000/- each. All the participants were given participation certificates and winners were given winners certificate. The overall accuracy of these participants was more than 67%.

h) Social media campaign:

BSE IPF created 6 new videos on investors’ awareness covering messages on 6 different topics. These videos were uploaded on YouTube and the link was sent out to all social media handles of BSE i.e., Facebook, LinkedIn, Twitter and Instagram during the entire length of the WIW.

i) Exclusive Panel Discussion by Women for Women:

On November 27, 2021, an all-women panel discussion featuring financial experts, was arranged in co-ordination with a Bengaluru based resource person affiliated with BSE IPF. Eminent panellists from industry, deliberated on important topics such as how women investors see today’s financial services landscape, the challenges they face, what are the women’s expectations and what challenges do women face in the financial services industry etc.

j) Special Investors’ Awareness Program (IAP) exclusively for the blind trainers associated with National Association of Blind (NAB) and faculty members.

This was a unique initiative taken by BSE IPF whereby a special IAP for the blind trainers and faculty members of the National Association for the Blind (NAB) was conducted on November 26, 2021. The program was conducted in online mode through webinar and the speakers guided the attendees on the various topics such as importance of saving, how to convert savings into investments, effect of compounding, various aspects of investing in securities market, what precautions to be taken, Do’s and Dont’s to be followed by investors etc.

k) Global Money Week initiatives

Global Money Week (GMW), an OECD initiative, is an annual global awareness campaign organised under the aegis of OECD International Network on Financial Education (OECD/ INFE). It was celebrated in

India from March 22 - 27, 2022. SEBI was the national coordinator for the celebrations of GMW - 2022 in India and the week witnessed a range of awareness activities conducted across the country.

BSE IPF conducted 137 IAPs through its network of resource persons across the country addressing the audience of youth on the theme provided by SEBI of Learn. Save. Earn. In addition to these IAPs we are pleased to inform that following special initiatives were also taken by us.

Financial Literacy Rally -

A resource person empanelled with BSE IPF has organized a Financial Literacy Rally in the city of Mumbai (Locality Bandra) in association with MMK College of Commerce and Economics, where students of the college carried posters/banners/slogans on the theme of LEARN, SAVE and EARN which is the current theme of the ‘Global Money Week''22'' in order to create awareness amongst the public at large. The rally was conducted on Friday, 25^th March (8am) starting from Smt. MMK College, Jyotu Kundnani Chowk, Bandra towards Bandra Station and back. Approx. 200 students participated in the rally and few students performed a short skit conveying the message about saving and investment. BSE IPF was associate partner for the event and supported it. Our representative also attended this rally.

Art Competition for students of IBCS College, Bhubaneshwar

Under this special event, BSE IPF had conducted a competition on March 25, 2022, wherein students between the age of 18-30 participated. Students were required to create any Art based on the subjects "Investing in Indian Capital Market”. The students were provided Do''s and Don''ts of investing in capital market to derive an idea for creating the arts. The event was very successful wherein 70 students participated in the competition and 3 were declared as winners and awarded with Winner''s certificate and Trophy.

l) Celebration of Azadi Ka Amrit Mahotsav

SEBI is celebrating Azadi ka Amrit Mahotsav (AKAM) to commemorate 75 years of India''s Independence. As a part of this celebration, SEBI in coordination with Dept. of Economic Affairs, Ministry of Finance, Govt. of India has lined up various activities till August 2022 like Quiz contest and Essay competitions in association with NISM. Further, SEBI has also planned to conduct various Investors'' Awareness Programs in physical mode in different parts of the country, in association with various MIIs.

Accordingly, during the F. Y. 2021-22, BSE IPF has successfully conducted 13 Investors'' Awareness Programs in various cities across the country. Further, BSE IPF has also created a microsite for AKAM accessible through its website, to disseminate the information about AKAM programs.

m) Launch of unique initiative of Pledge Certificate for Financial Independence

In keeping with our 75^th year of Independence, BSE IPF launched a unique initiative whereby investors in India and all over the world, can create personalised Certificate of Pledge through a website www. pledgecertificate.com. Investors pledge to adopt qualities of a prudent investor and achieve financial independence. This was launched at the first Investors'' Awareness Program held at Chennai, under the AKAM series on October 16, 2021, at the hands of erstwhile WTM SEBI Shri G Mahalingam. It is heartening to see that this initiative has been received very well and over 12 Lakh investors have already taken the Pledge and are sharing their Certificates on various social media.

E. GREEN INITIATIVE

The Company disseminates all agenda items of Board and Committee meetings electronically on a real time basis, by uploading them on a secured online application specifically designed for this purpose, thereby eliminating circulation of printed agenda papers.

F. THE DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (31 OF 2016) DURING THE YEAR ALONG WITH THEIR STATUS AS AT THE END OF THE FINANCIAL YEAR.

During the year, no proceedings has been initiated under Insolvency and Bankruptcy Code for default in payment of debt. Further, Company has also not initiated any proceedings against the defaulting entities. However, it had lodged its claim with the resolution professional/ liquidator appointed for defaulting listed companies.

G. THE DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONETIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF.

During the period under review, Company has not taken any loans from the banks or financial institutions. Accordingly, there has been no onetime settlement or valuation done for this purpose.

17. ACKNOWLEDGEMENTS

The Board sincerely thanks the Government of India, SEBI, RBI, IRDA, GIFT City Ltd., CERC, the Government of Maharashtra, other State Governments and various government agencies for their continued support, co-operation and advice.

The Board is grateful to the members of various committees for their continued support during the year.

The Board also acknowledges the support extended by trading members, issuers, investors in the capital market and other market intermediaries and associates.

The Board expresses sincere thanks to all its business associates, consultants, bankers, vendors, auditors, solicitors and lawyers for their continued partnership and confidence in the Company.

The Board members also wish to place on record their appreciation for the dedication and contribution made by the employees at all levels and look forward for their support in future as well. The Board members are also deeply touched by the efforts, sincerity and loyalty displayed by the employees without whom the growth of the Company is unattainable

Further, the Board expresses its gratitude to you as Shareholders for the confidence reposed in the management of the Company.

For and on behalf of the Board of Directors

Date: Mumbai Justice Vikramajit Sen

Place: May 11,2022 Chairman

---

Mar 31, 2018

To the Members,

The Directors present the Thirteenth Annual Report of BSE Limited (“the Company”) along with the audited financial statements for the Financial Year (FY) ended March 31,2018.

FINANCIAL SUMMARY/ HIGHLIGHTS, OPERATIONS, STATE OF AFFAIRS

The financial performance of the Company for the year ended March 31,2018 is summarized below:

                                                                                                                                              (Rs, in Lakh)

Â	Standalone		Consolidated
PARTICULARS	FY 2017-18	FY 2016-17	FY 2017-18	FY 2016-17
Â	(FY18)	(FY17)	(FY18)	(FY17)
Total Revenue	65,107	55,099	69,892	61,828
Total Expenses	35,254	35,137	42,346	40,939
Profit before exceptional items & tax	29,853	19,962	27,546	20,889
Exceptional items	31,556	364	(260)	(2,079)
Profit before tax and share of net profits of investments accounted	61,409	20,326	27,286	18,810
for using equity method	Â	Â	Â	Â
Share of net profits of investments accounted for using equity method	-	-	1,990	107
Profit before tax	61,409	20,326	29,276	18,917
Tax Expenses	5,014	462	5,545	1,066
Net Profit for the year from continuing operation	56,395	19,864	23,731	17,851
Net Profit for the year from discontinued operation	-	-	48,722	8,658
Net Profit for the year from total operation	56,395	19,864	72,453	26,509
Net Profit attributable to the shareholders of the Company	56,395	19,864	71,128	22,057
Net Profit attributable to the non-controlling interest	-	-	1,325	4,452
Other comprehensive income	(68)	(12)	13	(642)
Total comprehensive income for the year from total operation	56,327	19,852	72,466	25,867
Total comprehensive income attributable to the shareholders of the Company	56,327	19,852	71,141	21,431
Total comprehensive income attributable to the non-controlling interest	-	-	1,325	4,436
Basic and diluted EPS before exceptional items (T) - Continuing Operations	45.51	34.40	43.82	35.19
Basic and diluted EPS after exceptional item (Rs,) - Continuing Operations	103.40	36.39	43.51	32.70
Basic and diluted EPS after exceptional item (Rs,) - Total Operations	103.40	36.39	130.41	40.41

COMPANY PERFORMANCE

Consolidated Results

The total income of the Company during FY 2017-18 on a consolidated basis was Rs, 69,892 Lakh reflecting an increase of Rs, 8,064 Lakh (13%) over previous Financial Year. The total expenses for the year were higher by Rs, 1,407 Lakh (3%) at Rs, 42,346 Lakh.

During FY 2017-18, the income was higher mainly due to increase in Transaction Charges (up by 29%) and Listing Fees (up by 29%) earned by the Company. Increase in expenses are mainly due to increase in Computer Technology Related Expenses (up by 15%), Regulatory and CSR related expenses (up by 34%) and Building repairs & maintenance expenses (up by 107%).

The Company partially divested its stake to 24% from 50.05% in Central Depository Services (India) Limited (“CDSL”), an erstwhile subsidiary company, on June 29, 2017. The divestment has resulted in a loss of control and therefore the profit on sale of the investment in the subsidiary (including the Remeasurement of the retained investment at fair value in accordance with Ind AS 110 “Consolidated Financial Statements”) amounting to ' 45,118 Lakh has been credited to the statement of consolidated financial results during the year ended March 31, 2018. The residual equity stake retained in CDSL is now considered as an investment in an associate.

The net profit after tax from all operations was higher by ' 45,944 Lakh (up by 173%) to ' 72,453 Lakh as against ' 26,509 Lakh in the previous Financial Year and Net Profit attributable to the shareholder of the Company for the Financial Year was higher by ' 49,071 Lakh (up by 222%) to ' 71,128 Lakh as against ' 22,057 Lakh in the previous Financial Year.

Standalone Results

The total income of the Company during the Financial Year 2017-18 on a standalone basis was ' 65,107 Lakh reflecting an increase of ' 10,008 Lakh (up by 18%) over previous Financial Year. The total expenses for the year were marginally higher by ' 117 Lakh at ' 35,254 Lakh.

During the Financial Year, the income was higher mainly due to increase in transaction charges (up by 29%) and Listing Fees (up by 28%) earned by the Company. Increase in expenses are mainly due to increase in Computer Technology Related Expenses (up by 8%), Regulatory and CSR related expenses (up by 25%) and Building repairs & maintenance expenses (up by 107%).

The Company has partially divested its stake in CDSL, an erstwhile subsidiary company, on June 29, 2017. The profit on divestment amounting to Rs, 31,603 Lakh is reflected as an “Exceptional Item” in the Statement of Standalone Financial Results during the year ended March 31, 2018.

The net profit after tax was higher by Rs, 36,531 Lakh (up by 184%) to Rs, 56,395 Lakh as against Rs, 19,864 Lakh in the previous Financial Year.

Buyback of Equity Shares

The Board of Directors of the Company, at its meeting held on January

15, 2018, inter-alia, has approved the buyback of 15,09,090 (Fifteen Lakh Nine Thousand Ninety Only) or more fully paid-up equity shares of face value of Rs, 2/- each from the shareholders/ beneficial owners of the Company, at a price not exceeding Rs, 1,100 (Rupees One Thousand and One Hundred Only) per equity share payable in cash for an aggregate amount not exceeding Rs, 16,600 Lakh, from the open market through stock exchange mechanism excluding transaction costs viz. brokerage, applicable taxes such as securities transaction tax, service tax, stamp duty, etc. This is in accordance with the provisions of the Companies Act, 2013 (the Act), and the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998, and other applicable laws and regulations.

Pursuant to the same, the Company bought back 5,48,640 equity shares upto March 31, 2018, of which 5,02,920 equity shares were extinguished as at March 31, 2018. In line with the requirement of the Companies Act 2013, an amount of Rs, 4,487 Lakh has been utilized from the securities premium account and capital redemption reserve of Rs, 10 Lakh (representing the nominal value of the shares bought back and extinguished) has been created out of retained earnings on account of the buyback of shares.

Appropriations

Dividend

The Board of Directors of the Company, in its meeting held on May 4, 2018, has recommended a final dividend of Rs, 31 per equity share of the face value of Rs, 2/- each fully paid up for the Financial Year ended March 31, 2018 subject to the approval of the shareholders at the Thirteenth Annual General Meeting taking the total dividend for the Financial Year ended March 31, 2018 to Rs, 36 per equity share of the face value of Rs, 2/- each fully paid up after considering the interim dividend of Rs, 5 per equity share of the face value of Rs, 2/- each fully paid up paid in the month of February 2018.

The final dividend, if approved, would result in a cash outflow of approximately Rs, 20,196 Lakh, including corporate dividend distribution tax. The total dividend on equity shares including dividend tax for FY 2017-18 would aggregate to Rs, 23,481 Lakh, resulting in a payout of 95% of the standalone profits of the Company subject to the number of shares bought back by the Company till March 31, 2018.

Under Clause 5.3 of the BSE (Corporatisation and Demutualisation) Scheme, 2005 (the Scheme), the allotment of equity shares to 12 Trading Members of the erstwhile BSE has been kept in abeyance for various reasons as on March 31, 2018. Meanwhile, all corporate benefits including dividend as may be declared by the Company from time to time are being provided for and would be payable on the allotment of these shares.

Transfer to Reserves

The Company does not propose to transfer any amount to the General Reserve out of amount available for appropriations.

BUSINESS PERFORMANCE OVERVIEW

Economic Environment - Global Outlook

The global economy has experienced a cyclical recovery on the back of rebound in investment, manufacturing activity and trade. This economic improvement comes against the framework of benign global financing conditions, largely accommodative policies, rising consumer and business confidence, and firming commodity prices.

Towards the end of CY 2016, global economic activity began to see a modest pickup, which extended into CY 2017. According to the “World Economic Situation and Prospects by United Nations (UN)”, global economic growth was estimated to have reached 3.0% when calculated at market exchange rates, or 3.6% when adjusted for purchasing power parities in 2017— the highest growth rate since CY 2011. All major developed economies experienced a synchronized upturn in growth. Compared to CY 2016, growth strengthened in almost two thirds of countries worldwide in CY 2017¹.

World industrial production accelerated in tandem with a recovery in global trade that has been predominantly driven by strong import demand from East Asia. In CY 2017, East Asia and South Asia accounted for nearly half of global growth, as both regions continued to expand at a rapid pace. Confidence and economic sentiment indicators have also generally strengthened, especially in developed economies. In developed economies, investment conditions have improved amid stable financial markets, strong credit growth, and a more solid macroeconomic outlook. However, developing economies remained the main drivers of global growth.

At the global level, Gross Domestic Product (GDP) was forecasted to expand at a steady pace of 3% in CY 2018 and CY 2019. The acceleration in GDP growth in CY 2017 from a low of 2.4% in CY 2016, lowest since the ‘2008 financial crisis,' stems predominantly from firmer growth in several developed economies. Cyclical improvements in Argentina, Brazil, Nigeria and the Russian Federation explain roughly a third of the rise in the rate of global growth in CY 2017. The composition of global demand has shifted more towards investment in CY 2017. Gross fixed capital formation accounted for roughly 60% of the acceleration in global economic activity in CY 2017.

Global trade rebounded in CY 2017. The synchronized growth among both developed and developing countries boosted global exports and imports. In CY 2017, world merchandise trade grew at its fastest pace since the ‘2008 financial crisis'. The rebound springs predominantly

¹Â Source: World Economic Situation and Prospects 2018 by UN from stronger import demand in East Asia, as domestic demand picked up in the region, supported by accommodative policy measures. In several developed economies, imports of capital goods have rebounded, as firms respond to improving conditions for investment. Recent course adjustments in major trade relationships, such as the United Kingdom (UK) decision to withdraw from the European Union (EU) and the United States of America (US) decisions to renegotiate the North American Free Trade Agreement (NAFTA) and to reassess the terms of its other existing trade agreements, have raised concerns over a potential escalation in trade barriers and disputes. An increasingly restrictive trade environment may hinder medium-term growth prospects, given the mutually reinforcing linkages between trade, investment and productivity growth.

Commodity prices play a key role in the economic dynamics of the majority of countries in Africa, South America and Western Asia. Some developed economies such as Australia and Canada, as well as many economies in transition, are also very sensitive to commodity prices. Strong consumption demand is expected from China, the US and India — the world's three largest energy consumers. Crude oil prices (Brent) averaged USD 52.5 per barrel in CY 2017 and expected to average USD 55.4 per barrel in CY 2018. Compared to 2011-2014 period, oil price levels have roughly halved in CY 2017.

Global financial conditions improved in CY 2017, supported by improved outlook in the world economy and expectations for a smooth and gradual monetary policy transition in the US. Furthermore, international bank lending has also shown signs of recovery, while stock markets have registered large gains, not only in developed countries — climbing to record highs in some cases — but also in several emerging economies. The improving global financial and liquidity environment, coupled with the ongoing pickup in global trade, aided the recovery of investment and supporting global growth.

The recovery in capital inflows in emerging economies throughout CY 2017 had been driven by portfolio flows, particularly debt flows. The “search for yield” boosted portfolio flows, which were likely to touch USD 350 billion in CY 2017, after posting only USD 163 billion in CY 2016. Sizeable inflows into emerging markets have led to strong gains in the Emerging Market Bond Index (EMBI) in CY 2017. Bonds issuances also gained momentum in China, Colombia, India, Indonesia, Mexico and Turkey, while issuance of sovereign bonds in crude oil-exporting and low-income countries also increased in CY 2017.

Recent Developments in Key Economies

Growth in the US reached 2.3% in CY 2017 supported by an improvement in business investment. This marks a significant improvement compared to the 1.5% growth recorded in CY 2016. The acceleration largely stems from shifting dynamics in business investment and net trade. While the US's proposed infrastructure plan to support USD 1 trillion in infrastructure investment has not yet gained traction, a recovery in external demand coupled with expectations for stable domestic growth will continue to support moderate investment growth in 2018. Planned cuts to corporate tax may also encourage investment. The growth forecast is expected to expand at a steady pace of 2.9% and 2.7% in CY 2018 and CY 2019 respectively.

In Asia, China's growth is expected to remain solid, underpinned by favourable domestic demand and accommodative fiscal measures. Amid on-going economic rebalancing efforts, growth is expected to moderate at a gradual pace from 6.9% in CY 2017 to 6.6% in CY 2018 and 6.4% in CY 2019. In CY 2017, the Chinese economy expanded at a faster pace compared to the previous year, marking the first acceleration in growth since CY 2010. The stronger than expected growth was in part attributed to the implementation of fiscal policy stimulus measures, including higher infrastructure spending. Private consumption remained the main driver of growth, as reflected in the continued strong increase in sales of consumer goods in CY 2017. Looking ahead, household spending in China was expected to remain robust, supported by healthy wage growth, rising disposable income and steady job creation.

Economic growth in Japan accelerated to unexpectedly high levels in CY 2017, with GDP growth reached an estimated 1.7%. The robust economic growth was prompted by the continuously accommodative macroeconomic policy stance, and was led by a rapid expansion of domestic demand. Steady external demand growth from Asia and North America also contributed to the growth. The present momentum is expected to taper off in CY 2018 and CY 2019, as the impact from fiscal stimulus measures ease, with GDP forecast to grow by 1.2% in CY 2018 and 0.9% in CY 2019.

Economic activity in Europe remained robust, with real GDP growth forecast to reach 2.4% in CY 2018, up from 2.3% in CY 2017. The European Central Bank (ECB) decision to taper the pace of its asset purchases and eventually cease expansion of its balance sheet will have some dampening effect, contributing to a slight downturn in growth projections to 2.0% in CY 2019. This overall solid aggregate growth trajectory in Europe encompasses several economies with markedly higher growth rates. For instance, economic growth in the EU members from Eastern Europe and the Baltic States continued to outpace the EU average, thanks to capital accumulation and productivity gains. The aggregate GDP of these group known as EU-13 countries expanded by 4.2% in CY 2017 and is estimated to expand by 3.6% in CY 2018 and 3.5% in CY 2019. The expansion in the EU-13 in CY 2017 has been largely driven by the robust export performance of the manufacturing sector in Eastern Europe, and also a recovery of investment following the earlier slump in CY 2015 and CY 2016 that was related to the interval between EU funding cycles.

In the UK, growth is expected to decelerate to 1.6% and 1.5% in CY 2018 and CY 2019 respectively, as the economy will face increasing pressure from the effects of the decision to leave the EU. The weaker pound sterling has contributed to the rise in import cost pressures while taming domestic demand in the UK. At the same time, business investment is suffering from significant uncertainty regarding the future framework for the economic relations of the UK with the EU and the rest of the world.

In CY 2017, African economies expanded by 2.6%, following growth of 1.7% in CY 2016. The recovery was supported by economic improvement in large crude oil exporting economies such as Angola and Nigeria, and by Morocco where the agricultural sector recovered from a devastating drought in CY 2016. Africa's economic growth is projected to grow at 3.5% in CY 2018 and 3.7% in CY 2019. The projected modest improvement in growth is underpinned by strengthening external demand and a moderate increase in commodity prices.

India Economic Environment

Economic performance in Financial Year (“FY”) 2017-18

In India, growth of GDP moderated in FY 2017-18 as compared to FY 2016-17 owing to businesses' adjustment to the newly introduced Goods and Services Tax (GST). Fiscal trends remained attuned to the consolidation plans and inflation remained within the comfort levels. There was increase in global confidence in Indian economy as well as an improvement in ease of doing business ranking in the year. Several economic reforms were undertaken during the year that include implementation of GST, Public Sector Undertaking (PSU) bank recapitalization program, infrastructure status to affordable housing thereby giving a fillip to infrastructure development, larger allocation of funds for highway construction and added focus on coastal connectivity. Apart from these reforms, other initiatives to boost the country's economy include lower income tax for companies with annual turnover upto Rs, 50 Crore; allowing carry-forward of MAT credit upto a period of 15 years instead of 10 years at present; additional measures to improve the ease of doing business ranking; and thrust to digital economy.

According to provisional estimates of Annual National Income FY 2017-18 released by the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, India continued its economic growth in the fourth quarter of FY 2017-18, growing at 7.7% on an annualized basis, underlining its position as the world's fastest growing major economy. India's economy expanded at its fastest pace since December 2016 as government spending continues to drive the recovery. Rapid growth in agriculture (4.5%), manufacturing (9.1%) and construction sectors (11.5%) in the Financial Year contributed to the overall growth.

In FY 2017-18 India's GDP grew by an estimated 6.7% in FY 201718 as compared to the growth rate of 7.1% in FY 2016-17. Further, GDP at constant (2011-12) prices for FY 2017-18 is estimated at Rs, 130.11 Lakh Crore, as against Rs, 121.96 Lakh Crore for FY 201617. In FY 2017-18, India's GDP growth displayed a steady growth, rebounding to 7.7%, 7.0% and 6.3% in the fourth, third and second quarter respectively from 5.5% in the first quarter after initial hiccups associated with the roll-out of the GST.

Real Gross Value Added (GVA) i.e., GVA at basic constant (2011-12) prices for the year FY 2017-18 estimated at ' 119.76 Lakh Crores showing a growth rate of 6.5% over the year 2016-17 of Rs, 112.48 Lakh Crore. The sectors which registered growth rate of over 7.0% are Rs,public administration, defense and other services' (10.0%), ‘trade, hotels, transport, communication and services related to broadcasting' (8.0%), and ‘electricity, gas, water supply & other utility services (7.2%)'. The growth in the ‘agriculture, forestry and fishing', ‘mining & quarrying', ‘manufacturing', ‘construction', and ‘financial, real estate and professional services' estimated to be 3.4%, 2.9%, 5.7%, 5.7% and 6.6%, respectively.

According to the provisional estimates, agriculture, forestry and fishing sector grew at a rate of 3.4% in its GVA in FY 2017-18, as against the previous year's growth rate of 6.3%. Similarly, growth in the mining and quarrying sector estimated to be 2.9% in FY 2017-18 as compared to growth of 13% in the previous year. The key indicators of mining sector, namely, production of coal, crude oil and natural gas registered growth rates of 2.5%, -0.9% and 3.4% respectively in FY 2017-18 as compared to 2.3%, -3.2% and -3.3% during the same period in FY 2016-17. IIP mining grew by 2.3% in FY 2017-18 as against 5.3% in the same period in FY 2016-17.

The growth in GVA at basic prices for FY 2017-18 from ‘manufacturing’ sector is estimated to be 5.7% as compared to growth of 7.9% in FY 2016-17. The private corporate sector growth (having a share of around 70% in the manufacturing sector) was at 9.0% at current prices in FY 2017-18. Growth in GVA at basic prices for FY 2017-18 from ‘Electricity, gas, water supply and other utility services' sector was estimated at 7.2% as compared 9.2% in FY 2016-17. The key indicator of this sector, namely, IIP of Electricity registered a growth rate of 5.4% in FY 2017-18 as compared to growth of 6.3% during the same period in FY 2016-17.

In FY 2017-18, the growth of construction sector was estimated at 5.7% as compared to growth of 1.3% in FY 2016-17. Key indicators of construction sector, i.e. the production of cement and consumption of finished steel registered growth rates of 6.3% and 7.8% respectively, in FY 2017-18 as compared to -1.2% and 3.1% respectively during the same period in FY 2016-17.

Growth in services relating to trade, hotels, transport, communication and broadcasting was estimated at 8.0% in FY 2017-18 as compared to growth of 7.2% in FY 2016-17. With introduction of GST, sales tax data is now subsumed under GST. Therefore, a comparable estimate of turnover based on sales tax has been estimated. Growth in financial, insurance, real estate and professional services was estimated at 6.6% in FY 2017-18 as compared to 6.0% in FY 2016 17. Finally growth in public administration, defense and other services was estimated at 10.0% in FY 2017-18 as compared to 10.7% in FY 2016-17.

Gross Fixed Capital Formation (GFCF) at current prices was estimated at Rs, 47.79 Lakh Crore in FY 2017-18 as against Rs, 43.52 Lakh Crore in FY 2016-17. In terms of GDP, the rates of GFCF at current and constant (2011-12) prices during FY 2017-18 are estimated at 28.5% and 31.4% respectively, as against the corresponding rates of 28.5% and 31.1% respectively in FY 2016-17. The GFCF expected to register growth rate of 9.7% at current prices and 7.6% at constant prices for FY 2017-18.

Controlling inflation has been a priority area for the Government. According to the Economic Survey for FY 2017-18, Consumer Price Index (CPI) based headline inflation, factored in by the Reserve Bank of India (RBI) while arriving at its bi-monthly monetary policy, averaged 3.3% during the period, which “is the lowest” in the last six Financial Years. As per the economic survey, headline inflation has been below 4% for 12 straight months from November 2016 to October 2017. The survey noted that the economy has “witnessed a gradual transition” from a period of high and variable inflation to more stable prices in the last four years.

According to the RBI, the Banking Stability Indicator (BSI) shows that the risks to the banking sector remain at an elevated level weighed down by further asset quality deterioration. Credit growth of Scheduled Commercial Banks (SCBs) showed an improvement between March and September 2017, while Public Sector Banks (PSBs) continued to lag behind their private sector peer. The Gross Non-Performing Advances (GNPA) ratio of SCBs increased from 9.6% to 10.2% between March and September 2017, and estimated to reach 10.8% by March 2018 and further to 11.1% by September 2018, according to RBI's Financial Stability Report. The NPA ratio, which averaged around 11-12% in the first three quarters of FY 2017-18, increased to almost 13.5% in the fourth quarter, thereby making banks to scale up provisioning and write-off bad debts from their balance sheet. However, RBI believes that stress in the banking sector may be bottoming out. The report also stated that credit growth of scheduled commercial banks has shown an improvement by growing at 10.32% (Y-o-Y) for the fortnight ended March 30, 2018.

The GDP growth at 7.7% in Q4 FY 2017-18 displayed strong signs of growth and revival of economic activity. GVA increased by 7.6% at constant prices in Q4 compared to 6.6% in Q3. Much of the growth was due to government expenditure—the “public administration, defense and other services” sector. The government's push to growth was also seen in the GDP figures on the expenditure side, with Government Final Consumption Expenditure going up by a massive 16.8% (Y-o-Y). The stand out numbers in the Q4 GVA numbers is that the “Trade, hotels, transport and communication etc.” sector and the “financial, real estate and professional services” sector both saw lower growth in the Q4, despite a favorable base effect. The good news is industrial sector, which is at long last seeing a recovery, with growth in manufacturing, mining, and electricity and other utilities picking up. This is buttressed by the expenditure side figures for gross capital formation, which show a jump in growth to 14.4% (Y-o-Y). Investment demand is growing rapidly, although a large chunk of that is driven by government spending.

Though the situation has shown improvement since the first quarter of FY 2017-18, the overall investment climate remains challenging. The positive signals of improvement - ‘the decline in number and cost of stalled projects, ‘the efforts to improve the quality of government expenditure', ‘ease of doing business ranking', ‘India's sovereign rating upgrade by Moody's' and the ‘bank recapitalization announcement' are expected to provide impetus to investment sentiments in the coming years.

Economic Prospects for FY 2018-19

Stable macro-economic indicators, structural reforms, improving business climate, thrust on infrastructure development, and liberal FDI regime have resulted in high foreign capital inflows and provided the needed impetus to make India a favored investment destination. India's GDP is expected to rise to 7.4% in FY 2018-19, 7.8% in both FY 2019-20 and FY 2020-21, cementing its place as the world's fastest growing major economy². Implementation of GST is expected to positively contribute to economic activity and fiscal sustainability by reducing the cost of complying with multiple state tax systems and expanding the tax base by bringing more informal activity into the formal sector. India continues to move towards the path of macroeconomic stability, as evidenced by the improving inflation and fiscal deficit. Retail inflation averaged at 3.4% for the FY 2018 period, lower than 4.5% for the same period last year.

The economic reforms undertaken in FY 2017-18 expected to strengthen growth momentum. Going ahead, growth in India is projected to continue at a steady pace and expected to hover over 7%. A pickup in growth is expected in FY 2018-19, primarily due to restructured bank balance sheets and efficiency gains from the new tax regime. According to the Organization for Economic Co-operation and Development (OECD), the GDP growth of India is expected to average about 7.3% between FY 2018-19 and FY 2022-23, from 6.8% average registered for the period from FY 2011-12 to FY 2015-16, due to structural reforms. Economic growth is expected to draw support from the steady expansion of private consumption and investments following foreign ownership liberalization in some industries. Increase in planned government spending is expected to further boost the economic growth rate. However, increase in NPAs of banks and contingent liability may dampen the growth.

The proportion of government spending to GDP, which stands at 11% for FY 2017-18, may increase in the coming years in light of the planned fiscal expansion. The public investment share is expected to mirror the trend. In FY 2018-19, the sectors, which are likely to register growth rate of over 7% are ‘public administration, defense and other services', trade, hotels, transport, communication and services related to broadcasting', ‘electricity, gas, water supply and other utility services' and ‘financial, real estate and professional services'. The growth in the ‘agriculture, forestry and fishing', ‘mining and quarrying', ‘manufacturing', and ‘construction' is estimated to be 3%, 3%, 5.1% and 4.3% respectively.

In the long run, the GST is expected to boost corporate investment, productivity and growth by creating a single market and reducing the cost of capital equipment. Indicators of rural consumption, such as two-wheelers sales, have bounced-back, also aided by higher crop production and higher rural wages. Increase in wages, pensions and various allowances for public servants would also boost private consumption, especially in urban areas. Investment will be further supported by the plan to recapitalize public banks.

With GDP growth of 6.3% in the Q2 FY 2017-18, which was an uptick after five consecutive quarters of declining growth, and GDP growth of 7.0% and 7.7% for Q3 and Q4 respectively thereafter, exports surging to a six year high of 9.8% (Y-o-Y) in March 2018, all time high forex reserves of more than USD 400 billion and sharp jump in FDI inflows during FY 2017-18 indicates structural drivers of the Indian economy remain strong going forward. Strong growth in the industrial economies coupled with measures to improve the ease of doing business will help exports grow at a faster pace in FY 2018-19. Government's efforts and measures to liberalize foreign ownership caps and improving country's competitiveness is expected to foster a conducive climate for investment in India.

CAPITAL MARKETS

Overview

BSE is the world's fastest Stock Exchange and the largest stock exchange in terms of number of companies listed. As of March 31, 2018, BSE was ranked #2 in currency options traded, #4 in currency futures traded, and #9 by market capitalization among global stock exchanges.

Primary Market

The total number of companies listed on BSE as on March 31, 2018 was 5,619 as compared to 5,834 as on March 31, 2017.

During FY 2017-18, 40 companies tapped the capital market through the IPO process to get listed on the Mainboard of BSE. The amount raised through Mainboard IPOs in FY 2017-18 was Rs, 75,796.52 Crore as against Rs, 27,156.56 Crore in FY 2016-17.

In addition to 40 IPOs on the Mainboard, another 60 companies raised Rs, 700.32 Crores through the Small and Medium-sized Enterprises (“SME”) IPO process in FY 2017-18. Further, one SME listed company raised Rs, 12.60 Crore through FPO. During FY 2017-18, 2 initial public Issues of Infrastructure Investment Trusts (InvITs) came to the market and raised Rs, 7,282.85 Crore.

The total amount mobilized through Privately Placed Debt Instruments (“PPDI”) at BSE in FY 2017-18 was Rs, 4,28,312 Crore as against Rs, 4,20,995 Crore in FY 2016-17. During FY 2017-18, there were 8 public issues of bonds, which mobilized Rs, 5,172.56 Crore as against Rs, 29,547.15 Crore in the FY 2016-17. Out of these 8 public issues, 5 issues (63%) were exclusively listed on BSE and the average bids garnered through BSE's Internet based Book Building software (“iBBS”) platform for these debt public issuances was 97%.

BSE BOND - Electronic Book Platform for bidding of debt securities issued on private placement was made live effective from July 1, 2016 as per the guidelines of SEBI circular CIR/IMD/DF1/48/2016 dated April 21, 2016. The BSE BOND platform has been a preferred choice for companies to raise Debt Capital in India. In FY 2017-18, 82 issuers with 530 issues of bonds have successfully raised Rs, 2,08,906 Crore using BSE BOND platform.

Mutual Fund Segment

BSE StAR MF platform has become the largest mutual fund distribution Infrastructure with more than 25% of market share in New Inflows in mutual funds Industry. In Financial Year 2017-18, BSE StAR MF processed over 1.75 Crore transactions amounting to Rs, 1,18,112 Crore. The BSE StAR MF exchange Infrastructure is predominantly catering to retail category of mutual funds Industry i.e. 99.73% in terms of transactions and over 76% in terms of value of transactions.

BSE StAR MF is now adding over 1,000 members per month and has more than 200,000 Independent Financial Advisors (IFAs), brokers, broker branches and associates on its Network in over 3,000 cities and towns across India. Almost all the top distributors of mutual funds are part of BSE StAR MF family now.

37 AMCs accounting for more than 99.99 % of total assets under management in Indian Mutual Fund Industry have agreed to pay a service charge per transaction processed at BSE's MF platform and this will allow BSE additional resources to provide even better services to all investors in mutual funds bringing further automation and certainty to the mutual funds investment process in India.

Innovations and unique features of BSE StAR MF 0 The technology Infrastructure created a super highway, which has eliminated the barrier to expand mutual funds distribution for traditional distributors as well as new age e-commerce Network of 2,00,000 IFAs, brokers, broker branches and associates on its network in over 3,000 towns across India.

- Only Infrastructure in Indian Mutual Funds Industry that supports all modes and type such as: Regular as well as Direct mutual funds schemes, Demat as well as Non demat mode of holding of mutual funds units, Funds and Mutual Funds units Settlement via Broker Pool (Mutual Funds Intermediary (MFI)) as well as Direct with Investors for Mutual Funds Distributors (MFD)/ Registered Investment Advisers (RIA).

- 24X7 order acceptance is available on BSE StAR MF Platform, along with continuous settlement of orders.

- Overnight Investment framework facilitates BSE StAR MF Registered Investors:

-    To route idle monies as overnight investments, monies can be invested even for a single day i.e. overnight.

-    Subscription and redemption can happen simultaneously on the same day.

- Only Infrastructure in India that supports 4 modes via Systematic Investment Plan (“SIPs”), which can be initiated as under:

-    Paperless SIP: Wherein the link for payment is created for 1^st Instalments as well as subsequent Instalments, only available with BSE.

-    X-SIP/ National Automated Clearing House (“NACH”) based SIP Facility: Under this product, a single mandate can be used for investing in SIPs across all schemes and all Asset Management Companies (“AMCs”) registered with StAR MF. The SIP administration and the cost of administration is borne by BSE and the money is debited to the client's bank account directly instead of debiting the member pool account.

-    X-SIP Facility with First order today flexibility:

Enabling BSE StAR MF members to start SIP within couple of minutes instead of waiting for a month.

-    Paperless Internet based SIP (“ISIP”), wherein BSE is Biller in leading banks of India, Single ISIP Mandates can be used across all schemes of different AMCs, with “First order today” flexibility. This facility is available only on BSE.

-    Paperless E-mandate based SIP, wherein the NACH paper based mandate has been replaced by digital aadhaar authentication based e-mandate. This has drastically reduced the time for mandate approval from 35 days to 3 days.

- Any day Systematic Transfer Plan (“STP”) and Systematic Switch Plan (“SWP”), with First order today facility.

- 10 day order holding facility.

- Completely digital and real time onboarding of investors.

- Connectivity: Multi mode platform access;

-    Web - browser with CO-BRANDING facility,

-    APIs over leased lines,

-    WEB Services - APIs over internet.

-    Multi-ARN facility, useful when settlement of trades can be done for other AMFI registration no. (“ARNs”) of same group company or otherwise, only available on BSE.

Municipal Bonds and Green Bonds

BSE has been a leader in listing Municipal Bonds post the revised SEBI guidelines on Municipal Bonds issued in 2015. Pune Municipal Corporation and Greater Hyderabad Municipal Corporation raised ' 200 Crore each post the revised guidelines and listing for these municipal bonds was exclusively on BSE. BSE is also the first exchange to list Green Bonds. The first Green Bonds issued pursuant to SEBI's guidelines are listed exclusively on BSE Limited. BSE is also a member of Indian Green Bonds Council.

Sovereign Gold Bonds

BSE got permission from RBI and SEBI for acting as a Receiving Office for the Sovereign Gold Bond (“SGB”) Scheme. Three tranches of SGB aggregation to RBI were carried by banks and post offices. From fourth tranche onwards, Stock Exchanges are allowed to act as a receiving office. In this receiving office role, BSE role would be limited to aggregation of applications and transfer of funds.

Please find below table on SGB bids received on BSE in the respective Tranches.

Tranche	Total No. of Members	Total No. of Bids	Volume in Kgs.	Value in ' Crores
8th	132	4,779	112	33
9th	137	3,811	116	32
10th	44	1,455	35	10
11th	62	2,624	36	11
12th	35	752	12	3
13th	31	691	28	8
14th	17	711	13	4
15th	18	409	16	5
16th	18	300	8	2
17th	22	371	22	7
18th	20	239	5	2
19th	24	290	6	2
20th	25	350	11	3
21st	58	771	36	10

 

Secondary Market Equity Cash Segment (“ECM”)

The S&P BSE SENSEX ended FY 2017-18 at 32,969 compared to 29,621 at year end of FY 2016-17, an increase of 11.3% over the year which has been one of the factors for increased trading volumes this year. The average daily value of equity turnover on BSE in FY 2017-18 was ' 4,402 Crore, a y-o-y increase of about 9.37% from ' 4,025 Crore in FY 2016-17.

Equity Derivatives Segment (“EDX”)

In EDX, the daily average volume was 182 contracts per day in FY 2017-18 as compared to 498 contracts in FY 2016-17. BSE has decided to discontinue its Liquidity Enhancement Incentive Programme Scheme (“LEIPS”) that has been running for the past few years.

Currency Derivatives Segment (“CDX”)

In CDX, the Company's market share increased to 46.3% in FY 2017-18 from 38.09% in FY 2016-17. Members' participation in this segment increased to 361 (21 Banks and 340 Members) during FY 2017-18, compared to 332 (16 Banks and 316 Members) in FY 2016-17. Open Interest market share for FY 2017-18 is 21.34% as compared to 21.93% for FY 2016-17.

Interest Rate Derivatives (“IRD”)

During FY 2017-18, the Company's market share in IRD increased to 41.06% from 29.2% in FY 2016-17. Members' participation increased to 115 (8 Banks, 4 Primary Dealers & 103 Members) in 2017-18 from 104 (8 Banks, 4 Primary Dealers & 92 Members) in FY 2016-17.

BSE SME Platform

The framework for SME Platforms to serve small and medium-sized enterprises on stock exchanges was established by SEBI vide its circular dated May 18, 2010. The BSE SME platform received the final approval of SEBI on September 27, 2011. BSE SME IPO Index was launched on December 14, 2012 with 100 as the base.

On March 28, 2018 the value of this index reached 1,854.24. Additionally, the total market capitalization of all the 235 companies listed on BSE SME Platform reached ' 22,115.74 Crore. During FY 2017-18, the SME platform continued to be a front-runner with a market share of over 65%.

During FY 2017-18, 60 companies raised ' 700.32 Crore from the market and 1 company raised ' 12.60 Crore from the market through FPO. Therefore in FY 2017-18, Total Funds raised were of the order of ' 712.92

Migration to Main Board

BSE issued a circular on November 26, 2012 stating that companies have to be mandatorily listed and traded on the SME Platform for a minimum period of two years for them to migrate on to the Main Board as per SEBI guidelines.

During FY 2017-18, 21 BSE SME companies have migrated to the BSE Main Board.

BSE SME has received the “Change Agent” award from SP Jain Institute of Management & Research.

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 Rs, 4,79,350 Crore in FY 2017-18 as against Rs, 2,88,372 Crore in FY 2016-17, marking an increase of 66%. In case of Statutory Liquidity Ratio (“SLR”) securities i.e. Government Securities and Treasury Bills, trades worth Rs, 2,07,372 Crore were reported on ICDM in the current year as against Rs, 2,00,469 Crore in FY 2016-17.

Trading in Non-Convertible Debentures (“NCDs”) and Bonds on ‘FRs, group on BOLT BSERs,s equity platform saw volume of Rs, 2,971 Crore in FY 2017-18 as against Rs, 4,770 Crore in FY 2016-17. BSE has retained a market share of over 57.7% in the retail trading of Corporate Bonds in FY 2017-18.

The settlement volume for corporate bonds witnessed business of Rs, 2,10,037 Crore in FY 2017-18 as against Rs, 1,16,030 Crore in FY 2016-17, which is an increase of over 81%.

As of March 31, 2018, 135 Trading Members and Institutional Members were registered on BSE NDS (New Debt Segment).

ebidXchange - Auction of FPI limits for debt

The ebidXchange platform pioneered the auction of multiple products

- Infrastructure Bonds, Corporate Bonds and Government Securities. During FY 2017-18, BSE conducted 12 auction sessions, all of which were conducted seamlessly and received positive response from market participants. The total cumulative amount bid in these 12 auctions was Rs, 2,14,804 Crore.

Exchange Traded Funds (“ETF”)

As on March 31, 2018, BSE had 54 ETFs listed compared with 50 as on March 31, 2017. During FY 2017-18, the average daily turnover in ETF increased by 57% to Rs, 61.44 Crore from Rs, 39.05 Crore in FY 2016-17.

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 2017-18, there were 29 OFS issues out of which BSE was appointed as the Designated Stock Exchange in 26 issues (90%). Out of the 26 OFS issues, 12 issues were conducted exclusively on the BSE platform, the total amount raised through OFS issues was more than Rs, 10,000 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 Take Over or to the promoter in case of Delisting of securities. During FY 2017-18, there were 109 such OTB issues, of which BSE was appointed as the Designated Stock Exchange in 107 issues (98%). Out of the 107 OTB issues, 103 issues were conducted exclusively on BSE platform, the total subscription through OTB issues was more than Rs, 66,000 Crore.

Securities Lending & Borrowing (“SLB”)

ICCL acts as an Approved Intermediary under the SEBI Securities Lending and Borrowing Scheme, 1997. The registration of ICCL as an Approved Intermediary was renewed for a further period of three years from June 28, 2016 to June 27, 2019.

The SLB turnover at ICCL increased by 227% from Rs, 1,244.38 Crore in FY 2016-17 to Rs, 4,073.90 Crore in FY 2017-18, while the lending fees collected increased by 106% from Rs, 6.29 Crore to Rs, 12.97 Crore during this period.

Segment	FY 2017-18 (Rs, Crore)	FY 2016-17 (Rs, Crore)
Turnover for the period - 1st Leg	4,073.90	1,244.38
of SLB transactions (quantity	Â	Â
underlying price of the stocks as on	Â	Â
previous day)	Â	Â
Lending fees.	12.97	6.29

Disinvestment Drive of GOI and BSE’s support

In FY 2017-18, BSE's iBBS platform has facilitated Government of India Disinvestment Programme through OFS, OTB and Central Public Sector Enterprises Exchange Traded Fund (“CPSE ETF”) to garner more than Rs, 16,000 Crore, forming more than 16% of the Total Disinvestment by the Government of India in FY 2017-18.

The Company also has extended the facility for acceptance of subscriptions for New Fund Offer of CPSE ETFs “Bharat 22 NFO” by online mechanism called BSE iBBS Platform for Mutual Fund (“BiMF”) and garnered more than 90% of the subscription through electronic platform for CPSE ETF.

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. Following this, BSE has reached out to over 1,500 such companies admitted to BSE's Dissemination Board. BSE is working closely with SEBI to ensure smooth and proper exit to investors in such companies. During FY 2017-18, BSE initiated action against promoters/ directors of more than 300 exclusively listed companies, which were found to be non-compliant with SEBI circular of October 10, 2016 and August 1, 2017.

BUSINESS OPERATIONS REVIEW

Membership

During FY 2017-18, 34 Deposit Based Membership (“DBM”) applications were received at BSE. Since launch of new DBM scheme in April, 2010, BSE has received a total of 875 DBM applications as on March 31, 2018.

Corporate Services (Listing)

The Corporate Services segment of the Company registered healthy revenue growth in FY 2017-18. Annual Listing Fees (equity, debt and MF) increased by 22.81% to Rs, 127.96 Crore compared to Rs, 104.19 Crore in FY 2016-17. This increase in Annual Listing Fees is mainly attributed to an increase in Annual Listing Fees slab and an increase in number of companies listed under IPO.

The Company 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 Rs, 33.11 Crore in FY 2017 18 as compared to Rs, 14.31 Crore in FY 2016-17, a rise of 131.38% from the previous year on account of new primary market issuances and the newly introduced OTB facility.

Data Information Products

The Company and Deutsche Boerse have entered into a partnership in October, 2013 under which Deutsche Boerse 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 Boerse commenced from April, 2014. Under the co-operation, Deutsche Boerse is responsible for sales and marketing of all the Company's market data products to customers outside India, while the Company continues to serve its domestic clients. Deutsche Boerse 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 Rs, 26.28 Crore in FY 2017-18 as compared to Rs, 24.67 Crore in FY 2016-17. The increase in revenue was on account of increase in subscription for the Company's information products and services by new customers.

Index

Asia Index Private Limited (“AIPL”) is a joint venture between S&P Dow Jones Indices LLC and BSE.

AIPL won the mandate from ICICI Prudential AMC to design the index for the Government's second disinvestment programme via an Exchange traded Fund (ETF). AIPL designed and launched the S&P BSE BHARAT 22 Index on August 10, 2017. The S&P BSE Bharat 22 Index is designed to measure the performance of 22 select companies disinvested by the central government of India.

The government has raised Rs, 14,500 Crore through the Bharat 22 ETF. The portion reserved for retail investors was subscribed 1.45 times; retirement funds 1.50 times and NIIs and QIBs 7 times.

ICICI Prudential Asset Management Company launched the Bharat 22 ETF. The Bharat 22 ETF new fund offer (“NFO”) had an initial issue size of over Rs, 8,000 Crore with 25% of total issue size, or Rs, 2,000 Crore, reserved for anchor investors who put in bids worth about Rs, 12,000 Crore. The issue received highest subscription for any NFO in the history of Indian mutual fund industry.

Other new Indices launched by AIPL in FY 2017-18 were:

0 S&P BSE 100 ESG Index was launched on October 26, 2017 and is designed to measure securities that meet sustainability investing criteria while maintaining a risk and performance profile similar to the S&P BSE 100

0 S&P BSE 150 Midcap Index was launched on November 30, 2017 and is designed to track the performance of 150 mid-cap companies by total market capitalization, subject to buffers, that are in S&P BSE 500 but not in S&P BSE 100.

0 S&P BSE 250 SmallCap Index was launched on November 30,

2017    and is designed to track the performance of the 250 small-cap companies by total market capitalization within S&P BSE 500 that are not part of S&P BSE 100 or S&P BSE 150 MidCap.

0 S&P BSE 250 LargeMidCap Index was launched on November 30, 2017 and is designed to track the performance of the 250 companies that are part of S&P BSE 100 and S&P BSE 150 MidCap.

0 S&P BSE 400 MidSmallCap Index was launched on November

30, 2017 and is designed to track the performance of the 400 companies within S&P BSE 500 that are not part of S&P BSE 100.

0 S&P BSE 250 LargeMidCap65:35 Index was launched on November 30, 2017 and is designed to simulate a portfolio consisting of a position with a 65% weight in S&P BSE 100 and a 35% weight in S&P BSE 150 MidCap.

0 The S&P BSE Arbitrage Rate Index was launched on March 20,

2018    consists of a position with a 100% long index weight in the S&P BSE SENSEX TR and a 100% short index weight in the S&P BSE SENSEX Futures Index ER.

SECONDARY MARKET POLICY DEVELOPMENTS

Data Analytics Based Systemic Solution for Tracking Company News

The Company undertakes various regulatory policy and systemic measures for enhanced due-diligence, surveillance, corporate governance in the Indian capital markets to comply with SEBI regulations. In this regard, the Company has implemented artificial intelligence based framework for rumour detection since November

2016.

The primary objective is to detect and mitigate potential risks of market manipulation, rumour and reduce information asymmetry arising from it on digital media platforms, including social media.

In recent past, news media has undergone a sea of changes with digital media and social media becoming the frontline in news reporting or sharing information digitally for easier, faster and wider reach. On this background, any material news or rumour floating in the social media can have potential impact on the sentiments of the investing population which can further impact price/volumes of securities traded on exchange platforms.

The data analytics based systemic solution relies on artificial intelligence based framework to track news related to listed companies on digital media using social media like twitter, blogs, facebook, etc.

Alerts generated by this social media solution is monitored by the Company from the standpoint of material information and also vis-a-vis possible rumours appearing in various media including print and on-line channels as per SEBI regulations.

Graded Surveillance Measure (“GSM”)

The Exchange has pro-actively taken series of surveillance actions on its stocks in recent past as a pre-emptive measure to ensure safety and integrity of the market.

In continuation to various surveillance measures already implemented, SEBI and Exchanges, pursuant to discussions in joint surveillance meetings, have decided that along with the aforesaid measures, there shall be additional GSM on securities which witness an abnormal price rise not commensurate with financial health and fundamentals like Earnings, Book Value, Fixed Assets, Net Worth, Market capitalization, P/E Multiple, etc.

The main objective of these measures is to alert and advise investors to be extra cautious and advise market participants to carry out necessary due diligence while dealing in the securities.

Under the GSM framework which became effective from March 14,

2017, based on satisfaction of certain pre-defined objective criteria, the securities attract following additional graded surveillance actions such as additional surveillance Deposit, once a week trading only, Trade for Trade (TFT) etc.

As on March 28, 2018, a total of 835 companies have been identified to be a part of GSM framework.

Verification of credentials/ fundamentals of suspected shell companies

SEBI on August 7, 2017, forwarded a list of 331 suspected shell companies as identified by MCA and inter alia directed the Exchanges to take following actions:

-    Move trading in the securities of such companies directly to GSM stage VI whereby trading in a security is permitted on trade to trade basis once a month with 200% Additional Surveillance deposit with freeze on upper price movement.

-    Verify credentials/ fundamentals of companies by appointing independent auditor. Further, if necessary conduct forensic audit of these companies.

-    Promoters and directors are not allowed to transact in the Company except to buy securities until verification is completed.

- Initiate process of compulsory delisting, if any adverse findings with regard to credentials/ fundamentals of companies.

Based on SEBI direction, BSE has moved the trading in the securities of listed companies to GSM Stage VI and has undertaken verification of credentials/ fundamentals of the listed companies as per process finalized in consultation with SEBI.

S+ Framework

In continuation with various surveillance measures already implemented, the Exchange introduced an additional surveillance measure called “S+ Framework” w.e.f. June 14, 2017 for enhanced monitoring of securities exclusively listed/ traded on main board of BSE which are not a part of GSM framework and witness price rise not commensurate with financial health and fundamentals like Earnings etc. or witness spurt in volumes without any corporate event.

However, effective May 2, 2018, S+ framework has been done away.

Additional Surveillance Measure (ASM)

In continuation to various surveillance measures already implemented, SEBI and Exchanges, pursuant to discussions in joint surveillance meetings, have decided that along with the aforesaid measures there shall be Additional Surveillance Measures (ASM) on securities with surveillance concerns viz. Price variation, Volatility, etc.

Accordingly, the Exchange has implemented ASM w.e.f. March 26, 2018.

The surveillance actions applicable for the shortlisted securities is as under:

a)    Securities shall be placed in Price Band of 5%

b)    Margins shall be levied at the rate of 100%

The shortlisted securities shall be further monitored on a predetermined objective criteria and would be moved into Trade for Trade segment once the criteria gets satisfied.

REGULATION

Surveillance & Investigation Statistics for FY 2017-18:

As part of market monitoring activities during FY 2017-18; 66,214 surveillance alerts were generated, of which 1101 alerts were taken up for snap investigations. Subsequently till March 31, 2018, 207 cases were taken up for preliminary/ detailed investigations, of which 126 preliminary/ investigation reports have been forwarded to SEBI. The Company has also provided e-BOSS, the member level surveillance system to trading members to monitor their clients positions and manage risk at a nascent stage.

Broker Supervision

604 inspections of members were conducted during FY 2017-18, which include 515 routine inspections and 89 special inspections. This also included 25 inspections on the basis of risk based supervision.

Investor Services

The Investor Services Cell provides the following services: Redressal of complaints against trading members and Redressal of compliants against listed companies on BSE.

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 members electronically through the BSE Electronic Filing System (“BEFS”), thereby reducing the communication time resulting in expeditious resolution of investor complaints. All actions taken in the process of redressal are then updated on this system. The investors can also lodge complaints directly with the Exchange through email, physical document form or through online e-complaint registration on BSE website. The complaints against trading members are redressed through conciliation process by Investor Grievances Redressal Committees (“IGRC”) wherein the IGRC is also empowered to decide the claim value.

The Company provides IGRC as well as arbitration/ appellate arbitration services from its 24 Regional Investor Service Centers located at Ahmedabad, Bangalore, Bhubaneshwar, Chandigarh, Chennai, Dehradun, Delhi, Guwahati, Jaipur, Jammu, Hyderabad, Indore, Kanpur, Kochi, Kolkata, Lucknow, Mumbai, Panaji, Pune, Patna, Raipur, Ranchi, Vadodara and Shimla.

Thus the Company currently provides IGRC and arbitration services from 24 investor services centres located at different parts of the country.

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. BSE Limited is the only Exchange in the country, where 13 Registrars and Transfer Agents (“RTAs”) regularly visit its Investor Service Centre -Mumbai, for redressal of investor complaints against entities listed on BSE Limited.

Listing Compliance

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”). These are Shareholding Pattern, Corporate Governance Report, Voting Results, Financial Results and Share Capital Audit report.

Since introduction of XBRL reporting in 2015, we have seen an increasing number of companies making their filings in XBRL voluntarily. Encouraged by this response and the improved efficiency of data dissemination, the Exchange had made the filing of Shareholding Pattern, Corporate Governance and Voting Results also mandatory, in XBRL. In FY 2017-18, XBRL filing of Financial Results and Share Capital Audit Report was also made mandatory.

The Committee on Corporate Governance (Kotak Committee) in its report had recommended filing of disclosures to Exchange in XBRL format. Accordingly, SEBI has 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.

Compulsory Delisting

Trading in the securities of certain listed companies has been suspended for a long period of time on account of non-compliance with the critical clauses of the erstwhile Listing Agreement.

BSE under the guidance of SEBI, had advised companies that have been under suspension for a period of six months or more, to expedite the 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.

During FY 2017-18, the Exchange has delisted 384 companies and till date, the Exchange has delisted 883 suspended companies. This is an ongoing activity and is expected to be completed by June 2018.

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 of the information.

Towards this objective, the Exchange introduced the Corporate Announcement Filing System (“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 wholly accountable for their filings, which leads to much faster, efficient and informed decisions by investors and the public at large.

During the current year, the system has been periodically enhanced to include additional disclosures under the seamless mode. Further, pursuant to a SEBI directive, upload of ‘machine readable (PDF) documents' has been made mandatory and requisite checks have been introduced to verify whether the filing being done is in ‘machine readable' form and the same is notified to the listed companies.

SIGNIFICANT DEVELOPMENTS

Enhanced Supervision of Stock Brokers

The Company has implemented enhanced supervision framework of stock brokers to facilitate reporting of their Clients' funds utilization and client wise funds and securities balances, held by them in the capacity of stock broker.

Further, the Company implemented enhanced supervision framework of stock brokers to facilitate reporting of ISIN wise details of securities of clients.

Investors are sent SMS and emails conveying their funds and securities balances with the stock brokers. Emails sent to Investors also contain ISIN wise details of securities held by the stock broker.

This new initiative of ISIN wise details of securities is in line with SEBI's directive (vide SEBI Circular No. SEBI/HO/MIRSD/MIRSD2/ CIR/P/2017/123) dated November 29, 2017. Reporting on this clause has been made applicable w.e.f. February 1, 2018, for submission for the month of January 2018, onwards.

Margin Trading: The Company announced the revised framework for Margin Trading facility to the stock Brokers.

As per revised framework:

Group 1 securities are eligible for Margin Trading as against Securities offered in IPO and meeting conditions for inclusion in Derivatives Segment.

Initial margin payable by the client to the stock broker can also be in the form of Group 1 equity shares apart from cash and cash equivalents as against cash/cash equivalents earlier.

Stock Brokers are also allowed to borrow funds by issuance of commercial paper and by way of unsecured long term loans from their promoters and directors apart from Banks and Non-Banking Financial Companies (NBFCs) as against from Banks and NBFCs, earlier.

This new initiative is in line with SEBI's directive (vide SEBI Circular CIR/MRD/DP/54/2017 dated June 13, 2017 and SEBI Circular CIR/ MRD/DP/86/2017 dated August 1, 2017).

MARKETING AND COMMUNICATIONS

With a view to promote an investment culture among the masses, the Company undertook several initiatives to promote investor education. Apart from being present across leading television channels, the Company also utilised social media to spread the message of sound investing. The Company also undertook several initiatives in reaching out to members to inform them about existing products and future initiatives. The initiatives undertaken by the Company got significant coverage in all leading national and regional newspapers and television channels.

The Company hosted more than 230 events ranging from international delegations to educational programs to roundtables on important national and international topics. Some of the significant events were the Annual IOSCO (The International Organization of Securities Commissions) Conference, which was held for the 1^st time in India and attended by delegates from across the globe; Inauguration of the renovated International Convention Hall by Shri Nitin Gadkari, Hon'ble Minister of Road Transport and Highways, Shipping and Water Resources, River Development & Ganga Rejuvenation, Government of India; SAFE (South Asian Federation of Exchanges) Conference and listing of the 200^th company on BSE SME.

During the course of the year, the Company witnessed many high

profile visits and delegations from the government, industry and other

sectors from India and abroad.

The dignitaries include:

1.    Shri M Venkaiah Naidu, Hon'ble Vice-President of India

2.    Shri Nitin Gadkari, Hon'ble Minister of Road Transport and Highways, Shipping and Water Resources, River Development & Ganga Rejuvenation, Government of India

3.    Shri Piyush Goyal, Hon'ble Minister of Railways and Coal, Government of India

4.    Shri Devendra Fadnavis, Hon'ble Chief Minister of Maharashtra

5.    Shri Shiv Pratap Shukla, Hon'ble Minister of State for Finance, Government of India

6.    Shri Arjun Ram Mehgwal, Hon'ble Minister of State, Water Resources, River Development & Ganga Rejuvenation, Parliamentary Affairs, Government of India

7.    Shri Girish Bapat, Hon'ble Minister for Food, Civil Supplies & Consumer Protection, Food & Drug Administration & Parliamentary, Government of Maharashtra

8.    Smt. Bijoya Chakravarty, Member of Parliament and Chairperson - Committee on Empowerment of Women

9.    Dr. Vallabh Kathiria, Member of Parliament

10.    Shri Rajiv Gauba, Secretary (Urban Development) Ministry of Urban Development, Government of India

11.    Shri Ajay Tyagi, Chairman, SEBI

12.    Shri Dinesh Kumar Jain, Additional Chief Secretary (Finance), Government of Maharashtra

13.    Shri Praveen Garg, IAS, Joint Secretary of Department of Economic Affairs for Ministry of Finance, Government of India.

14.    Shri Kunal Kumar, Municipal Commissioner, Pune Municipal Corporation

15.    Smt. Madhabi Puri Buch, Whole Time Member, SEBI

16.    Shri S.V. Murli Dhar Rao, Executive Director, SEBI

17.    Nobel Laureate Shri Kailash Satyarthi, Founder of Bachpan Bachao Andolan

18.    Dr. Mohan Bhagwat, Sarsanghchalak, Rashtriya Swayamsevak Sangh

19.    Shri Gaur Gopal Das, Monk at the International Society of Krishna Consciousness (ISKCON) Mumbai

20.    H. E Mr. Vishvas Sapkal, High Commissioner of India to the Republic of Fiji

21.    Smt. Arundhati Bhattacharya, Former Chairman, State Bank of India

22.    Dr. Pawan Kumar Goenka, Managing Director, Mahindra & Mahindra Ltd.

23.    Smt. Chanda Kochhar, Managing Director & CEO, ICICI Bank Ltd.

24.    Shri Kumar Mangalam Birla, Chairman, Aditiya Birla Group

25.    Shri Robin Raina, Chairman and CEO of Ebix Inc.

26.    Mr. William C. Dudley, President, Federal Reserve Bank of New York

27.    Mr. Georgios Lakkotrypis, Ministry of Energy, Commerce, Industry and Tourism, Republic of Cyprus

28.    Hon. D. Sesungkur, Minister of Financial Services and Good Governance of the Republic of Mauritius

29.    Mr. Wu Lijun, Chairman, Shenzen Stock Exchange

30.    H.E. Joanna Kempkers, High Commissioner of New Zealand

31.    Mr. Rashed Al Blooshi, Chief Executive Senior Management, Abu Dhabi Stock Exchange

32.    H. E. Mr. Bulat Sarsenbayev, Ambassador of the Repulic of Kazakhstan

33.    Shri Rajesh Agrawal, Deputy Mayor of London (Business)

34.    Mr. Mesfin Gebremariam, Hon'ble Consul General of Democratic Republic of Ethiopia

35.    Rt Hon Karen Bradley, MP, Secretary of State for Digital, Media & Sport, UK

36.    Ms. Bari Rogoff, Policy Advisor to Ivanka Trump

37.    Mr. Pierre-Gabriel Cote, President & CEO, Investissement Quebec

38.    Mr. William Knottenbelt, Senior Managing Director, EMEA, CME Group

39.    Shri Kamal Hassan, Actor

40.    Ms. Richa Chadda, Actress

41.    Shri Vivek Oberoi, Actor

42.    Shri Vidyut Jamwal, Actor

AWARDS AND RECOGNITION

1.    ‘IT Genius Awards 2017' in the category ‘Data Centre Excellence' for setup of the India INX Data Centre by CORE (Centre of Recognition & Excellence)

2.    Digital Innovation Award 2017 for the Social Media Analytics Project by Netmagic

3.    Business World Digital Leadership and CIO Award

4.    The IDC Digital Transformation Awards 2017

5.    The Best Exchange of the year award for equity and currency derivatives in Tefla's Commodity Economic Outlook Award 2017

6.    SKOCH AWARD - Best Cyber Security Project Award 2017 -GOLD

7.    TOP 100 CISO Awards May 2017

8.    INFOSEC MAESTROS Award April 2017

9.    The Cyber Security Leader of the Year Award 2017 from NASSCOM-DSCI

10.    CIO Powerlist Award for Big Data Innovations (April 2017)

11.    IDC Digital Transformation Awards for Social Media Analytics implementation (April 2017)

12.    C-Change Awards 2017 for Big Data Implementation at DR site conferred by Cyber Media (June 2017)

13.    The Asia Capital Market Awards for Social Media Analytics by FOW & Global Investor (August 2017)

14.    Business World CIO World - Digital Leadership & CIO Awards for BEST Analytics Implementation (July 2017)

15.    CIO Crown Digital Innovation Award 2017, by NetMagic (August 2017)

16.    Next Generation SOC, by CNBC-TV18 Fintech Edge Award (September 2017)

RECENT GLOBAL INITIATIVES BY BSE IN SUSTAINABILITY

SPACE

- BSE has always been on a forefront to back various initiatives by regulators and various international forums that align with sustainable business practices.

-    BSE is engaging efforts to publish the “Guidance Document of ESG Disclosures” for its Listed Corporates to steer the initiatives of Sustainable Stock Exchange (“SSE”) globally. Global Reporting Initiative (GRI) and BSE entered a formal MoU in mid-2016 to work collaboratively and support the Listed Corporates establish sustainability reporting process. The collaboration led to the successful creation and launch of a linkage document that is designed to show companies how requirements under the SEBI Business Responsibility Report Framework correspond to the GRI Standards and disclosures. Also BSE has successfully driven various informative and educational workshops across India on ESG in association with GRI to encourage Sustainability Reporting amongst Listed Corporates.

-    Being a member of Indian Green Bonds Council set up for the development of green bonds market in India, BSE encourages the sustainable investments in the form of green bond listing. BSE has initiated its contribution in the sustainability space with its sustainability indices like S&P BSE Carbonex and S&P BSE Greenex. The latest addition being S&P BSE 100 ESG Index designed to measure securities meeting sustainability investing criteria.

-    In October 2017, BSE in collaboration with Carbon Disclosure Project (“CDP”) India and Environmental Resource Management (“ERM”) India; hosted a successful launch of CDP 2017 Climate Change Report.

-    In November 2017, BSE in collaboration with Environmental Resources Management and RobecoSAM conducted a successful round table on Responsible Investment: Integrating value by using ESG Frameworks as Effective Screening Tools involving judicious participation of various stakeholders.

-    BSE in association with Principles for Responsible Investment (PRI) and CFA Institute hosted the Global Survey on ESG Integration at BSE premises in India in February, 2018.

-    In April 2018, BSE has successfully steered a series of discussions and presentations on Information disclosure and ESG disclosures in the 36^th General Assembly of The Asian and Oceanian Stock Exchanges Federation (“AOSEF”) at

Shanghai, April 2018.

SHARE CAPITAL

Pursuant to clause 5 of BSE (Corporatisation and Demutualisation) Scheme, 2005 (“BSE Scheme, 2005”) approved by SEBI vide its notification dated May 20, 2005, every trading member having membership right of the Exchange or his nominee, as the case may be, as on record date was entitled to 10,000 equity shares of the face value of ' 1/- per share, against membership right of erstwhile BSE. It may be noted that the entitlement against membership right post consolidation of share capital stands changed to 5,000 equity shares of face value ' 2/- per share. Remaining 12 erstwhile trading members, having an aggregate 12 membership rights, continue to remain in abeyance till date for various reasons.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE COMPANY UNDER SECTION 186 OF THE COMPANIES ACT, 2013

A detailed disclosure of the particulars relating to Loans and investments by the Company as per Section 186 of Companies Act (2013) (“the Act”), is provided in notes to the financial statements.

SUBSIDIARIES/ ASSOCIATE COMPANIES

The Company has twelve subsidiary companies (direct and indirect) and six associates as on March 31, 2018 as follows:

Subsidiaries:

1.    BSE Institute Limited

2.    BSE Investments Limited

3.    BSE Sammaan CSR Limited

4.    BSE Skills Limited

5.    India International Exchange (IFSC) Limited

6.    India International Clearing Corporation (IFSC) Limited

7.    Indian Clearing Corporation Limited

8.    Marketplace Technologies Private Limited

9.    Marketplace Tech Infra Services Private Limited

10.    BFSI Sector Skill Council of India (Section 8 Company)

11.    BIL - Ryerson Technology Startup Incubator Foundation (Section 8 Company)

12.    BSE CSR Integrated Foundation (Section 8 Company) Associates:

1.    Asia Index Private Limited

2.    BSE EBIX Insurance Broking Private Limited (w.e.f. March 15,

2018)

3.    Central Depository Services (India) Limited (w.e.f. June 30, 2017)

4.    CDSL Ventures Limited (w.e.f. June 30, 2017)

5.    CDSL Insurance Repository Limited (w.e.f. June 30, 2017)

6.    CDSL Commodity Repository Limited (w.e.f. June 30, 2017)

BSE Skills Limited has discontinued its business operations. There has been no material change in the nature of the business of the other subsidiaries and associate companies.

Pursuant to Rule 5 (1) of the Companies (Accounts) Rules 2014 the performance and financial position of the subsidiary and associate companies given in Form AOC - 1, which forms a part of this Annual Report.

The financial statements of the Subsidiary companies are kept for inspection by the shareholders at the Registered Office of the Company. The Company shall provide free of cost, the copy of the financial statements of its subsidiary companies to the shareholders upon their request. The statements are also available on the website of the Company www.bseindia.com.

Changes in subsidiaries/ joint ventures/ associate company

1.    BSE EBIX Insurance Broking Private Limited was incorporated under the Companies Act, 2013 on March 15, 2018.

2.    Pursuant to the sale of 26.05% stake in CDSL under its Initial Public Offering through Offer for Sale, it has ceased to be a subsidiary and it is now considered as an associate company with effect from June 30, 2017. Accordingly, the subsidiaries of CDSL viz. CDSL Ventures Limited, CDSL Insurance Repository Limited and CDSL Commodity Repository Limited have also been considered as associate companies.

DIRECTORS AND KEY MANAGERIAL PERSONNEL (“KMP”) Appointment and Re - appointment of Directors

During the year under review, Shri S. S. Mundra and Shri David Wright were appointed as Public Interest Directors w.e.f. January 17, 2018 and March 16, 2018 respectively.

In accordance with the provisions of the Act, read with the applicable rules, as amended, Smt. Usha Sangwan, Shareholder Director retires by rotation and being eligible, offered herself for re-appointment at the ensuing Annual General Meeting.

Cessation of Directors

Shri Roland Schwinn was appointed as Shareholder Director in place of Mr. Thomas Bendixen w.e.f. June 13, 2017

Shri Sudhakar Rao and Shri Dhirendra Swarup retired from the position of Public Interest Director and Chairman, from the Board of the Company, w.e.f. June 28, 2017 and November 2, 2017 respectively, on successful completion of their term as Public Interest Director.

Dr. K. Kasturirangan retired from the position of Public Interest Director, from the Board of the Company w.e.f. from January 22, 2018 on successful completion of his said term.

The Company places on record its appreciation and gratitude for the valuable contributions made by them during their tenure as member of the Board.

Declarations by Public Interest Directors (‘PID’)

All PIDs have given declarations under section 149(7) of the Act that they met the criteria of Independence as laid down under Section 149(6) of the Act, and Regulation 16 of Listing Regulations. Further all PIDs have also given the declarations that they satisfy “fit and proper” criteria as stipulated under Regulation 20 of SECC Regulations.

MEETINGS OF THE BOARD

As on March 31, 2018, seven meetings of the Board were held during the year. For details of meetings of the Board, please refer to the Corporate Governance Report, forming part of this report.

Separate meetings of the Independent Directors were held on May 4, 2017 and February 1, 2018.

BOARD EVALUATION

The Board of Directors of the Company carried out annual evaluation of its own performance, committees of the Board and individual Directors pursuant to various provisions under the Act, Regulation 17,

19 and Schedule II of the Listing Regulations and based on the SEBI circular dated January 5, 2017 which provides further clarity on the process of board evaluation (“SEBI Guidance Note”).

The Company has implemented a system of evaluating performance of the Board of Directors and of its Committees and individual Directors on the basis of a structured questionnaire which comprises evaluation criteria taking into consideration various performance related aspects.

Disclosures as prescribed under SEBI circular dated May 10, 2018 are given below:

Observations of Board evaluation carried out for the year

No observations.

Previous year’s observations and actions taken

Since no observations were received, no actions were taken.

Proposed actions based on current year observations

Since no observations were received, no actions were required.

The procedure followed for the performance evaluation of the Board, Committees and individual Directors is enumerated in the Corporate Governance Report.

BOARD COMMITTEES

There are various Board constituted Committees as stipulated under the Act and Listing Regulations namely Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee, Risk Management Committee and Corporate Social Responsibility (CSR) Committee. Brief details pertaining to composition, terms of reference, meetings held and attendance thereat of these Committees during the year has been enumerated in Corporate Governance report.

Additionally, Company being an Exchange, has also constituted other Regulatory Committees as stipulated under SECC Regulations.

AUDIT AND AUDITORS REPORT

Statutory Audit

The auditors, M/s. S R Batliboi & Co. LLP, Chartered Accountants (Firm Registration No 301003E/E300005), Mumbai had been appointed, in the Twelfth AGM held on September 4, 2017, for a period of five years to hold the office from the conclusion of the twelfth AGM until the conclusion of seventeenth AGM to be held in the year 2022, accordingly they retire at the seventeenth AGM.

The Statutory Auditors report dated May 4, 2018 on the financial statements of the Company for FY 2017-18 is unmodified and does not have reservations, qualifications or adverse remarks.

Secretarial Audit

The Board appointed M/s. Ragini Chokshi & Co., Practicing Company Secretaries to conduct Secretarial Audit of the Company for FY 2017-18.

Secretarial audit report for the year ended on March 31, 2018 as provided by M/s. Ragini Chokshi & Co., Practicing Company Secretaries is enclosed as Annexure A.

The secretarial auditor's report does not contain any qualifications, reservations or adverse remarks.

POLICY MATTERS

Policy on Directors’ Appointment and Remuneration

The Company's policy on Director's appointment and remuneration provided in Section 178(8) of the Act, has been disclosed in the Annexure B enclosed with this report.

Corporate Social Responsibility (“CSR”)

The Company has constituted a CSR Committee in accordance with Section 135 of the Companies Act, 2013. The details of the CSR Policy of the Company, its development and initiatives taken by the Company on CSR during the year as per annexure attached to the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been appended as Annexure C to this Report.

Whistle Blower Policy

The Company promotes ethical behaviour and has put in place a mechanism for reporting illegal or unethical behaviour. The Company has a Vigil Mechanism and Whistle-blower policy under which the employees are free to report violations of applicable laws and regulations and the Code of Conduct. Employees may report their genuine concerns to the Chairman of the Audit Committee. During the year under review, no employee was denied access to the Audit Committee.

The details of establishment of such mechanism has been disclosed on the website http://www.bseindia.com/downloads1/Whistle_ Blower_policy.pdf

Particulars Relating to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has always believed in providing a safe and harassment free workplace for every individual working in its premises through various policies and practices. The Company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment.

The Company has adopted a policy on Prevention of Sexual Harassment at Workplace which aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of undesired behavior. An Internal Complaints Committee (“ICC”) has been set up by the senior management (with women employees constituting the majority). The ICC is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the Policy.

During the year ended March 31, 2018, no complaints pertaining to sexual harassment have been received.

RISK MANAGEMENT AND COMPLIANCE

The risk management report discusses various dimensions of our enterprise risk management. The risk related information outlined in this section may not be exhaustive. The discussion may contain statements that are forward looking in nature. Our business is subject to uncertainties that could cause actual results to differ materially from those reflected in the forward looking statements. Readers are advised to refer the detailed discussion of the risk factors and related disclosures in our regulatory filings, and exercise their own judgment in accessing risks associated with the Company.

Overview

Risk Management is an enterprise wide function at BSE which covers major business and functional objectives including Strategy, Operations, Technology and Compliance. The Enterprise Risk Management (ERM) enables the achievement of strategic objective by identifying, analysing, assessing, mitigating, monitoring and governing any risk or potential threat to these objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. Several risks can impact the achievement of a particular business objective. Similarly, a single risk can impact the achievement of several business objectives. The focus of risk management is to assess risks, deploy mitigation measures and review them including risk management policy on a periodic basis. This is done through periodic review meetings of the Risk Management Committee comprising of the Board members.

The risks in relation to internal control over financial recording and reporting is reviewed by the Audit Committee. The Company's internal control systems are commensurate with the nature of its business and the size and complexity of operations. These systems are routinely tested and certified by Statutory as well as Internal Auditor. The Audit Committee reviews adequacy and effectiveness of the Company's internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Company's financial risk management policies and systems.

The Key Roles and responsibility regarding risk management in the Company are summarized as follows

LEVEL	Key Roles and responsibility
Board of Directors	S Approving key business objective to be achieved by the Company. Ensuring that the executive management focuses on managing risks to key business objectives. S Reviewing the performance of the Risk Management Committee

 

LEVEL	Key Roles and responsibility
Risk Management Committee	S Comprises of five directors and three members from management : -    Smt. Usha Sangwan, Chairperson -    Shri S Ravi, Member -    Shri Sumit Bose, Member -    Shri Ashishkumar Chauhan, Member -    Shri Roland Schwinn, Member -    Shri Nehal Vora, Chief Regulatory Officer -    Shri Neeraj Kulshrestha, Chief of Business Operations -    Shri Nayan Mehta, Chief Financial Officer S Review and oversight with regards to identification, evaluation and mitigation of the strategic, operational, technology and compliance risks S Reviewing and approving risk related disclosures S Monitoring and approving the risk management framework and associated practices of the Company
Role of Risk team	S Adhering to the risk management policies and procedures S Implementing prescribed risk mitigations actions S Reporting risk events and incidents in a timely manner

Risk Categories

The Company's risk management framework is broadly categorized as risk pertaining to (a) Business and Development, (b) Information Technology, (c) People and Security, (d) Finance and Treasury,

(e) Operations, and (f) Risks emanating from operations of Group Companies, from the risk universe.

Risks arising out of the choices we have made in defining our business and development strategy and the risks to the successful execution of these strategies are covered in this category - for e.g., risk inherent to our industry and competitiveness are analyzed and mitigated through strategic choices of target markets, the Company's market offerings, business models and talent base. Potential risk to the long term scalability and sustainability of the organization are also analyzed and mitigation plans are actioned. We periodically assess risks to the successful execution of our strategy such as the effectiveness of strategic programs that are being executed, the momentum in new initiatives, the impact of strategy on financial performance, leveraging of inorganic strategies, effectiveness of organisation structure and processes, retention and development of high performing talent and leadership.

Risks arising out of internal and external factors affecting the policies, procedures, people and systems in our support functions thereby impacting services delivery, compromises our core values or not in accordance with generally accepted business practice or impacting the client's operations are covered in this category. For e.g. risks of business activity disruption due to natural calamities, terrorist attacks or war or regional conflicts, or disruption in telecommunications, systems failures, virus attacks or breach of cyber security.

Risks arising out of threats posed to our financial, organisational, or reputational standing resulting from violations or non-conformance with laws, regulations, codes of conducts or organisational prescribed practices or contractual compliances are covered in this category. For

e.g. risks of potential litigations, breach of contractual agreements, non-compliances to regulations, potential risk arising out of major regulatory/ geo-political changes, potential risks arising out of strategic or operational business decisions.

Risk Management Procedure Risk Identification

Risk Management is a continuous interplay of actions that permeate the Company. It is brought in to effect by the Company's risk committee, management and other personnel. The risk management process of the Company aims at providing reasonable assurance regarding achievement of the Company's objectives.

In order to provide reasonable assurance, the Company's risk management process endeavors to help:

-    Identify, assess and escalate new risks impacting the objectives of the Company,

-    Define mitigation actions to respond to the new risks effectively,

-    Monitor effectiveness of existing risk management mitigation actions and

-    Report risks and risk management mitigation actions to the Risk Management Committee on a periodic basis.

The risk analysis and evaluation are carried out using scenario based assessments to decide the potential impact, likelihood of occurrence and in some cases, the detectability of the risk.

Risk Mitigation

Mitigation actions are prepared and finalised, owners are identified and the progress of mitigation actions are monitored and reviewed. The Risk Management Committee periodically reviews and monitors the mitigation actions, its effectiveness and provides its advices to the mitigation teams.

Risk Reporting

The top risk from the risk registers, its mitigation plans, periodic review of processes and new risks emanating from such reviews are periodically reviewed by the Risk Management Committee. The risks identified by risk management function or roles at different levels in the organization are presented at appropriate level of governance structure. Critical risks or cross functional risks at each level are escalated to the next level in the governance structure. Critical risks under different categories of risks at group level are reviewed by Chief Executive Officer, Chief Financial Officer, Chief of Business Operations, Chief Information Officer and Chief Regulatory Officer.

Risk Management Framework for the year

During the year, as a part of monitoring the key risks, the risk management office:

(a) Reviewed the risk management practices, which were primarily focused on the effectiveness of strategic programs in improving our competitive position and differentiation in market segments.

(b)    Reviewed the momentum of new initiatives to achieve our long-term business aspirations, our preparedness to address any incidents that may cause business disruptions to our physical and technological infrastructure, strengthening operational and internal controls to detect fraudulent activity, leadership development and succession, planning and monitoring possible impact of changes in our regulatory environment.

(c)    Reviewed information security risks including cyber-attacks and threat intelligence and continue to monitor the progress of mitigation actions.

(d)    Reviewed key operational risks and actions based on inputs from internal risk register, external assessment, internal audit findings and incidents.

(e)    Reviewed operational risk areas including client service level standards, retentions and engagement of employees, reskilling of employees, brand attractiveness, women's safety, physical securities and business continuity management.

(f)    Monitoring by regulatory departments the key developments in the regulatory environment.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has maintained adequate internal financial controls over financial reporting. These includes policies and procedures - (a) pertaining to the maintenance of records that is reasonably detailed, accurately and fairly reflects the transactions and dispositions of the assets of the Company, (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Indian Accounting Standards notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time, and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company, and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material impact on the financial statements. Such internal financial controls over financial reporting were operating effectively as of March 31, 2018, based on the criteria established in COSO Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013 (COSO Framework).

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SUB-SECTION (1) OF SECTION 188 OF THE COMPANIES ACT, 2013

The Company has formulated a Policy on Related Party Transactions. The same is available on Company's website at http://www.bseindia. com/downloads1/Related_Party_Transaction_Policy.pdf.

1)    CNBC TV18 and CNBC Awaaz

2)    ZEE Business

3)    News 24

4)    ET Now

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND

FOREIGN EXCHANGE EARNINGS AND OUTGO

Conservation of Energy

(i)    The steps taken and their impact on conservation of energy:

As a policy we regularly replace high energy consuming electrical equipment with modern efficient devices such as replacing the induction ballasts with electronic ballasts and the fluorescent lights with LED lights. We conserve energy by switching off lights & other equipment when they are not required using sensing technology where feasible. Our offices are painted in brighter colors to maximize lighting efficiency besides using natural light in most places. We have coated the glass windows to reduce the heat entering the building which reduces the air-conditioning load. The Company continuously strives to optimize its energy usage and efficiency.

(ii)    The steps taken by the Company for utilising alternate sources of energy:

Our building has a glass windows all around and we also use the ambient light for lighting purposes as much as possible. This reduces the electricity consumption due to lesser need of lighting during the day.

(iii) The capital investment on energy conservation equipment:

Nil

Technology Absorption

Big Data Enhancements & Security

The Company takes pride in being one of the few companies that has ventured in different horizons to harness the benefits of its Big Data implementation. The processing of huge voluminous data are managed with ease. The open source Big Data HADOOP platform facilitates real time processing by consolidating information from Trading, Risk Management and Clearing & Settlement into Enterprise Data Lake.

Big Data implementation has helped meet statutory & mandatory requirements to maintain and make available historical information as well as helped achieving significant reduction in hardware and software investment.

The Company has implemented the Big Data capabilities for its real time surveillance and fraud detection. Extending the scope of surveillance beyond the traditional means, the Company has effectively implemented the Social Media analytics using Artificial Intelligence to predict rumors and verification of news floating in the market on BSE listed companies and its impact on the stock market.

Taking this to the next level, the Company has implemented machine learning and language parsing for rumour verification. BSE has implemented open source natural language processing framework for voice to text conversion. This is in addition, to the already implemented textual mining to detect rumours which is published in Print media, Facebook and Twitter. Today, many of the rumours are available in the media in the form of voice on different News channels. To capture these voices and convert them into text, textual data mining is done of converted text.

Using machine learning, BSE is able to do language conversion of news about BSE listed companies, appearing in print media, from Hindi to English. This helps BSE to do effective surveillance and monitoring for Indian regional language other than English language.

Data security is the vital and integral part of our Big Data implementation success. Using Cloudera enterprise, the Company is able to meet ever-evolving security requirements imposed by regulating agencies, governments, industries, and the general public. Cloudera clusters comprise both Hadoop core and ecosystem components, all of which are protected from a variety of threats to ensure the confidentiality, integrity and availability of all the cluster's services and data.

Goals for data management systems, such as confidentiality, integrity, and availability, require that the system be secured across several dimensions. With level 3 security, the Company's Cloudera enterprise is ready for full compliance with various industry and regulatory mandates and is ready for audit when necessary.

Adoption of Open source technologies 0 Open source Databases

The Company, in line with its overall outlook of moving towards the Open Source technologies and to save licensing costs towards proprietary software, has adopted to use PostGreSQL as its transactional database. During the year, initially a few of the non-critical databases were migrated, which helped in understanding inter-dependencies of heterogeneous databases and other challenges. These challenges were overcome as it were encountered in the migration process. The mid-level databases are planned to be migrated next, which is expected to be accomplished by end of 2018.

0 Unified Experience - Identity and Access Management

IAM (Identity Access Management) has already been implemented for BSE and its group companies for all internal applications. This solution is based on the open source technology, which is integrated with active directory. The user and access management is now streamlined with a single point authentication Active Directory/Lightweight Directory Access Protocol (AD/LDAP) for all internal applications and is linked to the HR systems for timely updates on the same and the periodic reviews triggered off at regular intervals.

Single Sign-on (SSO) for BSE's web-based applications is rolled out to few market participants on pilot basis and is scheduled to be rolled-out to all participants by first quarter of next Financial Year.

All the external facing applications are linked with the user authentication happening in LDAP. The user management, password policies are now uniform across all users. Most importantly, the market participants can now access all application on a single portal and do not have to remember multiple URL's, user names, passwords, etc. This would also ensure the user management discipline amongst the external users too. This definitely aims at having a cleaner process in place with limited overhead.

To highlight a few of the benefits:

1.    Control the implementation of password policy across all applications

2.    Have single credentials for all applications

3.    New user provisioning and de-provisioning encompassing all applications and services

4.    Reduction in user management calls at BSE help desk

5.    One portal for all available applications

Setting up Hybrid Cloud

Over the past two years, BSE had been investing efforts in the direction of moving towards adoption of cloud computing technologies. The Company has already set up the basic infrastructure for Hybrid Cloud. The typical hybrid cloud mix includes a blend of public cloud, private cloud and traditional IT services. Although the Company recognizes the huge opportunities of Cloud computing in IT infra arena, the move to Cloud is a journey, starting with small, manageable workloads and pick-up the speed as it gains confidence in the Cloud.

The Company has commenced delivering new and small scale workloads from new infrastructure on private Cloud. Existing less critical workloads are being migrated to the private cloud infrastructure in a phased manner.

The bigger picture of the Cloud initiative is to take advantage of the inherent benefits that Cloud computing offers, these are, reduced costs, high availability, business continuity capabilities and faster time to market.

The Company in parallel also engaged in assessing future technological challenges that may be required to adjust hybrid IT environment with its existing IT systems, applications, network and security.

Disaster Recovery site of India International Exchange - India INX

BSE was the first exchange to setup the country's first International Exchange at the International Financial Services Centre (“IFSC”), Gujarat International Finance-Tec City (“GIFT”), Gandhinagar. India INX became operational from January 16, 2017.

The trading and the peripheral systems have been setup in a high availability mode and is designed to run 22 trading hours a day. The daily beginning and end of day operations activities have been automated.

The Company during this year accomplished the setting up of the Disaster Recovery site of India INX. The site was made ready in two months' time and have already done multiple drills. This meets the regulatory and compliance requirement of Business Continuity plan.

Phasing out VSAT Network

It was observed over last several years that VSAT connectivity had become much slower as compared to other alternative connectivity methods such as Leased lines, MPLS, PoPs, Internet, etc. In addition, VSAT was also been found to of very high cost as compared to other connectivity alternatives. In view of high cost and slow speed, most market participants using VSATs had migrated to alternative connectivity methods. VSAT was mostly relegated to secondary or tertiary backup. Current framework of Closed User Group (CUG) had already increased cost of VSATs multi-fold for market participants and made connectivity commercially unviable for most of them. In view of this, BSE decided to phase out VSAT technology. Market participants have been migrated to MPLS connectivity. VSAT network has been shut down with effect from November 30, 2017.

GST implementation

The Company successfully implemented GST in the month of July 2017, as per the Government's direction. The new implementation was done across its billing and financial application. In GST, as base tax structure was undergoing a change, the impact of the change was on all the financial related process, necessitating careful approach using manual validations. The process eased out over a period of time and were automated.

Shift from Proprietary to Indigenous solutions 0 NEW HRMS

BSE and few of its group companies has been using proprietary Human Resource Management System (HRMS) to manage their HR related data and activities. As a technological initiative, it was decided to move to a home grown solution for the entire group. Office Manager, developed by BSE's IT arm Marketplace Technologies is designed to address the HR functions on all the fronts. Office Manager has already been rolled out in BSE and its group companies. Soon mobile application will be introduced for HRMS, to facilitate the users to have leave management, attendance records, expense management, etc., at their finger tip, and can be used from anywhere and everywhere within the Company portal.

0 Financial Accounting System

We have also commenced work on developing our in-house Financial Accounting System. The proprietary financial system is in the process of being transformed and migrated to a system that will be built by its IT team. This will result in cost reduction and remove dependency on third party vendor system.

Swift Service Bureau

Marketplace Technologies Pvt. Ltd., a wholly owned subsidiary of BSE Ltd., has recently tied up with Swift to act as its Service Bureau providing a gateway to standardized, cost-effective, robust and secured infrastructure to all market participants.

As the regulators are encouraging adoption of standardization to bring in operational efficiency in the securities market, the partnership is expected to provide easy access to industry players like AMCs, brokers/ dealers to connect via Swift network.

This will help participants to automate and standardize their communication including areas but not limited to investment account management, fixed income trade settlement and trade reporting, investment funds subscription and redemption which will bring operational efficiency and reduce risk.

BSE will provide shared services like Data Centre, Disaster Recovery, Security Operations, Systems Administration, Monitoring, Automation, etc. to this new project.

Swift Bureau was launched on November 10, 2017.

The first audit of the Bureau, conducted by Swift appointed Auditors, has been completed in the month of January 2018.

Unified Trading Interface

- BOLTPLus on Web (BOW)

The Company has been continuously striving to remain abreast and reciprocate the market trading needs into its trading interface viz. BOLTPLus on Web (“BOW”). BOW has come of the age in terms of user experience and technology. BOW is now recognized as one of the powerful real time trading solutions, made available to all trading members free of cost.

During the year, many important enhancements were added in BOW, which were widely accepted and acknowledged. Major initiatives and improvements were in Risk management, introducing new avenues of trading segment & enhanced user interface.

Few of the noteworthy enhancements implemented in BOW during the year:

1.    Multiple Level Risk Management controls with higher flexibility at Mark to Market level (MTM)

2.    Flexibility to include, exclude realized and notional Profit and loss

3.    MTM based Auto Square off.

4.    Dynamic Change in Order entry fields and other books for commodity segment

5.    Options for commodity segment

6.    Cross Currency trading in currency segment

The BOW trading solution is been constantly upgraded on India's first International Exchange India INX at GIFT City.

0 BEST - BSE Electronic Smart Trader

The Company in association with Thomson Reuters launched a new trading interface BEST (BSE Electronic Smart Trader), a robust, state-of-the-art hosted trading solution built by Thomson Reuters, for BSE members and customers.

BEST trading platform brings greater scalability, convenience, speed and transparency to the users. This hosted trading platform is offered through various channels including dealers, investor exe and web.

BEST supplements the existing order routing platform BOW (Bolt+ On Web) to provide a single trading platform for BSE customers across multiple exchanges including BSE, NSE, MCX and NCDEX for a wide range of investment categories such as equity, equity derivatives, bonds, currency and commodities on a single terminal. The platform will help traders make informed investing decisions and manage risk, along with the benefit of speed and accuracy, thereby increasing the effectiveness of the transaction.

In a nutshell, both BOW and BEST are intuitive feature rich interface that facilitates end-users to trade from anywhere, anytime using internet, charts, portfolio views, and many more. For trading members it provides an effective tool to manage and control the risk, faster on-boarding of clients. The highpoint of BOW and BEST solution is its Cloud model, as a result trading members do not have to invest and manage hardware, software or incur any other license costs.

Quality Assurance and Automation

BSE is growing and spreading its wings in various products. This makes it necessary to ensure that the product launched by BSE has a Quality Standard which is accepted internationally. In order to achieve this, our Quality Assurance team focuses on the functionality testing as well as validates the International standards.

The time to market of a new functionality is also very crucial. The management has further invested in the Automation of the Test cases to help perform regression testing. Such automation ensures that previously developed and tested software still performs the same way after it is changed. It also helps in reducing the testing time as the manual tester needs to focus only on changes or functionalities which are new to the market.

With the adoption of Quality Assurance Process and Automation the Company is now comfortable to launch a fully tested product in a short span of time.

Application Release Management

In addition to the testing process, BSE has also invested in the process of Release Management. Release Management basically ensures that the right code has been migrated to the production serverin a fully automated manner.

The Company uses an open source release management tool and it has been customized as per the Company's process. In this process, the developers commit the code in the development branch and the release team takes over from there and ensures the same code is available in all servers. The release management tool also being the versioning tool, ensures sanctity of the code once committed. This is a major step, which ensures all the codes of all applications are been maintained and nothing is lost.

Implementation of Next Generation Cyber Security Operations Center 24*7 (“CSOC”)

With increase in cyber threats and attacks, cyber security is becoming more critical and established in the corporate structure. Constant enhancement in the Cyber Security Framework and Information Security Management System has been the Company's top priority.

Cyber Security risks essentially refer to the potential negative outcomes associated with cyber-attacks, which can be performed by individuals or groups with different motivations and levels of capabilities. A cyber-attack could produce devastating ripple effects affecting entire financial systems and the broader economy. As a result, this could affect the trust on which financial markets are built. Cyber-attacks could also cause market disruption by potentially leading to the disclosure of restricted and non-public confidential data.

About the Project - Next Generation Cyber security Operation Center:

- The project comprises of various cyber security technologies that work at end point, network, application and system level as a well-defined integrated and robust security framework.

- Also a 24*7 Cyber Security Operation monitoring with the help of latest niche Technologies.

- The project has brought more control in operational areas, monitoring area and thus facilitating in better information to the decision makers.

- This in turn is also bringing better governance and control based near real time data for mitigating Cyber Security threat.

- As a part of this project we have implemented niche and advanced cyber security solutions in a fully integrated manner. The details of some of the technologies implemented are as below:

1.    Privileged Identity Manager - Privileged identity management (PIM) is the monitoring and protection of privileged accounts in an organization's IT environments.

2.    Anti-Phishing Service - The solution provides deep insight into cybercrime trends and in-depth investigations into fraud methods and operations within the dark web. The service is designed to identify malware threats, respond to an attack when it occurs and minimize the threat by blocking end-user access to the attack's online resources. The service monitors all major app stores, social media sites to detect rogue apps or social media activity targeting an organization's customer base. It shuts down unauthorized apps, thereby reducing threats to organizations' reputation and financial losses.

3.    Website Anti Malware Service - Website Anti-malware service solution runs regular and on-demand scans for:

a.    Analysis of web page against identifiable malicious activity to enable easy clean-up of infections.

b.    Instant alerting identifying to enable fast malware removal.

c.    Anti-Malware scan helps website owners to assure visitors that the website is safe to be browsed. It protects web site traffic by avoiding blacklisting by browsers and search engines to ensure maximum availability of website to visitors.

4.    Unified Threat Management (“UTM”) - UTM Firewalls monitor the flow of traffic between networks and filter all network packets to determine whether or not to forward them towards their destinations.

5.    Network Intrusion Prevention - It is an independent platform that identifies intrusions by deploying sensors to capture network traffic and analyze the content of individual packets against known attack patterns of malicious traffic.

6.    Web Application Firewall - protects Web servers from malicious traffic and blocks attempts to compromise the system. It prevents targeted attacks that include crosssite scripting, SQL injection, forceful browsing, cookie poisoning and invalid input.

7.    Application Scanning - is the use of software, hardware, and procedural methods to protect applications from external threats. Different techniques are used to surface such security vulnerabilities at different stages of an applications lifecycle such design, development, deployment, upgrade, or maintenance.

Security application testing techniques scour for vulnerabilities or security holes in applications making use of static, dynamic and hybrid security testing.

8.    Security Information & Event Management (“SIEM”)

a.    Security information and event management is an approach to security management that seeks to provide a holistic view of an organization's Information Technology security.

b.    It deals with real-time monitoring, correlation of events, notifications and console views.

c.    It detects anomalies, uncovers advanced threats and removes false positives. It consolidates log events and network flow data from thousands of devices, endpoints and applications distributed throughout a network.

It then uses an advanced engine to normalize and correlate this data and identifies security offenses requiring investigation.

9.    Network Behavior Anomaly Detect & Forensics - This solution allows to retrace the step-by-step actions of a potential attacker, and quickly and easily conduct an in-depth forensics investigation of suspected malicious network security incidents.

a.    Retraces the step-by-step actions of cyber criminals to provide deep insights into the impact of intrusions and help prevent their reoccurrence.

b.    Reconstructs raw network data related to a security incident back into its original form for a greater understanding of the event.

c.    Integrates with Security Intelligence Platform and offers compatibility with many third-party packet capture offerings.

10.    Vulnerability Manager - Vulnerabilities scans are used to discover and report vulnerabilities in system against BSE baselines.

11.    Firewall Analyzer - Firewall Analyzer automates tasks such as firewall rule review, rule consolidation and optimizations. It also reports risks associated with a new rule before getting implemented.

12.    Database Activity Monitoring (“DAM”) - DAM is the observation of actions in a database. DAM tools enable us to monitor, capture and record database events in near-real time and provide alerts about policy violations. It is an important technology for protecting sensitive databases from external attacks by cybercriminals.

13.    Data Loss prevention (“DLP”) - DLP is a strategy for making sure that end users do not send sensitive or critical information outside the corporate network. Adoption of DLP is being driven by insider threats and by more rigorous state privacy laws, many of which have stringent data protection or access components. In addition to being able to monitor and control endpoint activities, DLP tools can also be used to filter data streams on the corporate network and protect data in motion.

14.    Network Access Control (“NAC”) - NAC is a solution that uses a set of rules to define and implement a policy that describes how to secure access to network when the machines initially attempt to access the network.

15.    Deception platform detects cyber-attacks like reconnaissance, spear phishing, lateral movement, stolen credentials and data theft. Deception technology considers the human attacker's point of view and methodology for exploiting and navigating networks to identify and exfiltrate data. It integrates with existing technologies to provide new visibility into the internal networks, share high probability alerts and threat intelligence with the existing infrastructure.

16.    Anti-Advance Persistent Threat (“APT”) & Endpoint Detection and Response (“EDR”) - Anti APT is an emerging technology that focuses on detecting, investigating, and mitigating suspicious activities and issues on hosts and endpoints. Anti-APT provides visibility into a variety of events, including: Application access and activity, Operating system activity, All data interactions (creation, modification, transmission, duplication, etc.) & User access to sensitive data Memory usage. EDR helps to combat APT and targeted attacks which Anti-malware and other endpoint solutions are usually unable to detect.

17.    Automated Intelligence (“AI”) and Machine Learning - AI enables BSE SOC services with advisory services based on cognitive analysis making use of Machine Learning techniques.

18.    Threat Analytics, Intelligence and Hunting - EDR is an emerging technology that focuses on detecting, investigating, and mitigating suspicious activities and issues on hosts and endpoints. EDR provides visibility into a variety of events, including: Application access and activity, Operating system activity, All data interactions (creation, modification, transmission, duplication, etc.) & User access to sensitive data Memory usage.

The project has transformed the overall maturity of cyber security posture of BSE in terms of cyber security readiness and threat mitigation capabilities.

Key Differentiators & USP of the Project:

-    Onboarding of all niche and advance technologies were done by a Big Bang approach by rolling out a single and comprehensive RFP.

-    Technologies were chosen to obtain maximum leverage of existing technologies landscape. This ensure optimize integration of all the technologies in the stack.

-    Advanced technologies like Anti APT for protection against latest malwares and ransomwares & mitigation of threats like zero day attack were implemented.

-    Niche Technologies like, User Behavioral Analysis, Anti APT, Deception technology, Real-time Forensics, etc. were also implemented.

-    Subscriptions to Multiple Global and local Cyber Threat intelligence feed.

-    The USP of Next Gen SOC is implementation of Cognitive Analysis and AI which Gain deeper insights by ingesting and understanding extensive data sources, including human generated data (for example, blogs, websites, research papers).

Awards & Recognition:

The BSE SOC Project is considered as a benchmark in cyber security space & information security community. It is considered as a role model for similar cyber security implementations.

- SKOCH AWARD - Best Cyber Security Project Award 2017 - GOLD

- TOP 100 CISO Awards May 2017

- INFOSEC MAESTROS Award April 2017

- The Cyber Security Leader of the Year Award 2017    from NASSCOM-DSCI

- Finnoviti Best Cyber Security Project Award 2018

- 5th Annual Dynamic CISO Excellence Award 2018

Foreign Exchange Earning and Outgo

The particulars of Foreign Exchange Earnings and outgo during the year under review are furnished hereunder:

Foreign Exchange Earning: ' 2,347 Lakh (Previous Year: ' 2,168 Lakh)

Foreign Exchange Outgo: Rs, 981 Lakh (Previous Year: Rs, 585 Lakh) HUMAN RESOURCES

Human Resources (“HR”) organizations that invest in human capital invest in the future. At BSE, the focus has been on making the right investments in human capital to take the Company and all its employees to the next level of competence and expertise. The Company has always believed that motivated employees are the core source of competitive advantage and hence there is continuous investments in training and development programs along with various other HR initiatives. The Company has aligned the compensation packages of management and successfully revamped many outdated HR policies to make benefits and compensation more transparent and employee-friendly. Also, the organizational structure of the Company has undergone significant restructuring to enhance accountability and efficiency with a view to aligning performance management and reward strategies. As of March 31, 2018, the Company had 385 officers and 118 staff level employees.

Human Capital

Recognizing the growing importance of talent in driving success of the organisation and changing dynamics of the business, we have built a talent pool of around 385 professionals in the officers category with an ideal mix of experience and youth. In addition to the 385 professionals, we also have 118 staff level employees.

Training & Development

We have carried out a comprehensive training need identification and analysis from the inputs drawn from individual annual appraisals and prepared a training calendar. The training calendar covers both the technical/ operational skills as well as behavioural/ soft skills. We have been using in-house and external resources to impart the required training as per the calendar. Knowledge updation of employees is also taken care of by regularly sending them for various public seminars and conferences. The in-house training for behavioural/ soft skills is imparted through our 100% subsidiary company, BSE Institute Limited and by the Human Resource Department. Eminent professionals from capital markets and industry also help our employees upgrade their skills in various sessions that happen periodically.

Particulars of Employees

In compliance with the requirements of Section 197 (12) of the Act, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Securities Contracts (Regulations) (Stock Exchanges and Clearing Corporations) Regulations, 2012, a statement containing details of employees is annexed as Annexure E.

DEPOSITS

The Company has not accepted any public deposits during the Financial Year ended on March 31, 2018 and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

Details of Deposits not in Compliance with the Requirements of the Act

Since the Company has not accepted any deposits during the Financial Year ended on March 31, 2018, there has been no non-compliance with the requirements of the Act.

GREEN INITIATIVE

The Company promotes green initiative by requesting members to register their email ids to save on the paper cost for sending annual reports and notices. Additionally the Company disseminates all agenda items of Board and Committee meetings electronically on a real time basis, by uploading them on a secured online application specifically designed for this purpose, thereby eliminating circulation of printed agenda papers.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to sub-section (5) of Section 134 of the Act, with respect to the Directors' Responsibility Statement, it is hereby confirmed that:

a.    in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b.    the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the profit of the Company for that period;

c.    the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d.    the directors had prepared the annual accounts on a going concern basis;

e.    the directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f.    the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

OTHER DISCLOSURES Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT - 9 is annexed herewith as Annexure F.

Management Discussion & Analysis

In terms of Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report forms part of this Annual Report.

Material Changes and Commitments Affecting the Financial Position of the Company

There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the Financial Year of the Company to which the financial statements relate and the date of the report.

Change in the Nature of Business

The Company has not undergone any changes in the nature of the business during the Financial Year.

The details of Significant and Material Orders passed by the Regulators or Courts or Tribunals impacting the going concern status and the Company’s operation in future

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company's operation in future.

Frauds

No Fraud has been reported by the Auditors to the Audit Committee or the Board.

Corporate Governance

Pursuant to the SECC Regulations, Listing Regulations and the Act, report on Corporate Governance as at March 31, 2018, forms part of this Annual Report. A Certificate from Practicing Company Secretary, Mumbai confirming status of compliances of the conditions of Corporate Governance is annexed to this report.

Audit Committee Recommendations

During the year, all recommendations of Audit Committee were approved by the Board of Directors.

Secretarial Standards

The Company complies with the applicable Secretarial Standards issued by the ‘Institute of Company Secretaries of India'.

ACKNOWLEDGEMENTS

The Board thanks the Government of India, SEBI, RBI, Gift City Ltd., the Government of Maharashtra and other State Governments and various government agencies for their continued support, cooperation and advice.

The Board is grateful to the members of various committees constituted during the year.

The Board also acknowledges the support extended by trading members, issuers, investors in the capital market and other market intermediaries and associates.

The Board expresses sincere thanks to all its business associates, consultants, bankers, auditors, solicitors and lawyers for their continued partnership and confidence in the Company.

The Board wishes to thank all the employees for the exemplary dedication and excellence displayed in discharge of their duties for the Company.

Further, the Board expresses its gratitude to you as shareholders for the confidence reposed in the management of the Company.

                                                        For and on behalf of the Board of Directors

Date: May 4, 2018                           S. Ravi

Place: Mumbai                                 Chairman

 

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Mar 31, 2017

To the Members,

The Directors present the Twelfth Annual Report of BSE Limited (‘the Company’) along with the audited financial statements for the financial year (FY) ended March 31, 2017.

FINANCIAL SUMMARY/ HIGHLIGHTS, OPERATIONS, STATE OF AFFAIRS

The financial performance of the Company for the year ended March 31, 2017 is summarized below:

(Rs. in Lakhs)

Particulars	Standalone		Consolidated
	2016-17	2015-16	2016-17	2015-16
Total Revenue	55,099	51,542	80,075	67,009
Total Expenses	35,137	31,389	47,530	41,155
Profit before exceptional items & tax	19,962	20,153	32,545	25,854
Exceptional items	(364)	7,327	2,079	4,660
Profit before tax	20,326	12,826	30,466	21,194
Provision for tax	462	(460)	4,064	3,705
Share of Profit/Loss of Associate and Joint ventures	-	-	107	224
Net Profit for the year	19,864	13,286	26,509	17,713
Net Profit attributable to the shareholders of the Company	19,864	13,286	22,057	13,293
Net Profit attributable to the non-controlling interest	-	-	4,452	4,420
Other comprehensive income (net of tax)	(12)	5	(642)	3
Total comprehensive income for the year	19,852	13,291	25,867	17,716
Net Profit attributable to the shareholders of the Company	19,852	13,291	21,431	13,298
Net Profit attributable to the non-controlling interest	-	-	4,436	4,418

Consolidated Results

The total income of the Exchange during the FY 2016-17 on a consolidated basis was Rs.80,075 Lakh reflecting an increase of Rs.13,066 Lakh (19.50%) over previous year. The total expenses for the year were higher by Rs.6,375 Lakh (15.49%) at Rs.47,530 Lakh. During the year, the expenses were higher mainly due to technology related costs, employee costs and impairment loss on financial assets (mainly representing higher provisions for bad and doubtful debts/investments). The increase was offset by decrease in overall administrative expenses. It may be noted that during the financial year, Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 (“SECC Regulations”) have been amended whereby the requirement of transfer of 25% of profits to the Settlement Guarantee Fund (“SGF”) has been done away with from August 29, 2016; resulting in decrease in contribution to the SGF by 59.58% compared to previous year. In view of the same, the profit before tax was higher by Rs.9,272 Lakh (43.75%) to Rs.30,466 Lakh as against Rs.21,194 Lakh in the previous year and Net Profit attributable to the shareholders of the Company for the year was higher by Rs.8,764 Lakh (65.93%) to Rs.22,057 Lakh as against Rs.13,293 Lakh in the previous year.

Standalone Results

The total income of the Exchange during the FY 2016-17 on a standalone basis was Rs.55,099 Lakh reflecting an increase of Rs.3,557 Lakh (6.90%) over previous year. The total expenses for the year were higher by Rs.3,748 Lakh (11.94%) at Rs.35,137 Lakh. During the year, the expenses were higher mainly due to technology related costs, employee costs and impairment loss on financial assets (mainly representing higher provisions for bad and doubtful debts). The increase was offset by decrease in overall administrative expenses. It may be noted that during the financial year, SECC Regulations have been amended whereby the requirement of transfer of 25% of profits to the SGF has been done away with from August 29, 2016, resulting in decrease in contribution to SGF by 59.58% compared to previous year. In view of the same, the profit before tax was higher by Rs.7,500 Lakh (58.47%) to Rs.20,326 Lakh as against Rs.12,826 Lakh in the previous year and Net Profit attributable to the shareholders of the Company for the year was higher by Rs.6,578 Lakh (49.51%) to Rs.19,864 Lakh as against Rs.13,286 Lakh in the previous year.

Dividend

The Board, in its meeting held on February 14, 2017 declared an interim dividend of Rs.5/- per equity share of the face value of Rs.2/each fully paid up. Further, the Board in its meeting held on May 5, 2017 has recommended a final dividend of Rs.23/- per equity share of the face value of Rs.2/- each fully paid up for the FY 2016-17 subject to the approval of the shareholders at the Twelfth Annual General Meeting (“AGM”) and if approved, would result in a cash outflow of approximately Rs.15,111 Lakh, including corporate dividend tax. The total dividend on equity shares including dividend tax for the FY 2016-17 would aggregate Rs.18,396 Lakh, resulting in a payout of 93% of the standalone profits of the Company.

Under Clause 5.3 of the BSE (Corporatisation and Demutualisation) Scheme, 2005 (the Scheme), the allotment of equity shares to 12 Trading Members of the erstwhile BSE has been kept in abeyance for various reasons as on March 31, 2017, as compared to 14 Trading Members, whose shares were kept in abeyance as on March 31, 2016. Meanwhile, all corporate benefits including dividend as may be declared by the Exchange from time to time are being provided for and would be payable on the allotment of these shares. For further details on allotment of Shares to two erstwhile members, please read Share Capital section of this report.

Transfer to Reserves

The Exchange does not propose to transfer any amount to the General Reserve out of amount available for appropriations.

LISTING OF BSE’S EQUITY SHARES

The Company successfully completed its Rs.1,243 Crore Initial Public Offer through Offer For Sale route and listed its equity shares on the National Stock Exchange of India Limited (“NSE”) on February 3, 2017.

BUSINESS PERFORMANCE OVERVIEW

Economic Environment - Global Outlook

Global Gross Domestic Product (“GDP”) growth is projected to increase, rising from just under 3% in Calendar Year (“CY”) 2016 to 3.30% in CY 2017 and around 3.50% in CY 2018¹. There have been positive signs of accelerating activity and rising consumer and business confidence in recent months in advanced economies and a number of emerging market economies, including improved momentum around the turn of the year. The rise in interest rates and oil prices will offset this somewhat, although higher commodity prices will benefit some emerging market economies. Confidence has improved, but consumption, investment, trade and productivity are far from strong, with deceleration in growth and higher inequality. This comes against the background of a five-year period where the global economy has been in a low-growth trap.

The modest pick-up in global growth in CY 2017 and CY 2018 reflects the effect of ongoing and projected fiscal initiatives, notably in China and the United States, together with an easier stance in the Euro area and initiatives in other economies such as Canada. These are expected to catalyze private economic activity and push up global demand. Exiting the low-growth trap depends on the joint impact of macroeconomic, structural and trade policy choices, as well as on concerted and effective implementation of existing initiatives.

While global trade growth was weak in CY 2016 at around 2%, recent data suggest some improvement, particularly in Asia. However, trade growth is likely to remain below pre-2008 crisis growth rates, in part reflecting a slowdown or reversal of the expansion of global value chains.

Headline inflation is rising in most countries as the result of higher energy prices, following the OPEC agreement in November 2016 to cut oil production. However, underlying inflation in advanced economies is still subdued and will pick up only slowly as the expansion gains traction, and supports a more robust wage growth across all income groups. Inflation is easing in a number of emerging market economies as the effect of past exchange rate depreciations fades and the effect of monetary policy actions works through, commodity importers are exposed to rising commodity prices.

Domestic demand in the United States is set to strengthen over the next two years and expand at a solid pace, helped by gains in household wealth and a gradual upturn in energy production. Employment is rising steadily, although the pace is expected to ease, and wages should continue to pick up as the labour market tightens. GDP growth is projected to pick up to 2.40% in CY 2017 and 2.80% in CY 2018, supported by an anticipated fiscal expansion, especially in CY 2018, despite higher long-term interest rates and continued headwinds from the stronger US dollar. Policy choices, including on the composition of fiscal spending, taxation, regulation and trade, are likely to have a significant impact on growth outcomes.

In the United Kingdom, the pace of expansion in CY 2016 was lower than in previous years, despite support from resilient household spending, actions by the Bank of England and adjustment to the fiscal stance following the Brexit vote. The country’s growth is expected to ease further as rising inflation weighs on real incomes and consumption, and business investment weakens amidst uncertainty about the country’s future trading relations with its partners due to Brexit.

In the Euro area, GDP growth is projected to continue at the current moderate pace, supported by accommodative monetary policy and a modest fiscal easing over the coming years. There is fiscal space for more ambitious and effective fiscal initiatives in Europe. There are encouraging signs that business investment may be strengthening, but high non-performing loans and labour market slack in some Euro area countries continue to hold back growth prospects. Growth is set to remain solid in Germany, but will continue at a slower pace in France and Italy. Headline inflation has been pushed up a little, but the recovery is not yet sufficiently advanced to durably raise core inflation.

In most other major advanced economies, growth is projected to continue around the current modest path. In Japan, data revisions show a somewhat more positive picture of recent growth outcomes. Industrial production and exports have strengthened, helped by the depreciation of the Yen, but consumption spending remains subdued. The fiscal easing will help GDP growth pick up to 1.20% in CY 2017.

Growth in China is expected to edge down further to 6.30% by CY 2018 as the economy is undergoing a transition, including shifting towards consumption and services, adjustment in several heavy industries, working off excess housing supply and ensuring credit developments are sustainable. Demand is being supported by very expansionary fiscal policy, including via policy banks, which in turn is boosting private investment and trade. Producer price inflation has picked up strongly, but consumer price inflation remains low. Higher commodity prices and easing inflation are supporting a recovery from deep recessions in Brazil, Russia and some other commodity producers, although short-term supply restrictions will limit the positive impact of higher oil prices on production in some countries.

Economic Environment - Indian Outlook

Economic performance in financial year (“FY”) 2016-17

According to Government of India estimates², economic growth slowed down marginally to 7.10% in FY 2016-17, below 7.90% growth in FY 2015-16. Much of growth in FY 2016-17 came from strong agriculture and Government services. Agriculture grew by a robust 4.40% as a healthy monsoon helped food grain production grow by 8.10% to new records. Excluding government services, growth in value added dropped from 6.70% to 6%. Overall, India remains the fastest growing large developing economy, as it benefits from strong private consumption and gradual introduction of significant domestic reforms.

After growing by 8.20% in FY 2015-16, industry decelerated to 5.80% in FY 2016-17. Mining slowed considerably as oil and natural gas production contracted. Manufacturing value added grew by a healthy 7.70%, though down from the 10.60% recorded a year earlier. Growth reflected robust performance by large private manufacturers, which benefitted from lower input costs. Construction was muted, growing by 3.10% as the cash crunch possibly affected real estate activity in the second half of the fiscal year.

Services growth also moderated, to 7.90%, with slowdowns in finance and real estate, as well as in trade, hotels, and transportation and communication services. Anemic credit growth continued to weigh on financial services, though deposit growth picked up substantially immediately after demonetization. Contraction in railway ridership and tonnage, and subdued growth in commercial vehicle sales restrained expansion in transportation services. By contrast, there was strong growth in government services, including public administration and defense, on account of salary hikes for central government employees. Government consumption is estimated to have grown at its fastest pace since FY 2010-11 to pay the higher wages and salaries. Despite a 10.60% increase in central government capital expenditure, overall investment remained flat, growing by only 0.60%, as private investment continued to be weighed down by low capacity utilization and slow progress toward deleveraging. GDP growth got a further impetus from a robust increase in net taxes, buoyed by strong indirect tax collection.

Inflation remained subdued for a second consecutive year, averaging 4.70%. While food inflation inched up in the first few months of FY 2016-17 with rises for vegetables, pulses, and sugar, subsequent months saw prices cooled by a better monsoon and summer crop. Retail inflation is down considerably since November 2016. Domestic fuel inflation has remained relatively subdued at 3%. Core inflation was also stable, ranging from 4.50% to 5%. Subdued inflation allowed the Reserve Bank of India, the central bank, to reduce policy rates by 50 basis points during FY 2016-17, for a cumulative decline of 175 basis points since January 2015. Moreover, with deposit accretion far outweighing credit growth, commercial banks lowered their lending rates by 40-90 basis points as their new deposit costs came down.

The central government budget for FY 2016-17 was presented a month earlier than usual at the beginning of February 2017 to speed appropriations. The central government succeeded in narrowing the fiscal deficit to 3.50% of GDP in FY 2016-17. This reduction was accompanied by improved quality of expenditure. While capital expenditure was originally targeted to contract by 2.40% in FY 2016-17 to compensate for higher government salaries, estimates show capital expenditure growing by 10.60%. Current expenditure grew by 12.80%. Subsidy spending continued to decline from the equivalent of 1.90% of GDP in FY 2015-16 to 1.70% as fertilizer and petroleum subsidies fell owing to low oil prices and the expansion of a program that pays the cooking gas subsidy directly into recipients’ bank accounts to reduce leakage.

Government revenue grew by a healthy 16.70% in FY 2016-17, aided by strong growth in tax revenue and public enterprise dividends and profits. Personal income tax witnessed robust growth at 22.80% as the government introduced in FY 2016-17 two tax amnesties to encourage income disclosure. Excise tax collection also grew strongly for a second year, partly on higher revenues from several hikes to excise rates on petroleum products in FY 2015-16. Buoyant excise tax collections can also be attributed to growth from other products.

Fiscal Responsibility and Budget Management (“FRBM”) committee set up to review avenues to fiscal consolidation, recommended sustainable debt as the principal macroeconomic anchor for fiscal policy and called for reining in the ratio of public debt to GDP from the current 67% to 60% by FY 2022-23. To achieve this target, the committee recommended capping the fiscal deficit at 3% of GDP in the 3 years following the FY 2016-17 budget, which had a deficit equal to 3.20% of GDP. This is in line with the FRBM recommendation.

Imports declined for a second consecutive year, contracting by an estimated 3.70% in FY 2016-17. Although oil imports fell by nearly 2% in FY 2016-17, much of the contraction was concentrated in the first half of the fiscal year. Oil prices firmed considerably in the second half, and oil imports picked up. Gold imports declined substantially because of softening global prices and demonetization. Imports other than oil and gold were relatively steady as commodity prices stabilized and domestic demand was muted.

Exports revived in the second half of FY 2016-17, growing by an estimated 2.50% for the year. The revival was driven largely by a pickup in refined petroleum exports and stronger demand from the advanced economies, especially the US and Germany. In particular, exports of gems and jewelry, iron and steel, and motor vehicles picked up in the second half of FY 2016-17. The net services trade surplus narrowed in FY 2016-17, tracking a slowdown in exports of software and financial services. Remittance inflows weakened a bit as low crude oil prices squeezed host economies in the Middle East.

Net Foreign Direct Investment (“FDI”) inflows remained strong for a second consecutive year at USD 36.7 Billion after the government simplified guidelines and allowed more FDI in sectors like real estate, airport and air transport services and e-commerce. Net Foreign Portfolio Investment (“FPI”) flows remained subdued by comparison. The Q3 FY 2016-17 brought a large outflow, possibly a result of a US interest rate hike in December 2016 and uncertainty following demonetization. Net portfolio debt outflows amounted USD 2 Billion in FY 2016-17. While varying month to month, equity inflows amounted to USD 7 Billion in FY 2016-17, which pushed stock prices on the S&P BSE Sensex up by 16% over the year. Net deposits by nonresident Indians turned negative in FY 2016-17 largely because of the repayment of maturing deposits that the central bank had attracted from them in FY 2012-13. However, because these outflows were buffered by a forward sale-and-swap arrangement established earlier by the central bank, they did not significantly drain holdings of foreign reserves, which stood at USD 367 Billion in March 2017.

Economic Prospects for FY 2017-18

With the central bank printing new currency to replace the demonetized notes and lifting limits on deposit withdrawals in March 2017, the cash crunch eased markedly toward the end of FY 2016-17. Consumption deferred from the second half of FY 2016-17 by the cash crunch will likely surface in FY 2017-18 and lift consumption growth. Consumption will receive a further boost as several state governments hike salaries and pensions for their employees in FY 2017-18 following a similar hike for central government employees in FY 2016-17. A good monsoon being experienced would allow rural consumption to grow at a healthy rate.

With the effects of demonetization turning out to be short-lived and modest relative to some early expectations, the outlook for FY 2017-18 has been brightened considerably by a number of factors. Firstly, with the accelerated pace of demonetization, discretionary consumer spending held back by demonetization is expected to have picked up from Q4 FY 2016-17 and will gather momentum over several quarters ahead. The recovery will also likely be aided by the reduction in banks’ lending rates due to large inflows of current and savings accounts (“CASA”) deposits, although the fuller transmission impact might be impeded by stressed balance sheets of banks and the tepid demand for bank credit.

Secondly, various proposals in the Union Budget FY 2017-18 are expected to be growth stimulating: stepping up of capital expenditure; boosting the rural economy and affordable housing; the flawless roll-out of the Goods and Services Tax (“GST”); and steps to attract higher FDI through initiatives like abolishing the Foreign Investment Promotion Board (“FIPB”).

Thirdly, global trade and output are expected to expand at a stronger pace in CY 2017 and CY 2018 than in recent years, easing the external demand constraint on domestic growth prospects. However, the recent increase in the global commodity prices, if sustained, could have a negative impact on our net commodity importing domestic economy.

Sentiment in the corporate sector improved during Q4 FY 2016-17, according to the Reserve Bank of India’s (“RBI”) industrial outlook survey. The improvement was led by optimism on future production, order books, exports, employment, financial situation, selling prices and profit margin. Amounts mobilized through initial public offerings (“IPOs”) in recent months and the number of companies filing red herring prospectus with the Securities and Exchange Board of India (“SEBI”) have been higher, which suggest investment optimism in the period ahead. Both manufacturing and services firms expected output to be higher a year from now, according to the Purchasing Managers’ Survey for March 2017. Professional forecasters surveyed by the RBI in March 2017, expected real Gross Value Added (“GVA”) growth to accelerate from 6.50% in Q4 FY 2016-17 to 7.60% in Q4 FY 2017-18, led by growth in services and industry.

Considering the baseline assumptions, the fast pace of demonetization, survey indicators and updated model forecasts, RBI staff’s baseline scenario projects that real GVA growth will improve from 6.60% in Q3 FY 2016-17 and 6.50% in Q4 to 7% in Q1 FY 2017-18 and 7.407.60% in the remaining three quarters of FY 2017-18, with risks evenly balanced around this baseline path. Looking beyond FY 2017-18 and assuming a normal monsoon, a congenial global environment, no policy induced structural change and no supply shocks, structural model estimates yield real GVA growth of 8.10% in FY 2018-19.

Higher oil prices will boost refined petroleum exports, which have contracted in the past two years. Global growth improvement would help exports, though an appreciating Rupee in real effective terms could dent India’s competitiveness. Price recovery for commodities like metals, chemicals, and food would lift exports, as volumes for them have held up. Overall, exports are forecast to grow by 6% in FY 2017-18.

The national GST implemented from July 2017 is expected to lower prices for capital goods, providing impetus to investment. After easing for four consecutive years, consumer price inflation is expected to inch up in FY 2017-18. With global prices for oil forecast to increase by 20% in FY 2017-18, and with most domestic fuel prices becoming deregulated, domestic fuel inflation is forecast to rise by 10-20 basis points. Higher procurement prices for pulses and wheat along with an uptick in rural wages pose an upside risk to the forecast for food inflation. Inflation is likely to average 5.20% in FY 2017-18, accelerating to 5.40% in FY 2018-19 with further firming of global commodity prices and strengthening of domestic demand.

The quality of expenditure is expected to improve further with capital spending in FY 2017-18 projected to grow by 10.70%, against growth in current expenditure by only 5.90%. The budget continues to prioritize infrastructure and rural development with higher outlay on roads and highways, railways, electric power, affordable housing, and irrigation. Subsidy payments are forecast to decline as petroleum and fertilizer subsidies are curtailed.

In FY 2016-17, India surpassed China to become the fastest growing economy and continues to be in FY 2017-18 despite the expected slowdown in growth. The agenda set for FY 2017-18 is ‘transform, energize and clean India’. The GST Bill is likely to lead to spurring growth, competitiveness, indirect tax simplification and greater transparency.

FY 2016-17 has been marked by historic economic policy developments, highlighted by structural reforms notably, the passing of the Bankruptcy and Insolvency Act and the Constitutional amendment paving the way for implementing GST. Demonetization has also brought the digital agenda to the fore like never before. Given the low rate of tax compliance in the country, the Government recognizes that in order to make quantum leaps in the levels of compliance and overall tax revenues, the digital payment infrastructure and GST can pave the way. The effect of flawless GST implementation would improve the sovereign credit rating as well as reduce personal income tax in the long run.

Digital Economy is one of key focus themes for establishing speed, accountability and transparency in the system. The demonetization drive resulted in people adopting the electronic payment options. The Government looks resolute to leave a mark as it forges ahead with all regulatory and operational measures necessary to achieve a more transparent and a resilient digital economy.

This push towards a cashless digital economy has the potential to generate long-term benefits in terms of reduced corruption, greater digitalization of the economy, increased flows of financial savings, and greater formalization of the economy, all of which could eventually lead to higher GDP growth, better tax compliances and greater tax revenues.

India continues to enhance its reputation as an attractive FDI destination by improving the ease of doing business and liberalizing regulations and sector caps for FDI. India’s economy has grown at a strong pace in recent years and growth prospects are favorable over the medium term due to the implementation of critical structural reforms, loosening of supply-side bottlenecks, appropriate fiscal and monetary policies, favorable terms of trade and lower external vulnerabilities.

Capital Market

BSE is the world’s fastest Stock Exchange and the largest stock exchange in terms of number of companies listed. As of March 2017, BSE is ranked #2 in currency options traded, #3 in currency futures traded and #10 by market capitalization³ among global stock exchange.

Primary Market

The total number of companies listed (Equity as well as Debt) on BSE as on March 31, 2017 was 5,834 as compared to 5,911 as on March 31, 2016.

During FY 2016-17, 25 companies came to the market through the IPO process on the Mainboard of BSE. The amount raised through Mainboard IPOs in FY 2016-17 was Rs.27,156.56 Crore as against Rs.15,374.99 Crore in FY 2015-16.

Further, there were no Mainboard Follow on Public Offer (“FPOs”) in FY 2016-17. In addition to 25 IPOs on the Mainboard, another 48 companies raised Rs.431.69 Crore through the Small and Mediumsized Enterprises (“SME”) IPO process in FY 2016-17. Further, one SME listed company raised Rs.9.99 Crore through FPO.

The total amount mobilized through Privately Placed Debt Instruments (“PPDI”) at BSE in FY 2016-17 was Rs.4,20,995 Crore as against Rs.2,35,402 Crore in FY 2015-16. During FY 2016-17, there were 16 public issues of bonds which mobilized Rs.29,547.15 Crore as against Rs.33,811.92 Crore in the FY 2015-16. Out of these 16 public issues, 8 issues (50%) were exclusively listed on BSE. BSE’s platform was used to collect Rs.37,621 Crore and the average bids garnered through BSE’s Internet based Book Building software (“iBBS”) platform for these debt public issuances was 90%.

BSE BOND - Electronic Book Platform for bidding of debt securities issued on private placement was made live effective from July 1, 2016 as per the guidelines of SEBI circular CIR/IMD/DF1/48/2016 dated April 21, 2016. The BSE BOND platform has been a preferred choice for companies to raise Debt Capital in India. In the FY 2016-17, 74 Issuers with 434 issues of bonds have successfully raised Rs.2,16,726 Crore using BSE BOND platform.

- Mutual Fund Segment [Innovations and unique Features for on BSE STAR MF Platform]

Innovations and unique features for on BSE STAR MF Platform.

Technology Infrastructure: BSE has invested and created world class robust technology and operational capabilities for accepting mutual funds orders and providing seamless settlement through Indian Clearing Corporation Limited (“ICCL”).

The technology Infrastructure has created a super highway, which has eliminated the barrier to expand mutual funds distribution for traditional distributors as well as new age e-commerce.

- Only platform in India that supports both Demat and Non demat mode for both Pool based settlement, Mutual Fund Investor (“MFI”) mode as well as direct settlement, Mutual Fund Distributor (“MFD”) / Registered Investment Advisor (“RIA”) mode with end Investors.

- 24X7 order acceptance is available on BSE STAR MF Platform.

- Overnight Investment framework facilitates BSE STAR MF Registered Investors:

- To route idle monies as overnight investments, monies can be invested even for a single day i.e. overnight.

- As an alternative investment avenue for idle monies with Investors by investing in MF Liquid Schemes for better returns and relatively lowers risk.

- Subscription and redemption can happen simultaneously on the same day.

- Only Platform in India that support 3 modes via Systematic Investment Plan (“SIPs”), which can be initiated as under:-

- Paperless SIP: Wherein the link for payment is created for 1^st Installment as well as subsequent Installment, only available with BSE.

- X-SIP / National Automated Clearing House (“NACH”) based SIP Facility: Under this product, a single mandate can be used for investing in SIPs across all schemes and all Asset Management Company (“AMCs”) registered with STAR MF. The SIP administration and the cost of administration is borne by BSE and the money is debited to the client’s bank account directly instead of debiting the member pool account.

- X-SIP Facility with First order today flexibility: Enabling BSE STAR MF members to START SIP within couple of minutes instead of waiting for a month.

- Paperless Internet based SIP (“ISIP”), wherein BSE is Biller in leading banks of India, Single ISIP Mandates can be used across all schemes of different AMCs, with First order today flexibility. This facility is available only on BSE.

- Any day Systematic Transfer Plan (“STP”) and Systematic Switch Plan (“SWP”), with First order today facility.

- 6 day order holding facility.

- Multiple mode of payments viz. payment gateway, one time mandate, cheque, RTGS/NEFT.

- Completely digital and real time investor’s registration.

- Direct pay-out of units to client (“DPC”) Facility: DPC accounts option to member broker, available only on BSE.

- Connectivity: Multi mode of platform access;

a) Web - browser with CO-BRANDING facility,

b) APIs over leased lines,

c) WEB Services - APIs over internet.

- SMS/email based redemption order authentication in MFD mode

- Provision for Minimum redemption quantity facility, useful when the holdings fall below permitted minimum lot, only available with BSE

- Multi-ARN facility, useful when settlement of trades can be done for other AMFI registration no. (“ARNs”) of same group company or otherwise, only available on BSE.

- Android based mobile application.

Secondary Market - Equity Segment

The S&P BSE SENSEX ended FY 2016-17 at 29,621 compared to 25,342 at year end of FY 2015-16, an increase of 16.89% over the year which has been one of the factors for increased trading volumes this year. The average daily value of equity turnover on BSE in FY 2016-17 was Rs.4,025 Crore, an annual increase of about 34.35% from Rs.2,996 Crore in FY 2015-16.

- Equity Derivatives Segment

Equity derivatives daily average volume was 498 contracts per day in FY 2016-17 as compared to 4.32 Lakh contracts from FY 2015-16. BSE has decided to discontinue its Liquidity Enhancement Incentive Programme Scheme (“LEIPS”) that has been running for the past few years.

- Currency Derivatives Segment

In the currency derivatives, BSE’s market share increased to 38.09% in FY 2016-17 from 36.41% in FY 2015-16. Members’ participation in this segment increased to 332 (16 Banks and 316 Members) during FY 2016-17, compared to 285 (14 Banks & 271 Members) in FY 2015-16. Open Interest (“OI”) for FY 2016-17 was 17.42 Lakh contracts, an increase of over 35.35% as compared to 12.87 Lakh contracts during FY 2015-16.

- Interest Rate Derivatives

During FY 2016-17, BSE’s market share in interest rate derivatives increased to 29.20% from 17.19% in FY 2015-16.

Members’ participation increased to 104 (8 Banks, 4 Primary Dealers & 92 Members) in 2016-17 from 94 in FY 2015-16.

- BSE SME Platform

The framework for SME Platforms to serve small and mediumsized 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. BSE SME IPO Index was launched on December 14, 2012 with 100 as the base.

On March 31, 2017 the value of this index reached 1,288.88. Additionally, the total market capitalization of all the 175 companies listed on BSE SME Platform reached Rs.16,925.72 Crore. During FY 2016-17 the SME platform continued to be a front-runner with a market share of over 80%.

During FY 2016-17, 48 companies raised Rs.436.46 Crore from the market.

- Migration to Main Board

BSE issued a circular on November 26, 2012 stating that companies have to be mandatorily listed and traded on the SME Platform for a minimum period of two years for them to migrate on to the Main Board as per SEBI guidelines.

During FY 2016-17, 9 BSE SME companies have migrated to the BSE Main Board.

- Global Recognition for the BSE-SME platform

In its research report of July 2015, International Organization of Securities Commissions (“IOSCO”) commended BSE’s SME platform for being the most cost effective platform for SME listing in the world. In March 2016, it also received the SKOCH Achiever Award from Shri. K. T. Rama Rao, Hon’ble Minister of IT, Government of Telangana. In the same period, the World Federation of Exchanges put forth a report on SME funding through exchanges and has used the BSE SME platform as a key case study.

- Debt Segment

The Fixed Income segment at BSE provides an array of products and services to market participants. In this space, BSE also offers reporting of Secondary Market Trades in Government Securities, Treasury Bills, Corporate Bonds, Certificate of Deposit (“CDs”) and Commercial Paper (“CPs”) on the Wholesale Debt Market platform called Indian Corporate Debt Markets (“ICDM”). BSE witnessed reporting of Over the Counter (“OTC”) trades in Corporate Bonds on ICDM worth Rs.2,88,372 Crore in FY 2016-17 as against Rs.2,07,652 Crore in the previous year, marking an increase of 39%. In case of Statutory Liquidity Ratio (“SLR”) securities i.e. Government Securities and Treasury Bills, trades worth Rs.2,00,469 Crore were reported on ICDM in the current year as against Rs.2,27,124 Crore in FY 2015-16.

Trading in Non-Convertible Debentures (“NCDs”) and Bonds on ‘F’ group on BOLT saw increased activity of Rs.4,770 Crore in FY 2016-17 as against Rs.4,608 Crore in the previous year. BSE has retained a market share of over 57.60% in the retail trading of Corporate Bonds in FY 2016-17. During the year, BSE introduced clean price mechanism for retail debt trading platform.

No significant activities were observed in trading in Government Securities on the Retail Debt Market (“RDM”) ‘G’ group across the entire market.

In accordance with RBI and SEBI guidelines, BSE has developed a platform called ‘E-settle’ to facilitate clearing and settlement of secondary market trades in corporate bonds, CPs and CDs on Delivery Vs Payment 1 (“DvP1”) basis through the ICCL.

The settlement volume for corporate bonds witnessed business of Rs.1,16,030 Crore in FY 2016-17 as against Rs.57,874 Crore in the previous year which is an increase of over 100% over previous FY 2015-16.

BSE had launched the New Debt segment (“BSE-NDS”) on March 20, 2014 in accordance with SEBI guidelines for new dedicated debt segment on stock exchanges issued in January, 2013 and the risk management framework therein, issued in September, 2013. 135 Trading Members and Institutional Members are registered on BSE NDS.

- Sovereign Gold Bonds

BSE’s got permission from RBI and SEBI for acting as a Receiving Office for the Sovereign Gold Bond (“SGB”) Scheme. Three tranches of SGB aggregation to RBI were carried by banks and post offices. From fourth tranche onwards, Stock Exchanges are allowed to act as a receiving office. In this receiving office role, BSE role would be limited to aggregation of applications and transfer of funds.

Please find below table on SGB bids received on BSE in the respective Tranches.

Tranche	Total No. of Members	Total No. of Bids	Volume in Kgs.	Value in Rs. Crores
4th	161	3,931	158.84	49.54
5th	214	4,770	149.99	44.00
6th	206	6,772	202.70	59.94
7th	173	3,545	103.00	29.80

- ebidXchange - Auction of FPI limits for debt

A custom designed platform called ‘ebidXchange’ for allocation of FPI limits for investment in government securities and corporate bonds was launched by BSE in May 2009.

The ebidXchange platform pioneered the auction of multiple products - Infrastructure Bonds, Corporate Bonds and Government Securities. During FY 2016-17, BSE conducted 5 auction sessions, all of which were conducted seamlessly and received positive response from market participants. The total cumulative amount bid for these 5 auctions was Rs.41,355 Crore.

- Exchange Traded Funds (“ETF”)

As at March 2017, BSE had 50 ETFs listed compared with 45 as on March 2016. During FY 2016-17, the average daily turnover in ETFs increased by 35% i.e. Rs.39.05 Crore from Rs.28.99 Crore in FY 2015-16.

- Offer for Sale (“OFS”) & Offer to Buy(“OTB”)

During FY 2016-17 there were 22 OFS issues, of which BSE was appointed as the Designated Stock Exchange in 19 issues (86%). Out of the 19 OFS issues, 15 issues were conducted exclusively on the BSE platform. In FY 2016-17, the total amount raised through OFS issues was Rs.5,672.86 Crore.

During FY 2016-17, there were 88 OTB issues, of which BSE was appointed as the Designated Stock Exchange in 86 issues (98%). Out of the 86 OTB issues, 81 issues were conducted exclusively on BSE platform, the total amount raised through OTB issues was Rs.29,206 Crore.

- Securities Lending & Borrowing (“SLB”)

ICCL acts as an Approved Intermediary under the SEBI Securities Lending and Borrowing Scheme, 1997. The registration of ICCL as an Approved Intermediary was renewed for a further period of three years from June 28, 2016 to June 27, 2019. The SLB turnover increased by 297% from Rs.313.23 Crore in F.Y. 2015-16 to Rs.1,244.38 Crore in F.Y. 2016-17, while the lending fees collected increased by 331% from Rs.1.46 Crore to Rs.6.29 Crore during this period.

Segment	FY 2015-16 (Rs. Crore)	FY 2016-17 (Rs. Crore)
Turnover for the period - 1st Leg of SLB transactions (quantity x underlying price of the stocks as on previous day)	313.23	1,244.38
Lending fees.	1.46	6.29

- BSE Hi-tech for Start Ups

The Company had launched a new segment BSE Hi-Tech, following the announcement of the new Institutional Trading Platform Regulations by SEBI in August 2015. This platform has been launched to facilitate young, fast growing companies to access capital and provide liquidity to early stage investors. The Company has formed an Advisory Panel comprising eminent persons from the ecosystem and organized several knowledge sessions. There has been no listing on this platform yet. Feedback has been gathered from the companies, investors and other stakeholders and the Advisory Panel which is shared with the policy makers to get benefit of this important initiative of the Government to help Start Up industry.

- Dissemination Board

SEBI issued a circular in October 2016, requiring all exclusively listed companies of Regional Stock Exchanges which are derecognized and which are on Dissemination Boards of Nationwide Stock Exchanges to either list on a nationwide stock exchange or to provide exit to its investors. Following this, BSE has reached out to over 1,500 such companies admitted to BSE’s Dissemination Board. BSE is working closely with SEBI to ensure smooth and proper exit to investors’ in such companies.

- Disinvestment Drive of GOI and BSE’s support

In the FY 2016-17, BSE’s iBBS platform has facilitated Government of India Disinvestment Programme through OFS, OTB and Central Public Sector Enterprises Exchange Traded Fund (“CPSE ETF”) to garner more than Rs.25,000 Crore, forming more than 50% of the Total Disinvestment by the Government of India in FY 2016-2017.

The Company also has extended the facility for acceptance of subscriptions for further Fund Offer of CPSE ETFs by introducing an online mechanism called BSE iBBS Platform for Mutual Fund (“BiMF”).

Business Operations Review Membership

During FY 2016-17, 52 Deposit Based Membership (“DBM”) applications were received at BSE. Since launch of new DBM scheme in April, 2010, BSE has received a total of 841 DBM applications.

Corporate Services (listing)

The Corporate Services segment of the Company registered healthy revenue growth in FY 2016-17. Annual Listing Fees (equity, debt and MF) increased by 2.82% to Rs.104.19 Crore compared to Rs.101.33 Crore in FY 2015-16. This increase in Annual Listing Fees is mainly attributed to an increase in number of companies listed under IPO.

The Company 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 Rs.14.31 Crore in FY 201617 as compared to Rs.11.23 Crore in FY 2015-16, a rise of 27.43% from the previous year on account of new primary market issuances and the newly introduced OTB facility.

Data Information Products

The Company and Deutsche Bourse have entered into a partnership in October, 2013 under which Deutsche Bourse would act as the licensor of the Company’s market data and information to all international clients. Under the co-operation, Deutsche Bourse is responsible for sales and marketing of all the Company’s market data products to customers outside India, while the Company continues to serve its domestic clients. Deutsche Bourse 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 business for sales and marketing of the Company’s market data products to International customers by Deutsche Bourse commenced from April, 2014. The total revenue from the sale of market data and information products was Rs.24.67 Crore in FY 2016-17 as compared to Rs.22.42 Crore in the previous year. The increase in revenue was on account of increase in subscription for the Company’s information products and services by new customers.

Index

Asia Index Private Limited (“AIPL”) is a joint venture between S&P Dow Jones Indices LLC and BSE. AIPL launched 3 new indices in FY 2016-17:

- The S&P BSE Liquid Rate Index was launched on July 26, 2016; the index is designed to measure the returns from a daily rolling deposit at the Collateralized Borrowing and Lending Obligation (“CBLO”) rate.

- The S&P BSE SENSEX 50 Index was launched on December 6, 2016; the index is designed to measure the performance of the top 50 largest and most liquid stocks in the S&P BSE Large Mid Cap.

- The S&P BSE SENSEX Next 50 Index was launched on February 27, 2017; the index is designed to measure the performance of the next 50 largest and most liquid stocks after the constituents of the S&P BSE SENSEX 50 in the S&P BSE Large Mid Cap.

Secondary Market Policy Developments

Data analytics based systemic solution for tracking company news

The Company undertakes various regulatory policy and systemic measures for enhanced due-diligence, surveillance, corporate governance in the Indian capital markets to comply with SEBI regulations. In this regard, the Company has implemented artificial intelligence based framework for rumour detection since November, 2016.

The primary objective is to detect and mitigate potential risks of market manipulation, rumour and reduce information asymmetry arising from it on digital media platforms, including social media.

In recent past, news media has undergone a sea of changes with digital media and social media becoming the frontline in news reporting or sharing information digitally for easier, faster and wider reach. On this background, any material news or rumour floating in the social media can have potential impact on the sentiments of the investing population which can further impact price/volumes of securities traded on exchange platforms.

The data analytics based systemic solution relies on artificial intelligence based framework to track news related to listed companies on digital media using social media like twitter, etc.

Alerts generated by this social media solution is monitored by the Company from the standpoint of material information and also vis-a-vis possible rumours appearing in various media including print and on-line channels as per SEBI regulations.

Graded Surveillance Measure (“GSM”)

The Exchange has pro-actively taken series of surveillance actions on its stocks in recent past as a pre-emptive measure to ensure safety and integrity of the market.

In continuation to various surveillance measures already implemented, SEBI and Exchanges, pursuant to discussions in joint surveillance meetings, have decided that along with the aforesaid measures, there shall be additional GSM on securities which witness an abnormal price rise not commensurate with financial health and fundamentals like Earnings, Book Value, Fixed Assets, Net Worth, P/E Multiple, etc.

The main objective of these measures is to alert and advice investors to be extra cautious and advice market participants to carry out necessary due diligence while dealing in the securities.

Under the GSM framework which became effective from March 14, 2017, based on satisfaction of certain pre-defined objective criteria, the securities shall attract following additional graded surveillance actions:

I. Shifting of scrips on Trade to Trade (“T2T”) basis with price band of 5% or lower T2T

II. T2T with 100% Additional Surveillance Deposit (“ASD”) equivalent to buy value of transaction

III. T2T 100% ASD Once a week trading

IV. T2T 200% ASD Once a week trading

V. T2T 200% ASD Once a month trading

VI. T2T 200% ASD Once a month trading Freezing of price on upper side

As on April 25, 2017, a total of 778 companies have been identified to be a part of GSM framework. Out of these 141 companies are in Stage I, 54 companies are in Stage II while 5 companies are in Stage III.

REGULATION

Surveillance & Investigation

Statistics for FY 2016-17:

As part of market monitoring activities during FY 2016-17; 69,062 surveillance alerts were generated, of which 1,339 alerts were taken up for snap investigations. Subsequently, 173 cases were taken up for preliminary/detailed investigations, of which 111 preliminary/ investigation reports have been forwarded to SEBI. Based on the findings, 431 observations letters were issued to various members/ clients. Further, on account of surveillance measures, there were 1,833 price band reductions. The Company has also provided e-BOSS, the member level surveillance system to trading members to monitor their clients positions and manage risk at a nascent stage.

Broker Supervision

607 inspections of members were conducted during FY 2016-17, which include 518 routine inspections and 89 special inspections. This also included 25 inspections on the basis of risk based supervision.

Investor Services

The Company redresses investor complaints against trading members and listed companies 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 members electronically through the BSE Electronic Filing System (“BEFS”), thereby reducing the communication time resulting in expeditious resolution of investor complaints. All actions taken in the process of redressal are then updated on this system. The investors can also lodge complaints directly with the Exchange. The complaints against trading members are redressed through mediation and counselling by Investor Grievances Redressal Committees (“IGRC”) wherein the IGRC is also empowered to decide the claim value.

The Company provides IGRC as well as arbitration services at its Regional Investor Service Centers located at Mumbai, Chennai, Delhi, Kolkata, Ahmedabad, Hyderabad, Kanpur, Indore, Jaipur, Pune, Bangalore, Patna, Vadodara, Lucknow. During the year, the Company commenced new investor services centres at ten cities namely, Bhubaneshwar, Chandigarh, Dehradun, Guwahati, Jammu, Kochi, Panaji Raipur, Ranchi and Shimla. Thus the Company currently provides IGRC and arbitration services from 24 investor services centres located at different parts of the country. BSE is the only Exchange in the country, where 13 Registrars and Transfer Agents (“RTAs”) regularly visit its Investor Service Centre at Mumbai, for redressal of investor complaints against companies listed on BSE.

Listing Compliance

Update on extensible Business Reporting Language (“XBRL”)

BSE is the first and only 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”)These are Shareholding Pattern, Corporate Governance Report, Voting Results and Financial Results.

Since introduction of XBRL reporting in 2015, we have seen an increasing number of companies making their filings in XBRL voluntarily. Encouraged by this response and the improved efficiency of data dissemination, the Exchange has made the filing of Shareholding Pattern, Corporate Governance and Voting Results mandatory.

In continuation with these initiatives, the Exchange has recently made it mandatory for companies to file Financial Results in the XBRL format (initially in pdf and in XBRL within 24 hours) for all results filed from the quarter ended March 31, 2017 onwards. This important development has also been noted and reported in the Newsletter of XBRL International.

Compulsory Delisting

Trading in the securities of certain listed companies has been suspended for a long period of time on account of non-compliance with the critical clauses of the erstwhile Listing Agreement.

BSE under the guidance of SEBI, had advised companies that have been under suspension for a period of three years or more, to expedite the 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.

During the FY 2016-17, the Exchange has delisted 294 companies. This is an ongoing activity and is expected to be completed by September, 2017.

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 of the information.

Towards this objective, the Exchange introduced the Corporate Announcement Filing System (“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 wholly accountable for their filings, leading to much faster, efficient and informed decisions by investors and the public at large.

Over 90% of listed companies at BSE have registered for this facility. In case of any inadequacies or discrepancies, clarifications are sought from the companies and the responses again disseminated on the website. Post dissemination of these critical announcements in the public domain, the Company carries out further checks with respect to adequacy and accuracy.

SIGNIFICANT DEVELOPMENTS

Social Media Analytics

The Company has implemented Social Media analytics using Artificial Intelligence to predict rumors and verification of news floating in the market on its listed companies and its impact on the stock market. Such real time approach has resulted in prompt dissemination of information pertaining to the companies. The Company has deployed this technological innovation to mitigate the potential risks of market manipulation and information asymmetry arising from it. This would enhance market integrity, orderly functioning and investor protection in the Indian Capital Markets.

As the first phase of the project, the Company implemented a live framework to monitor the news websites using data management and machine learning. In the subsequent phases, the framework for collecting data from Facebook and Twitter was implemented.

Social Media analytics has helped faster processing and dissemination of information. This was one of the primary criteria for success of this project. As the quantum of processing information increased, the Company was able to monitor impact of certain news on the prices. Employee involvement and productivity reached new highs, as the team involved were equipped with better and more information. Overall savings in cost in terms of resources deployed for manual tracking, and other indirect costs were drastically reduced.

Major milestones achieved by IPF

- BSE Investor Protection Fund (“IPF”) has done 4,499 investor awareness programs across 30 states during the year. Highest in a single year.

- Participated at the India International Trade Fair (held for 14 days) along with SEBI in New Delhi in November, 2016 to showcase the Company’s products and services to Investors.

- Participated at the Vibrant Gujarat Trade Fair (held for 4 days) in January, 2017 to showcase the Company’s products and services to Investors.

- Managing 25 Investors Service Centres covering major state capitals.

Enhanced Supervision of Stock Brokers

The Company has announced enhanced supervision of stock brokers to facilitate reporting of their Bank and Demat accounts.

This new initiative is in line with SEBI’s directive (vide SEBI Circular SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016. Reporting on most of the clauses has been made applicable w.e.f. July 1, 2017, and for the remaining clauses on various dates notified from time to time subsequently.

SEBI has issued guidelines which cover following broad areas:-

- Uniform nomenclature to be followed by stock brokers for Naming/Tagging of Bank and Demat Accounts and the reporting of such accounts to the Stock Exchanges/Depositories.

- Monitoring of Clients’ Funds lying with the Stock Broker by the Stock Exchanges, through a sophisticated alerting and reconciliation mechanism, to detect any misutilisation of client’s fund.

- Changes in the existing system of internal audit for stock brokers/depository participants, viz., appointment, rotation of Internal Auditors, formulation of objective sample criteria, monitoring of quality of Internal Audit Reports, timeline for submissions of Internal Audit Reports, etc.

- Monitoring of Financial Strength of Stock Brokers by Stock Exchanges so as to detect any signs of deteriorating financial health of stock brokers and serve as an early warning system to take preemptive and remedial measures.

- Imposition of uniform penal action on stock brokers/depository participants by the Stock Exchanges/Depositories in the event of non-compliance with specified requirements.

- Other Requirements:

a. Uploading client’s funds and securities balances by Stock Brokers to Stock Exchange System and onward transmission of the same to the clients for better transparency.

b. Clarification on Running Account Settlement.

c. Providing Permanent Account Number (“PAN”) details of Directors, Key Management Personnel and Dealers, to Stock Exchanges and any change thereof.

MARKETING AND COMMUNICATIONS

During the year, the Company continued with the task of educating investors and; supporting and launching new products.

The launch of the International Exchange and the listing of BSE were 2 significant events for the Company during the year. The International Exchange, India International Exchange (IFSC) Limited (India INX), was inaugurated by the Hon’ble Prime Minister of India, Shri Narendra Modi. The event had over 5000 people attending in person and millions witnessing it live on their television sets.

BSE emerged as India’s first listed stock exchange, a significant milestone supported by an integrated communication campaign covering television, print and social media.

The Company did get significant coverage in all leading national/ international newspapers and channels while its presence on social media grew manifold. The Company hosted more than 240 events ranging from international delegations to educational programs to roundtables on important national and international topics.

During the course of the year the Company witnessed many high profile visits and delegations from the government, industry and other sectors from India and abroad.

The dignitaries include:

1. Shri Narendra Modi, Hon’ble Prime Minister of India

2. Shri CH Vidyasagar Rao, Hon’ble Governor of Maharashtra

3. Shri Arun Jaitley, Hon’ble Union Minister of Finance, Corporate Affairs and Defence, Government of India

4. Shri Suresh Prabhu, Hon’ble Minister of Railways, Government of India.

5. Shri Venkaiah Naidu, Hon’ble Former Minister of Information and Broadcasting, Urban Development, Housing and Urban Poverty Alleviation, Government of India

6. Smt. Smriti Irani, Union Cabinet Minister of Textiles, Information and Broadcasting Government of India

7. Shri Devendra Fadnavis, Hon’ble Chief Minister of Maharashtra

8. Shri Vijay Rupani, Hon’ble Chief Minister of Gujarat

9. Shri Laxmikant Parsekar, Former Hon’ble Chief Minister of Goa

10. Shri Piyush Goyal, Minister of State with Independent Charge for Power, Coal, New & Renewable Energy and Mines in Government of India

11. Shri Ramdas Athawale, Minister of State for Social Justice & Empowerment, Government of India

12. Shri Hansraj Gangaram Ahir, Union Minister of State for Home Affairs.

13. Shri Jayant Sinha, Hon’ble Minister of State for Civil Aviation, Government of India

14. Shri Arjun Ram Meghwal, Minister of State Finance & Corporate Affairs, Government of India

15. Shri Arvind Sawant, Member of Parliament, Loksabha

16. Shri Sudhir Mungantiwar, Hon’ble Minister for Finance and Planning, Forest, Government of Maharashtra

17. Shri Rajkumar Badole, Hon’ble Minister for Social Justice and Special Assistance, Government of Maharashtra

18. Shri Ram Kadam, Member of Legislative Assembly of Maharashtra State

19. Prime Minister of Serbia, H.E. Mr. Aleksandar Vucic

20. Mr. John Tory, Hon’ble Mayor of Toronto

21. Mr. John Halligan T.D., Hon’ble Minister for Training, Skills and Innovation, Ireland

22. Mr. Navdeep Singh Bains, Hon’ble Minister of Innovation, Science, and Economic Development, Canada

23. Mr. Pat Breen TD, Hon’ble Minister of State for Employment and Small Business, Irish Government

24. Mr. Meng Jianzhu, Special Envoy of President Xi Jinping, Member of the Political Bureau of the Central Committee of the Communist Party of China (CPC), Secretary of the Political and Legislative Affairs Committee of the CPC Central Committee.

25. Mr. Panos Kalogerpoulos, Hon’ble Ambassador of Greece to India

26. Mr. Steven Armour, Director Huston Polo Club and National Governor of United States Polo Association

27. Mr. Taro Kono, Member of Japanese Parliament

28. Mr. Rajcoomar Rampertab, Hon’ble MP, Mauritius & Parliamentary Private Secretary and in charge Development Desk, Office of Prime Minister of Mauritius.

29. Shri Shaktikanta Das, Secretary (Economic Affairs), Ministry of Finance

30. Shri D. K. Jain, Addl. Chief Secretary, Govt. Of Maharashtra

31. Shri Praveen Garg, Joint Secretary, Department of Economic Affairs, Ministry of Finance, Govt. of India

32. Shri Ajay Tyagi, Chairman, SEBI

33. Shri. U. K. Sinha, Former Chairman, SEBI

34. Dr. Harshdeep Kamble, Commissioner, FDA, Maharashtra

35. Hon. Adv. Shri Prakash Yashwant Ambedkar, Head, Bharipa Bahujan Mahasangh

36. Smt. Nita Mukesh Ambani, Chairperson & Founder, Reliance Foundation and Non-Executive Director, Reliance Industries

37. Shri Azim Premji, Chairman, WIPRO

38. Shri Mukesh Kumar Suhana, CMD, HPCL

39. Shri Sanjeev Goenka, Chairman, CESC Ltd.

AWARDS AND RECOGNITION

- Business World Digital Leadership and CIO Award

- The IDC Digital Transformation Awards 2017

- The Best Exchange of the year award for equity and currency derivatives in Tefla’s Commodity Economic Outlook Award 2017

- Best Brand award 2017 by Economic Times

- CIO POWER LIST 2017

- Best Corporate film encompassing Vision, History, Value and Spirit of Excellence award, Best Corporate film on Employer Branding award and Most Influential HR Leaders in India award at World HRD Congress 2017

- ’Best Exchange of the year’ award at 4^th India Bullion & Jewellery awards 2017.

- Red Hat Innovation Awards 2016 by Red Hat Solutions.

- Skoch Achiever Award 2016 for SME Enablement.

- Best IT Implementation Award 2016 in the “Most Complex Project Category” by PCQuest.

- InfoSec Maestros Awards 2016.

- Lions CSR Precious Awards 2016.

SHARE CAPITAL

During the year under review, the face value of the equity shares of the Company was consolidated from Rs.1/- (Rupee One only) to Rs.2/- (Rupees Two only) per share, vide resolution passed by the members of the Company on November 25, 2016.

Pursuant to clause 5 of BSE (Corporatisation and Demutualisation) Scheme, 2005 (BSE Scheme, 2005) approved by SEBI vide its notification dated May 20, 2005, every trading member having membership right of the Exchange or his nominee, as the case may be, as on record date was entitled to 10,000 equity shares of the face value of Rs.1/- per share, against membership right of erstwhile BSE. It may be noted that the entitlement against membership right post consolidation of share capital stands changed to 5000 equity shares of face value Rs.2/- per share. The said shares as on March 31, 2017, have been kept in abeyance for various reasons.

The Company on March 27, 2017 allotted 1,30,000 equity shares of the face value of Rs.2/- per share, along with corporate benefits accrued thereon as on the said date to two erstwhile trading members having membership rights whose entitlements to shares were kept in abeyance, pursuant to BSE Scheme, 2005. The said allotment of 65,000 equity shares to each of the above trading member comprised of 5,000 equity shares towards initial entitlement of equity shares pursuant to BSE Scheme, 2005 and 60,000 bonus equity shares issued by the Company in the year 2009.

The above share allotment resulted in an increase in equity share capital of the Company from Rs.10,73,56,344 to Rs.10,76,16,344, as on March 31, 2017. The authorised capital of the Company as on March 31, 2017, stood at Rs.3,00,00,00,000. As per BSE Scheme, 2005, remaining 12 erstwhile trading members, having an aggregate 12 membership rights, continue to remain in abeyance till date.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

A detailed disclosure of the particulars relating to Loans and investments by the Company as per Section 186 of the Companies Act, 2013 (‘the Act’), is provided in notes to the financial statements.

SUBSIDIARIES/ JOINT VENTURES/ ASSOCIATE COMPANY

The Company has the following sixteen subsidiary companies (direct and indirect) and one joint venture as on March 31, 2017 names of which are given below:-

Subsidiaries:

BSE Investments Limited

BSE Sammaan CSR Limited

BSE CSR Integrated Foundation (Section 8 Company)

BSE Institute Limited

BFSI Sector Skill Council of India (Section 8 Company)

BSE Skills Limited

BIL - Ryerson Technology STARTup Incubator Foundation (Section 8 Company)

Central Depository Services (India) Limited

CDSL Ventures Limited

CDSL Insurance Repository Limited

CDSL Commodity Repository Limited (w.e.f. March 16, 2017)

India International Exchange (IFSC) Limited (w.e.f. September 12, 2016)

India International Clearing Corporation (IFSC) Limited (w.e.f. September 12, 2016)

Indian Clearing Corporation Limited

Marketplace Technologies Private Limited

Marketplace Tech Infra Services Private Limited

Joint Venture:

Asia Index Private Limited

The statement containing the salient features of the financial statements along with the names of the subsidiaries/ joint ventures of the Company are given in Form AOC - 1, which forms a part of this Annual Report.

Further, the financial statements of the Subsidiary companies are kept for inspection by the shareholders at the Registered Office of the Company. The Company shall provide a copy of the financial statements of its subsidiary companies to the shareholders upon their request in writing. The statements are also available on the website of the Company www.bseindia.com

BSE Skills Limited have filled application to Registrar of Companies (ROC) for removing its name from register of companies. There has been no material change in the nature of the business of the other subsidiaries and joint venture.

Changes in subsidiaries/ joint ventures/ associate company

The Company incorporated the following subsidiaries during the year ended March 31, 2017: -

1. India International Exchange (IFSC) Ltd. (India INX) was incorporated under the Act, on September 12, 2016.

2. India International Clearing Corporation (IFSC) Ltd. (India ICC) was incorporated under the Act, on September 12, 2016.

3. CDSL Commodity Repository Limited was incorporated under the Act, on March 16, 2017.

Central Depository Services (India) Limited (CDSL)

During the FY 2016-17, the Company sold 4.15% equity stake in its subsidiary, CDSL. The shareholders of the Company have also approved divestment of 26.05% equity stake in CDSL through a postal ballot during FY 2016-17. The Company has successfully tendered 27,217,850 equity shares, i.e. 26.05% of its equity stake in CDSL, through offer for sale, post which the aggregate shareholding of the Company stands reduced to 25,080,000 equity shares, i.e. 24%. Accordingly, CDSL along with its subsidiaries namely CDSL Venture Limited, CDSL Insurance Repository Limited and CDSL Commodity Repository Limited ceased to be subsidiaries of the Company and have become an associate companies with effect from June 29, 2017.

DIRECTORS AND KEY MANAGERIAL PERSONNEL (“KMP”) Appointment and Re - appointment of Directors

During the year under review, Shri Sumit Bose and Justice Vikramajit Sen were appointed as Public Interest Directors w.e.f. May 19, 2016.

In accordance with the provisions of the Act, read with the applicable rules, as amended, Dr. Sriprakash Kothari, Shareholder Director retires by rotation and being eligible, offered himself for re-appointment at the ensuing Annual General Meeting.

Cessation of Directors

Dr. Sanjiv Misra ceased to be Public Interest Director w.e.f. April 22, 2016. Shri Roland Schwinn was appointed as Shareholder Director in place of Shri Thomas Bendixen w.e.f. June 13, 2017.

Shri Sudhakar Rao ceased to be Public Interest Director and Chairman w.e.f. June 28, 2017, due to successful completion of his tenure.

The Company places on record its appreciation and gratitude for the valuable contributions made by them during their tenure as member of the Board.

Changes in KMP

During the year, Smt. Prajakta Powle was appointed as a Company Secretary & Compliance Officer of the Company w.e.f. September 7, 2016, in place of Smt. Neena Jindal, erstwhile Company Secretary of the Company.

Declarations by Public Interest Directors (‘PID’)

All PIDs have given declarations under section 149(7) of the Act that they met the criteria of Independence as laid down under Section 149(6) of the Act, and Regulation 16 of Listing Regulations. Further all PIDs have also given the declarations that they satisfy “fit and proper” criteria as stipulated under Regulation 20 of SECC Regulations.

MEETINGS OF THE BOARD

As on March 31, 2017, eight (8) meetings of the Board were held during the year. For details of meetings of the Board, please refer to the Corporate Governance Report, forming part of this report.

Separate meetings of the Independent Directors was held on May 4, 2016 and February 13, 2017.

BOARD EVALUATION

The Board of Directors of the Company carried out annual evaluation of its own performance, committees of Board and individual Directors pursuant to various provisions under the Act, Regulation 17, 19 and Schedule II of the Listing Regulations and based on the SEBI circular dated January 5, 2017 which provides further clarity on the process of board evaluation (“SEBI Guidance Note”).

The Company has implemented a system of evaluating performance of the Board of Directors and of its Committees and individual Directors on the basis of a structured questionnaire which comprises evaluation criteria taking into consideration various performance related aspects.

The procedure followed for the performance evaluation of the Board, Committees and individual Directors is enumerated in the Corporate Governance Report.

Board Committees

There are various Board constituted Committees as stipulated under the Act and Listing Regulations namely Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee, Independent Directors’ Committee and Corporate Social Responsibility (CSR) Committee. Brief details pertaining to composition, terms of reference, meetings held and attendance thereat of these Committees during the year has been enumerated in Corporate Governance report.

Additionally, Company being an Exchange, has also constituted other Regulatory Committees as stipulated under SECC Regulations.

AUDIT AND AUDITORS REPORT

Statutory Audit

The auditors, Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018), Mumbai, had been appointed, in the Ninth AGM held on August 1, 2014, for a period of three years to hold the office from the conclusion of the Ninth AGM until the conclusion of the Twelfth AGM to be held in the year 2017, accordingly they retire at the AGM.

The Board in its meeting held on May 5, 2017 approved and recommended the appointment of S R Batliboi & Co. LLP, Chartered Accountants, (Firm Registration No. 301003E/E300005) as statutory auditors of the Company for a period of five years with effect from ensuing AGM of the Company, subject to ratification by shareholders at every AGM. The auditors have confirmed that, their appointment would be in accordance with the Section 139 of the Act, and the rules made thereunder and that they are not disqualified in terms of Section 141 of the Act.

The statutory auditors’ report dated May 5, 2017 on the financial statements of the Company for FY 2016-17 is unmodified and does not have reservations, qualifications or adverse remarks.

Secretarial Audit

The Board appointed M/s. Ragini Chokshi & Co., Practicing Company Secretaries to conduct Secretarial Audit of the Company for the financial year 2016-17.

Secretarial audit report for the year ended on March 31, 2017 as provided by M/s. Ragini Chokshi & Co., Practicing Company Secretaries is enclosed as Annexure A.

The secretarial auditor’s report does not contain any qualifications, reservations or adverse remarks.

POLICY MATTERS

Policy on Directors’ Appointment and Remuneration

The Company’s policy on Director’s appointment and remuneration provided in Section 178(8) of the Act, has been disclosed in the Annexure B enclosed with this report.

Corporate Social Responsibility (“CSR”)

The Company has constituted a CSR Committee in accordance with Section 135 of the Act. The details of the CSR Policy, its development and initiatives taken on CSR during the year as per annexure attached to the Companies (Corporate Social Responsibility Policy) Rules, 2014, have been enclosed as Annexure C to this report.

Whistle Blower Policy

The Company promotes ethical behaviour and has put in place a mechanism for reporting illegal or unethical behaviour. The Company has a Vigil Mechanism and Whistle-blower policy under which the employees are free to report violations of applicable laws and regulations and the Code of Conduct. Employees may report their genuine concerns to the Chairman of the Audit Committee. During the year under review, no employee was denied access to the Audit Committee.

The details of establishment of such mechanism has been disclosed on the website http://www.bseindia.com/downloads1/Whistle_ Blower_policy.pdf

Particulars relating to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has always believed in providing a safe and harassment free workplace for every individual working in its premises through various policies and practices. The Company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment.

The Company has adopted a policy on Prevention of Sexual Harassment at Workplace which aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of undesired behavior. An Internal Complaints Committee (“ICC”) has been set up by the senior management (with women employees constituting the majority). The ICC is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the Policy.

During the year ended March 31, 2017, no complaints pertaining to sexual harassment have been received

RISK MANAGEMENT AND COMPLIANCE

The risk management report discusses various dimensions of the Company’s enterprise risk management. The risk related information outlined in this section may not be exhaustive. The discussion may contain statements that are forward looking in nature. The business is subject to uncertainties that could cause actual results to differ materially from those reflected in the forward looking statements. Members are advised to refer the detailed discussion of the risk factors and related disclosures in the regulatory filings, and exercise their own judgment in accessing risks associated with the Company.

Overview

Risk Management is an enterprise wide function at the Company which covers major business and functional areas including strategy, operations, technology and compliance. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. Several risks can impact the achievement of a particular business objective. Similarly, a single risk can impact the achievement of several business objectives. The focus of risk management is to assess risks, deploy mitigation measures and review them, including the risk management policy on a periodic basis. This is done through periodic review meetings of the Risk Management Committee comprising of the Board members.

The risk in relation to internal control over financial recording and reporting is reviewed by the Audit Committee. The Company’s internal control systems are commensurate with the nature of its business and the size and complexity of operations. These systems are routinely tested and certified by Statutory as well as Internal Auditors. The Audit Committee reviews adequacy and effectiveness of the Company’s internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Company’s financial risk management policies and systems.

The key roles and responsibilities regarding risk management in the Company are summarized as follows:

LEVEL	Key Roles and Responsibilities
Board of Directors	-	Approving key business objectives to be achieved by the Company. Ensuring that the executive
		management focuses on managing risks to key business objectives
	-	Reviewing the performance of the Risk Management Committee
Risk Management Committee	-	Composition of Committee:
		- Smt. Usha Sangwan
		- Shr	Sumit Bose
		- Shr	Sethurathnam Ravi
		- Shr	Thomas Bendixen (Ceased to be Shareholder Director w.e.f. June 13, 2017)
		- Shr	Nehal Vora
		- Shr	V. Balasubramaniam (Ceased to be Member w.e.f. July 11, 2017)
		- Shr	Nayan Mehta
	-	Review and oversight with regards to identification, evaluation and mitigation of the strategic, operational,
		technology and compliance risks
	-	Reviewing and approving risk related disclosures
	-	Monitoring and approving the risk management framework and associated practices of the Company
Role of Risk Team	-	Adhering to the risk management policies and procedures
	-	Implementing prescribed risk mitigations actions
	-	Reporting risk events and incidents in a timely manner

Risk Categories

The Company’s Risk Management Framework considers the following broad categories of risk:

(a) Strategy

Risks arising out of the choices we have made in defining our strategy and the risks to the successful execution of these strategies are covered in this category - for e.g., risks inherent in our industry and competitiveness are analyzed and mitigated through strategic choices of target markets, the Company’s market offerings, business models and talent base. Potential risk to the long term scalability and sustainability of the organization are also analyzed and mitigation plans are formulated. We periodically assess risks to the successful execution of devised strategy, such as the effectiveness of tactical programs that are being executed, the momentum in new initiatives, the impact of strategy on financial performance, leveraging of inorganic plans, effectiveness of organisation structure and processes, retention and development of high performing talent and leadership.

(b) Operational and Technology

Risks arising out of internal and external factors affecting the policies, procedures, people and systems in our support functions, thereby impacting delivery of services; compromises our core values. Risks not in accordance with generally accepted business practices or impacting the client’s operations are covered in this category. For e.g. risks of business activity disruption due to natural calamities, terrorist attacks, war or regional conflicts; or disruption in telecommunications, systems failures, virus attacks or breach of cyber security.

(c) Compliances

Risks arising out of threats posed to the financial, organisational, or reputational standing resulting from violations or non-conformance with laws, regulations, codes of conduct, prescribed practices or contractual compliances are covered in this category. For e.g. risks of potential litigations, breach of contractual agreements, non-compliances to regulations, potential risks arising out of major regulatory/geopolitical changes and potential risks arising out of strategic or operational business decisions.

Risk Management Procedure

(a) Risk Identification

Risk Management is a continuous interplay of actions that permeate the Company. It is brought into effect by the Company’s risk committee, management and other personnel. The risk management process of the Company aims at providing reasonable assurance regarding achievement of its objectives.

In order to provide reasonable assurance, the Company’s risk management process endeavors to help:

- Identify, assess and escalate new risks impacting the objectives of the Company,

- Define mitigation actions to respond to the new risks effectively,

- Monitor effectiveness of existing risk management mitigation actions and

- Report risks and risk management mitigation actions to the Risk Management Committee on a periodic basis.

The risk analysis and evaluation are carried out using scenario based assessments to decide the potential impact, likelihood of occurrence and in some cases, the ability to detect risk.

(b) Risk Mitigation

Mitigation actions are prepared and finalised, owners are identified and the progress of these actions are monitored and reviewed. The Risk Management Committee periodically evaluates the effectiveness of mitigating risks and provides its advice to the relevant teams.

(c) Risk Reporting

The top risk from the risk registers, its mitigation plans, periodic review of processes and new risks emanating from such reviews are assessed by the Risk Management Committee.

Risk Management Framework for the year

During the year, the Company’s risk management practices were primarily focused on the effectiveness of strategic programs in improving the competitive position and differentiation in market segments, the momentum of new initiatives to achieve longterm business aspirations, readiness to address any incidents that may cause business disruptions to the physical and technological infrastructure, strengthening internal controls to detect fraudulent activity, leadership development, leadership succession planning and monitoring possible impact of changes in the regulatory environment.

The following risk management activities were carried out during the last fiscal year:

- Assessed and strengthened the enterprise risk management framework for further standardization of risk identification, assessment and governance of risks across the organization.

- Identified top ten risks at the Company level and the same is broadly categorized under strategic and business risks, operational and technology risks, regulatory and compliance risks.

- Identified and established various risk mitigation controls to mitigate the risk.

- Assessment of our business momentum relative to competition and competitive position in key market segments comprising currency derivatives, interest rate derivatives and mutual fund segment were conducted.

- Regularly assessed progress on the execution of strategic programs, specifically, progress on the growth of new derivative products and performance of subsidiary businesses.

- Monitored key developments in the regulatory environment, especially amendments and notifications issued by SEBI and other authorities which are applicable to the business.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has maintained adequate internal financial controls over financial reporting.

These includes policies and procedures -

a. Pertaining to the maintenance of records that is reasonably detailed, accurately and fairly reflects the transactions and dispositions of the assets of the Company,

b. To provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Indian Accounting Standards (“IAS”) notified under the Companies (IAS) Rules 2015 as amended from time to time, and that receipts and expenditures of the Exchange are being made only in accordance with authorization of management and directors of the Company, and

c. To provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material impact on the financial statements. Such internal financial controls over financial reporting were operating effectively as of March 31, 2017, based on the criteria established in COSO Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013 (COSO Framework).

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SUB-SECTION (1) OF SECTION 188 OF THE COMPANIES ACT, 2013

The Company has formulated a policy on Related Party Transactions. The same is available on the Company’s website at http://www. bseindia.com/downloads1/Related_Party_Transaction_Policy.pdf.

The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and related parties. This policy specifically deals with the review and approval of material related party transactions keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions. Prior approval was obtained of Audit Committee for all the related parties and transactions thereof, entered in the ordinary course of business and at arm’s length. All related party transactions are placed before the Audit Committee for its review on a quarterly basis. All related party transactions are subjected to independent review by a reputed accounting firm to establish compliance with the requirements of related party transactions under the Act and Listing Regulations.

A detailed disclosure of these transactions with the related parties is enclosed with this report in Form AOC-2 as Annexure D.

INVESTOR PROTECTION FUND (IPF)

The Company, through its IPF, regularly conducts Investor Awareness Programmes (“IAPs”) throughout the country. IPF has conducted a total of 4,499 IAPs during FY 2016-17. During the year, IPF conducted 103 Regional Investor Seminars exclusively with SEBI across different parts of the country. BSE IPF also periodically brings out advertisements on Do’s and Don’t’s for investors to educate investors and enable them to safeguard their interests.

IPF has Started publishing research reports on traded companies to fill the information gap for the benefit of investors in those companies. As of March 31, 2017 there were 1,508 Company Research Reports available free of cost on the Company’s website, for the investors. Search filters available on the website give easy access to initiation research reports as well as quarterly reports. During the year, several educational and other capital market awareness events were sponsored by BSE IPF to raise awareness about corporate best-practice. BSE IPF has also supported global conferences and seminars that enhance understanding of Indian markets both in India and abroad. IPF is currently managing 25 offices across India covering all the major state capitals. In order to create Capital Market Awareness with Post Graduate college students, IPF Secretariat has conducted more than 700 programs with Universities and Educational Institutions across India.

Major Initiatives include:

1) India International Trade Fair with SEBI, New Delhi from November 14, 2016 to November 27, 2016.

2) 44^th National Convention of Institute of Company Secretaries, Ahmedabad, November 17, 2016.

3) Vibrant Gujarat Global Trade Show, Gandhinagar, from January 10, 2017 to January 13, 2017.

4) The Institute of Chartered Accountants of India (“ICAI”) Convention 2016, Chennai, on January 20, 2017.

5) BSE IPF opened new Investor Service Centers across 9 cities during 2016-17 as per the mandate from SEBI.

These include: Chandigarh; Dehradun; Guwahati; Bhubaneshwar; Ranchi; Panaji; Raipur; Shimla and Jammu.

Research Projects:

IPF supports research projects in the area of Capital Market. During FY 2016-17 IPF has completed following Research Projects:

1. “Analyzing investor behavior to increase the awareness of Investor awareness and Education Program” prepared by students of TA Pai Institute of Management Studies, Manipal under the BrandScan project.

2. “CFA Institute Research Challenge” hosted by the Indian Association of Investment Professionals Season 2016-17.

In order to spread awareness about capital market as part of financial inclusion and to educate investors at national level across India especially in tier 2, tier 3 & tier 4 cities, BSE IPF has used services of national level TV channels including leading Business channels and Doordarshan for spreading financial literacy programs related to capital market education, financial planning etc. BSE IPF has understanding with following TV channels in order to spread capital market awareness among masses:

1) CNBC TV18 and CNBC Awaaz

2) ZEE Business

3) Doordarshan (“DD”) - Prasar Bharati

4) ET Now

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Conservation of Energy

(i) The steps taken and their impact on conservation of energy:

The Company uses electricity to run its electronics and the offices. During the year we have regularly replaced the induction ballasts with electronic ballasts and also replaced the fluorescent lights with LED lights where feasible. We conserve energy by switching off lights & other equipment when they are not required. We prefer to use lighter and brighter colors in our offices to maximize efficiency of lighting. Wherever possible, we have coated the glass windows to reduce the heat entering the building which reduces the air-conditioning load. The Company continuously strives to optimize its energy usage and efficiency.

(ii) The steps taken by the Company for utilising alternate sources of energy:

Since our building has a large surface covered by glass windows we also use the ambient light for lighting purposes as much as possible. This reduces the electricity consumption due to lesser need of lighting during the day.

(iii) The capital investment on energy conservation equipment:

Nil

Technology Absorption

Big Data Implementation and expanding its scope

Data at the Company is growing at an exponential rate and is expected to grow many-fold as we may START new lines of business. Data volume is doubling every two years. As per Statutory & Legal compliance mandates, most of the data had to be made available for a number of years to provide historical information to authorities. Our business demands complex on-demand analysis & reporting on terabytes of data. This is coupled with real time surveillance and fraud detection models, which was challenging with our legacy technologies.

Our previous investment in a proprietary system was almost fully utilized and required significant ongoing investments every year to keep pace with our complex analytics requirement and data growth. This would necessitate upgrade to newer releases of hardware and software every few years incurring significant investments.

To address this, the Company has migrated its enterprise Data Warehouse proprietary system to open source Big Data HADOOP platform and has built a real time analytics framework on the same. This move has brought in efficiency and lower cost of ownership which would provide for our requirements at a fraction of cost. In the new platform, we have consolidated multiple systems that processes and provide information into an Enterprise Data Lake. Data from systems like Trading, Risk Management, Clearing and Settlement and Backoffice is available in real time from Big Data platform.

Further to Big Data analytics, the Company has also implemented Social Media analytics using Artificial Intelligence to predict rumors and verification of news floating in the market on BSE listed companies and its impact on the stock market. Such real time approach has resulted in prompt dissemination of information pertaining to the companies. The Company has deployed this technological innovation to mitigate the potential risks of market manipulation and information asymmetry arising from it. This would enhance market integrity, orderly functioning and investor protection in the Indian Capital Markets.

As the first phase of the project, the Company implemented a live framework to monitor the news websites using data management and machine learning. In the subsequent phases, the framework for collecting data from Facebook and Twitter was implemented.

Social Media analytics has helped faster processing and dissemination of information. This was one of the primary criteria for success of this project. As the quantum of processing information increased, the Company was able to monitor impact of a certain news on the prices. Employee involvement and productivity reached new highs, as the team involved were equipped with better and more information. Overall savings in cost in terms of resources deployed for manual tracking, and other indirect costs were drastically reduced.

Adoption of Open source technologies for transaction processing work load

The Company is currently using proprietary relational databases for various transactional processing work loads of various systems. The proprietary relational databases are cost intensive and the Company incurs huge costs on licenses and annual maintenance contracts for the same. To have a control on this ever increasing license cost and in line with its overall outlook of moving towards the Open Source technologies, the Company has taken steps in the direction to migrate its existing database to PostGreSQL for majority of its systems which is also open source. This will result in substantial savings in overall licensing costs.

It is expected that by end of FY 2017-18, majority of the migration activity to be completed.

Augmentation of Trading infrastructure

In the past year, the Company has upgraded the trading system infrastructure to achieve an increased and improved performance. The latest hardware includes the Intel V4 series central processing units, the use of which has improved the performance of the system by around 15-20 microseconds. The hardware has been augmented by the creation of additional partitions for providing enhanced parallelism in the matching process. The product distribution on the various matching engines has been optimally arranged to offer the best performance.

The trading system’s internal network has been further augmented by the additional switches to handle the Administrative messages flowing through the system. The additional switches enable segregation of the Order flows and Administrative message flows in the system.

Unified Trading Interface - BOLTPLus on Web

The Company provides BOLTPLus on Web (“BOW”), the powerful real time trading solution, free of cost to its members. As BOW is provided on a cloud model by the Company, trading members do not have to invest and manage hardware, software or incur any other license costs.

BOW comes with features like trade from anywhere, anytime using internet, daily charts, portfolio views and other user based customisation. Risk management is also an integral part of BOW, it provides flexibility to trading members to manage and control the risks, profiling of clients, monitoring and surveillance. Overall it’s a complete package for all needs of trading members and their clients.

It has been a constant endeavor to innovate and provide high end trading solutions to the market participants. This as a vision, the following are the key deliverables done to enhance market participation.

1. Portfolio based margin implemented with the real time Mark to Market margins.

2. Keeping pace with the digital transactions, third party Payment Gateway solution has been integrated with the BOW Application which facilitates the user to do real time fund transfer.

3. BSE Mobile Based Trading Application now gives the user trading facility along with real time market data.

4. BOW now also supports new trading formats of NCDEX.

The BOW trading solution was also implemented for India’s first International Exchange, India INX at GIFT City.

With continuous contribution from user experience and to enhance customer satisfaction, our focus is towards product enhancements with newer cost effective technologies and platforms. Performance, Scalability and Robustness are the key drivers of BOW platform. Trading users will be aided with enhanced GUI coupled with a new Flexible Risk Management system.

Unified Experience - Identity and Access Management

The Company has a series of application on variety of platforms. Each applications had its own work-flow management. In order to do away with inconvenience of manageability and simplify the process, the Company implemented its home grown solution of Identity and Access Management (“IAM”) using open source technologies which helps to achieve Single-Sign On (“SSO”) with Two Factor Authentication.

SSO solution was based on open source technology, integrated with its internal domain authentication mechanism. SSO facilitated unification of work-flow and access methodology. It reduces the overhead of maintaining multiple interfaces, reduces cost, simplifies process and vastly reduces non-compliance related issues.

To highlight a few of the benefits:

1. Control the implementation of password policy across all applications

2. Have single credentials for all applications

3. New user provisioning and de-provisioning encompassing all applications and services

4. Reduction in user management calls at IT help desk

5. One portal for all available applications

Launch of India INX

BSE, world’s fastest exchange with the speed of 6 microseconds, is the first and only exchange to setup the country’s first International Exchange at the International Financial Services Centre (“IFSC”), Gujarat International Finance-Tec City (“GIFT”), Gandhinagar.

The Company signed an agreement with GIFT Special Economic Zone (“SEZ”) Ltd., in January 2015 to set up International Exchange and International Clearing Corporation at the GIFT IFSC. Built over an area of 880 acres, the GIFT City is envisaged as an International hub for capital market trade.

India INX and India ICC are wholly owned subsidiaries of the Company.

BSE IT team had been instrumental in setting up the India INX Data Centre. The Data Centre setup was completed in a record time of 2 months. This included the design, build, provisioning of power and cooling, infrastructure setup. It also provides for colocation services, facilitating high frequency trading. Variants of data dissemination streams are provided to choose from, such as Full order book, tick-by-tick and snapshot based. Correspondingly, solution team too was engaged in application development and deployments of about 20 applications with multiple dry runs.

One of the notable and important IT contributions was application development to cater to 22 hours trading. The application architecture has been designed to be robust as well as flexible enough to meet international requirements, facilitating ease of configuring new products and its underline business rules.

The trading and the peripheral systems have been setup in a high availability mode and is designed to run 22 hours a day. The daily beginning and end of day operations activities have been automated.

India INX was inaugurated by the Hon’ble Prime Minister, Shri Narendra Modi, on January 9, 2017 and further the trading activities commenced on January 16, 2017.

India INX provides the BOW terminals to enable its Members to trade. In addition Exchange also provides API’s in the form of Intermediate Message Layer (“IML”) or Enhanced Trading Interface (“ETI”) to Trading Members or Independent Software Vendors (“ISV”) for development of their OmniLink Merchant Services (“OMS”).

Upgradation of the Security Operations Center (SOC)

The Company lays special emphasis on improvement in its cybersecurity framework and information security management systems. It was identified as a National Critical Information Infrastructure by National Critical Information Infrastructure Protection Centre (“NCIIPC”).

There is an ongoing process to strengthen cyber security under the guidance from NCIIPC and other national agencies like Indian Computer Emergency Response Team (“CERT-In”), National Security Council Secretariat (“NSCS”), Ministry of Home Affairs (“MHA”) and SEBI. With the increase in cyber threats and attacks, cyber security is becoming more and more established in the corporate structure. Constant enhancement in the Cyber Security Framework and Information Security Management System has been our top priority. Moreover, the Company’s performance is dependent upon the volume and value of trades executed on its trading platform. This implies high availability and no compromise on security around trading and peripheral systems or its underlying processes.

To address this challenge, the Company envisaged transforming its current information security posture to next generation security analytics and operations. The Company has embarked on a monumental task of creating the Next Generation security operations center (“SOC”) to provide increased resilience and rapid response to events throughout its IT landscape.

The year 2016-17, witnessed hectic groundwork to build the foundation for SOC. After due diligence and assessment of current posture, technologies and solutions were identified for fortifying existing security infrastructure and adapting new strategies to combat advanced threats. SOC Team configurations and required skill sets were analysed. IT Team was revamped with resources with a focus area in cyber security.

Prime responsibility of SOC is to perform 24x7 monitoring, detecting, and isolating incidents which indicate compromise in confidentiality, integrity and availability of these critical systems. Management of the organization’s security products, devices and systems are evident activities of SOC maintenance and operations scheme. The Next-Generation SOC will not only enable the Company to strategize against advanced cyber threats but also enhance its efforts as an organization to safeguard against informational, reputational and financial losses arising from cyber security breaches.

To build, maintain and operate Next-Generation SOC in integration with the existing security infrastructure, the Company has evaluated and appointed team of consultants and awarded contract to implement various security solutions. The fully operational SOC will be ready by end of 2017.

FOREIGN EXCHANGE EARNING AND OUTGO

The particulars of Foreign Exchange Earnings and Outgo during the year under review are furnished hereunder:

Foreign Exchange Earning: Rs.2,168 Lakh (Previous Year Rs.1,999 Lakh)

Foreign Exchange Outgo: Rs.585 Lakh (Previous Year Rs.663 Lakh)

HUMAN RESOURCES

Organizations that invest in human capital invest in the future. At BSE, the focus has been on making the right investments in human capital to take the Company and all its employees to the next level of competence and expertise. The Company has always believed that motivated employees are the core source of competitive advantage and these is continuous investments in training and development programs along with various other Human Resource (“HR”) initiatives.

The Company has aligned the compensation packages of management and successfully revamped many outdated HR policies to make benefits and compensation more transparent and employee-friendly.

Also, the organizational structure of the Company has undergone significant restructuring to enhance accountability and efficiency with a view to aligning performance management and reward strategies.

As of March 31, 2017 the Company had 369 officers and 121 staff level employees.

Material Developments in Human Resources/Industrial Relations Front, including number of people employed

The Company has been hiring talent both experienced as well as fresh post graduates from leading Business Schools in the recent years with a focus on matching skills and expertise to the relevant roles to enhance employee satisfaction. The Employee Relations scenario has also been satisfactory during the year. The clerical and sub staff are represented by an internal union.

Particulars of Employees

Pursuant to Section 197 (12) of the Act, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company shall disclose in the Board’s report, the ratio of the remuneration of each director to the median employee’s remuneration and other particulars of the employees drawing remuneration in excess of the limits prescribed in the above rules. Accordingly, such information pertaining to the Company is provided as an Annexure E.

DEPOSITS

The Company has not accepted any public deposits during FY 201617 and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

DETAILS OF DEPOSITS NOT IN COMPLIANCE WITH THE REQUIREMENTS OF THE ACT

Since the Company has not accepted any deposits during FY 2016-17, there has been no non-compliance with the requirements of the Act.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to sub-section (5) of Section 134 of the Act, with respect to the Directors’ Responsibility Statement, it is hereby confirmed that:-

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

c. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the directors had prepared the annual accounts on a going concern basis;

e. the directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f. the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

OTHER DISCLOSURES Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT 9 is enclosed herewith as per Annexure F.

Management Discussion & Analysis

The Management Discussion & Analysis Report forms part of this Annual Report.

Material Changes and Commitments Affecting the Financial Position of the Company

There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year to which the financial statements relate and the date of the report.

Change in the Nature of Business

Your Company has not undergone any changes in the nature of the business during the financial year.

The details of Significant and Material Orders passed by the Regulators or Courts or Tribunals impacting the going concern status and the Company’s operation in future

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company’s operation in future.

Frauds

No Fraud has been reported by the Auditors to the Audit Committee or the Board.

Corporate Governance

Pursuant to the SECC Regulations, Listing Regulations and the Act, report on Corporate Governance as at March 31, 2017, forms part of this Annual Report. A Certificate from Practicing Company Secretary, Mumbai confirming status of compliances of the conditions of Corporate Governance is annexed to this report.

ACKNOWLEDGEMENTS

The Board thanks the Government of India, SEBI, RBI, the Government of Maharashtra and other State Governments and various government agencies for their continued support, cooperation and advice.

The Board is grateful to the members of various committees constituted during the year.

The Board also acknowledges the support extended by trading members, issuers, investors in the capital market and other market intermediaries and associates.

The Board expresses sincere thanks to all its business associates, consultants, bankers, auditors, solicitors and lawyers for their continued partnership and confidence in the Company.

The Board wishes to thank all the employees for the exemplary dedication and excellence displayed in discharge of their duties for the Company.

Further, the Board expresses its gratitude to you as shareholders for the confidence reposed in the management of the Company.

For and on behalf of the Board of Directors

Place: Mumbai Dhirendra Swarup

Date: August 3, 2017 Chairman

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Mar 31, 2016

The Directors take great pleasure in presenting the Eleventh Annual Report of BSE Limited along with the audited financial statements for the financial year ("FY") ended March 31, 2016.

1. The Economic Environment

1.1 Global Outlook

Global growth is estimated at 2.4% in 2015, 0.4% below the projections as per the January 2016 World Bank Report on Global Economic Prospects. The below par performance largely reflected a continued growth deceleration in emerging and developing economies amid post-crisis lows in commodity prices, weaker capital flows and subdued global trade. In developing countries, growth in 2015 is estimated at a post-crisis low of 4.3%, down from 4.9% in 2014 and 0.4% lower than that projected in June 2015. The economic rebalancing in China is continuing and is accompanied by slowing growth. Brazil and Russia have been going through severe adjustments in the face of external and domestic challenges. More generally, 2015 growth estimates for more than half of the developing countries were further lowered.

According to the World Bank Global Economic Outlook 2016, global growth is projected to accelerate in the coming years reaching 2.9% in 2016 and 3.1% in 201718. This pickup is predicted on continued gains in major high-income countries, a gradual tightening of financing conditions, a stabilization of commodity prices, and a gradual rebalancing in China. The forecast is subject to downside risks, including a possible slowdown in major emerging market economies, financial market uncertainties arising from sudden shifts in borrowing costs and elbow room available for corrections to be attempted by the policy makers.

Growth in major high-income countries gained traction last year. This has been increasingly driven by stronger domestic demand, particularly in the United States, where employment conditions have improved. In the Euro area, credit growth is picking up and unemployment is declining. The recovery remains fragile in Japan despite substantial policy stimulus. With external demand negatively affected by a slowdown in large emerging market economies, growth forecasts across major high-income economies in 2016 have been calibrated down. The tightening cycle of the U.S. Federal Reserve is projected to be very gradual, while policy accommodation is likely to continue in the Euro area and Japan. China''s gradual slowdown and rebalancing continued in 2015, as further deceleration in sectors with excess capacity was partially offset by growth in services.

Overall, for world economies, downside risks dominate and have become increasingly centered on emerging and developing countries, as a gradual recovery in major high-income countries takes hold. As yet, unrealized gains from declining oil prices for importers pose an upside opportunity. India remains one of the brighter spots in the midst of uncertainty at the global level.

1.2 Indian Outlook

1.2.1 Economic performance in FY 2015-16

The Economic Survey released in February 2016 depicts an optimistic picture of the Indian economy. Amidst persisting global headwinds, India remains one of the best performing economies. Inflation, fiscal deficit and current account balance have exhibited distinct signs of improvement. As per the advanced estimates of the Government, the country is expected to register a GDP growth of 7.6% in FY 2015-16, as compared to 7.2% in 201415 (with the base as 2011-12), recording the highest percentage increase in the last five years. This year, India became the fastest growing major economy, surpassing China in terms of GDP growth. The economic reforms introduced by the government, a stable macro-economic environment and the falling commodity prices are some of the factors that have helped India achieve robust economic growth estimates.

According to the Economic Survey, India''s GDP is estimated to grow at 7-7.5% in the FY 201617 despite moderate global growth. The survey indicated that encouraging demand would be vital, and the implementation of the Seventh Pay Commission and onset of normal monsoons, are expected to provide some added optimism. The Survey states that the economy would be able to grow at 8.0% over the next couple of years. Further, it goes on to state that the country''s long run potential growth rate is still around 8-10% and realizing this potential requires a push on at least three fronts: being genuinely pro-competition, major investments in health and education of people, and focus on agriculture.

The Asian Development Outlook 2016 supports the Economic Survey findings and expects a 7.6% growth in GDP for the FY 2015-16 despite a double-digit decline in exports. The GDP growth is projected to dip marginally in FY 2016-17 due to a slowdown in public investment, stressed corporate balance sheets, and declining exports, then pick up in FY 2017-18 as newly strengthened bank and corporate finances allow a revival in investment. The growth estimates for FY 2016-17 is 7.4% and for FY 2017-18 is 7.8%. Notwithstanding unexpected delays in enacting some economic reform, the prospects for continued rapid growth are undiminished.

Despite a weak monsoon for a second consecutive year, agriculture grew by 1.1% in FY 2015-16, mainly on strong growth in livestock. Food grain production is estimated to have increased by 0.5% in FY 2015-16, though there was lower production of rice, coarse cereals, oilseeds, and sugarcane.

After growing by 5.9% in FY 2014-15, industry accelerated further to 7.3% in FY 2015-16. Manufacturing growth also rebounded to 9.5%, much higher than the 5.5% growth in FY 2014-15, primarily with the aid of robust performance in the manufacturing operations of private corporations, whose margins have been inching up due to lower input costs. The strong growth in manufacturing, which is based on value added, continues to be at variance with muted growth in industrial production, which measures volume. Growth in other industry subsectors - mining, construction, and utilities - moderated in FY 2015-16.

Expansion in services also moderated to 9.2%, largely in line with slower growth in public administration, defense, and the "other services" category. An increase in bank deposit and credit growth in the second half of FY 2015-16 helped financial, real estate, and professional services grow at a healthy 10.3%, while robust growth in airline passengers and sales of commercial vehicles bolstered expansion in trade, hotels, transport, and communications to 9.5%.

Shri Ashishkumar Chauhan, MD & CEO, BSE; Shri S. Ramadorai, Former Chairman, BSE and Shri Sameer Kochar, Chairman, Skoch Group presenting the award to Shri Anthony J.C. deSa, Chief Secretary, Madhya Pradesh, during the Skoch Awards on June 12, 2015 at BSE.

Private consumption growth is estimated to have picked up to 7.6% in FY 2015-16 from 6.2% a year. Much of the improvement in private consumption stems from a pickup in urban consumption, while rural consumption has remained subdued as a result of two consecutive weak monsoons. Government consumption growth also stayed moderate as the central government boosted capital expenditure and curtailed current expenditure. A 20.9% increase in capital expenditure undertaken by the central government helped investment growth improve to 5.3% from 4.9% in FY 2014-15. However, private investment remained weakened by overcapacity and Indian corporations'' debt overhang.

Inflation has been stable, averaging 5.0% in FY 2015-16. The easing of food inflation overall was helped by lower global commodity prices, restrained increases in domestic procurement prices, and improved management of government food stocks. Core inflation has remained steady, settling within the narrow range of 4.1% to 4.8% in FY 2015-16.

The government was able to achieve its target of reducing the budget deficit to the equivalent of 3.9% of GDP from 4.1% in FY 2014-15. The reduction came through curtailed current expenditure and through augmentation of tax revenue growth that exceeded the budgeted estimates. While corporate and personal income tax collection fell short of their targets, revenue from excise duties and taxes on services grew faster than planned, aided by hikes in excise duties on petroleum products. Despite receipts from planned asset sales falling well below their target, non-tax revenue registered healthy growth at over 30% as public sector enterprises, including public banks, paid higher dividends.

Expenditure grew by 7.3% in FY 2015-16, marginally higher than budgeted growth at 6.8%. Unlike in previous years, capital expenditure grew robustly, by 20.9%, such that the ratio of capital expenditure to GDP rose to 1.8% in FY 2015-16. By contrast, current expenditure growth was contained at 5.5%. The sharp drop in global oil prices, deregulation of diesel prices, and use of cash transfers to qualified recipients to rationalize the subsidized cooking gas benefit cut expenditures on the petroleum subsidy by more than half. However, there was an uptick in the outgo on account of fertilizer and food subsidies.

Buoyed by measures to enhance foreign direct investment - including raising the ceiling for investment in several important sectors such as broadcasting and defense, as well as rationalizing and simplifying procedures - net flows of foreign direct investment surged to an estimated $32 billion, nearly 26% higher than in the previous year. FDI inflows were primarily driven by investments in infrastructure and the services sector. Inflows in the form of deposits by non-resident Indians also remained strong, growing to nearly $15 billion in FY 2015-16. These inflows and continuing business and government loan inflows increased gross international reserves by $9.2 billion in FY 2015-16 to over $350 billion.

The Indian rupee depreciated by 8% against the US dollar in FY 2015-16. However, it weakened in nominal effective terms by a smaller 5%, and in real effective terms by less than 3%, implying that it moved in parallel with the currencies of its trading partners.

(L to R) CS Ashish Garg, Central Council Member & Program Director, ICSI; CS Atul Mehta, President, ICSI; Shri Ashishkumar Chauhan, MD & CEO, BSE; CS Makarand Lele, Central Council Member & Chairman, Financial Services Committee, ICSI and CS Rishikesh Gagan Vyas, Chairman, ICSI-WIRC & program coordinator present on dais during the ICSI Capital Markets Week June 2, 2015 at BSE.

Foreign Portfolio Investors ("FPI") net investments in Indian equities and debt reached record highs in FY 2015-16 backed by expectations of an economic recovery, falling interest rates and improving earnings outlook. FPIs net investments stood at Rs, 18,106 Crore in March 2016, out of which Rs, 16,731 Crore was invested in equities and Rs, 1,375 Crore invested in debt. In the Asia-Pacific region ex-China, India was the highest recipient of inflows in equities and ranked third for debt.

1.2.2 Economic Prospects for FY 2016-17

While public investment and urban consumption were the major drivers of growth in FY 2015-16, a revival of private investment and rural consumption is critical if growth is to remain strong in FY 2016-17 and FY 2017-18, given the likely sluggish recovery in the advanced economies and the bleak outlook for global trade. Urban consumption is expected to receive a boost due to the implementation of 7^th Pay Commission recommendations. Rural incomes and spending also received a boost in the Budget 2016-17 as it supports programs aimed to improve agricultural productivity and funding of the government employment scheme for poor rural families. An expectation of normal monsoon to above-normal monsoon gives hope to mitigate some of the pressure on food prices, which firmed up in the second half of FY 2015-16.

Public investment will continue to be an important driver of growth, as the government is expected to use savings from oil to further boost government investment. Ongoing deleveraging by private corporations, reductions in policy rates, and positive externalities from public investment are likely to initiate a recovery in private investment. The manufacturing purchasing managers'' index declined for 6 consecutive months to December

Shri Ashishkumar Chauhan, MD & CEO, BSE with Shri V.P. Nandakumar, MD & CEO, Manappuram Finance ringing the Opening Bell on Completion of 20 years of Manappuram Finance on November 6, 2015 at BSE.

but rose in January, February and March 2016 on new orders and exports. The services index has been more robust, reaching a 21-month high in January but then falling in February and again rising in March 2016 on a marginal increase in output.

RBI''s monetary policy over the last year had rested on rate cuts and liquidity measures - in that sequence of events and importance. The central bank has signaled an accommodative monetary stance and delivered a 25bp rate cut in April 2016 to bring down the policy repo rate to 6.5% in line with market expectations and stuck to its "accommodative" forward guidance. Though further cuts to key policy rates would be contingent on the evolving inflation trajectory and the implementation of planned budget consolidation. RBI''s projection for March 2017 CPI is at 5% and they target it to be 4.2% by early 2018. Thus, while aggressive rate cuts are unlikely, FY 2016 may see some monetary easing. The lending rates of the banks have not come down in tandem with the RBI rate cuts and the focus of the RBI is now on transmission of these rate cuts.

As per the survey conducted by Centre for Monitoring Indian Economy Pvt. Ltd. ("CMIE"), 41.2% of the respondents expect an increase in industrial production which is slightly less than 48.6% respondents who don''t expect it to change. A positive sign is that respondents who feel that production will decrease has never crossed 14% since Q1-11 and form a minority.

The FY 2016-17 budget displays fiscal prudence by reaffirming the path of fiscal consolidation and reducing the fiscal deficit to 3.5% of GDP. The Budget of 2016-17 has focused on a 9-pillar theme that supports the inclusive and overall growth

Bollywood actress Ms. Isha Koppikar along with BSE members ringing the Opening Bell for Muhurat Trading on November 11, 2015 at BSE.

policies of the Government. The proposals put forth are oriented towards providing for entrepreneurial skills, support start-ups and enable job creation. This would have long term implications in terms of boosting domestic demand, coming from both the urban and the rural sectors. The budget has special emphasis on reviving rural demand. The scope covers budget proposals to increase social sector spending and boosting infrastructure allocations for road transport, power generation, renewable energy, and railways. Numerous measures enacted to attract foreign direct investment along with further measures to improve the business environment. The regulator, Securities and Exchange Board of India ("SEBI") has now allowed Foreign Portfolio Investors ("FPI") to invest in units of Real Estate Investment Trusts ("REITS"), Infrastructure Investment Trusts ("InvITs"), Category III Alternative Investment Funds ("AIF"), and also permitted them to acquire corporate bonds under default. There is a focus of the Government to develop markets in Government securities, corporate bonds and commodities as additional asset classes for trading. The Budget contains a number of tax proposals for providing relief to small taxpayers, measures to boost growth and employment generation, incentivizing domestic value addition, reducing litigation and providing certainty, and for simplification and rationalization of taxation.

This year''s Budget bears the imprimatur of the Government''s intent in accelerating growth with its "Transform India" focus. The International Monetary Fund has projected India to be at a ''bright spot'', while the World Economic Forum has commented that India''s growth rate is ''extraordinarily high''. The government clearly wants to see India break out of the "big-but-poor" contradiction and take its rightful place with the most developed countries. Initiatives like ''Skill India'', ''Digital India'', ''Startup India Plan'', ''Make in India'' and ''Swachh Bharat'' initiatives are clear indicators of the Government''s intent to encourage employment, generate domestic demand and facilitate overall growth that will ensure that India remains a favored base for investment.

2. The Capital Markets Overview

BSE has become the world''s fastest Stock Exchange with an order response time of 6 microseconds and the largest exchange in the world in terms of number of companies listed. As of March 2016, BSE is the 2^nd largest exchange in the world for currency options, 3^rd largest in the world for currency futures, 11^th largest by number of trades and 12^th largest exchange in the world by market capitalization.

2.1 Primary Market

The total number of companies listed (equity as well as debt) on BSE as on March 31, 2016 was 5,911 as compared to 5,624 on March 31, 2015.

During FY 2015-16, 24 companies came to the market through the Initial Public Offering ("IPO") process in the Main Board. The amount raised through Main Board IPOs in FY 2015-16 was Rs, 15,374.99 Crore as against Rs, 1,374.62 Crore in FY 2014-15, a 10 fold-increase. Further, there were no Follow-on Public Offers ("FPO") in FY 2015-16. In addition to the 24 IPOs on the Main Board, another 38 companies raised Rs, 237.34 Crore through the SME IPO process in FY 2015-16. The total amount mobilized through Privately Placed Debt Securities at BSE in FY 2015-16 was Rs, 2,35,402 Crore as against Rs, 2,46,221 Crore in FY 2014-15.

During FY 2015-16, there were 20 public issues of bonds

Shri Neeraj Kulshrestha, Chief of Business Operations, BSE presenting a memento to Mr. Ramin Toloui, U.S. Treasury Assistant Secretary for International Finance at the USIBC Roundtable on November 3, 2015 at BSE.

which mobilized Rs, 34,461 Crore as against Rs, 10,716 Crore from public issues of bonds in the FY 2014-15. Further out of these 20 public issues, 15 issues were exclusively listed on BSE (75%). The BSE platform was used to collect Rs, 89,537 Crore and the average bids garnered through BSE''s Internet based- Book Building Software ("iBBS") platform for these debt public issuances was 96%.

During FY 2015-16 there were 18 Offer for Sale ("OFS") issues, of which BSE was appointed as the Designated Stock Exchange in 14 issues (78%). Out of the 14 OFS issues, 10 issues were conducted exclusively on the BSE platform. In FY 2015-16, the total amount raised through OFS issues was Rs, 19,813.87 Crore.

During the year, SEBI has extended Stock Exchange Mechanism route of secondary market to tender shares by investors for any Buyback/Delisting or Take Over offer. BSE enabled this facility through its iBBS platform as an Offer to Buy ("OTB") window. BSE has again emerged as the market leader in this new product offering. Since inception, there were 37 OTB issues, of which BSE was appointed as the Designated Stock Exchange in 5 issues and 28 issues were conducted exclusively on the BSE platform.

Further, during the year, SEBI also changed the guidelines and regulations for public issue of equity shares. Thus, the Applications Supported by Blocked Amount ("ASBA") mechanism was made mandatory and listing of shares is required to be completed within 6 days in place of 12 days permitted earlier. The average bids garnered through BSE''s iBBS platform after the streamlining of the IPO process was 61%.

In the Budget 2016, Government has given further relaxation in the matter of taxation for REIT and InvITs.

Shri Ashishkumar Chauhan, MD & CEO, BSE discussing with Dr. Ramgopal Agarwal, Honorary Senior Fellow, National Council of Applied Economic Research (NCAER) and Dr. Rajiv Kumar, a Senior Fellow at CPR during the BSE - CPR event on October 26, 2015 at BSE.

Shri Ashishkumar Chauhan, MD & CEO, BSE presenting a memento to CS K. Sethuraman, Company Secretary & Chief Compliance Officer, Reliance Industries Ltd. at the signing of agreement of RIL Listing at BSE on October 26, 2015.

BSE has started engaging with the regulators and market participants for the successful roll out of this product and for a new asset class to be available to investors on its Trading Platform.

2.2 Secondary Market

Equity Segment

The S&P BSE SENSEX ended FY 2015-16 at 25,342 compared to 27,958 at year end of FY 2014-15, a decrease of 9.36% over the year which has been one of the factors in the decline in trading volumes this year. The average daily value of equity turnover on BSE in FY 2015-16 was Rs, 2,996 Crore, an annual decrease of about 14.83% from Rs, 3,518 Crore in FY 2014-15.

Equity Derivatives Segment

Equity derivatives trading reached an average daily volume of 4.32 Lakh contracts per day in FY 2015-16 as compared to 20.80 Lakh from FY 2014-15. BSE has decided to discontinue its Liquidity Enhancement Incentive Programme Scheme ("LEIPS") that has been running for the past few years. Instead it has decided to provide incentives in terms of technological support to gain market share in this segment.

Currency Derivatives Segment

In the currency derivatives, BSE''s market share increased to 36.41% in FY 2015-16 from 33.86% in FY 2014-15. Members'' participation in this segment also increased to 285 members during FY 2015-16 which includes 14 banks that have been active out of the 26 banks who are our trading members, compared to 242 members in FY

2014-15. Open Interest ("OI") for FY 2015-16 was 12.87 lakh contracts, an increase of over 93.82% as compared to 6.64 lakh contracts during FY 2014-15.

Interest Rate Derivatives

Shri Ashishkumar Chauhan, MD & CEO, BSE presenting a memento to Mr. Vazil Hudak, Hon''ble Minister of Economy of Slovak Republic during his visit to BSE on October 8, 2015.

During FY 2015-16, BSE''s market share in interest rate derivatives increased to 17.19% from 8.85% in FY 201415. Members participation increased to 94 members (76 in FY 2014-15). Currently seven banks and two primary dealers are active in this segment.

Debt Segment

The Fixed Income segment at BSE provides an array of products and services to market participants. In this space, BSE also offers reporting of Secondary Market Trades in Government Securities, Treasury Bills, Corporate Bonds, Certificate of Deposit ("CDs") and Commercial Paper ("CPs") on the Wholesale Debt Market platform called Indian Corporate Debt Markets ("ICDM"). BSE witnessed reporting of OTC trades in Corporate Bonds on ICDM worth '' 2,07,652 Crore in FY 2015-16 as against Rs, 2,03,387 Crore in the previous year, marking an increase of 2.10%. In case of SLR securities

i.e. Government Securities and Treasury Bills, trades worth Rs, 2,27,125 Crore were reported on ICDM in the current year as against Rs, 2,21,233.28 Crore in FY 201415. The same is mainly attributed to increased Brokers participation on BSE''s Debt platforms.

Trading in Non-Convertible Debentures ("NCDs") and Bonds on ''F'' group on BOLT saw increased activity of Rs, 4,608 Crore in FY2015-16 as against Rs, 3,756.82 Crore in the previous year. BSE has retained a market share of over 61.9% in the retail trading of Corporate Bonds in FY 2015-16.

No significant activities were observed in trading in Government Securities on the Retail Debt Market ("RDM") ''G'' group across the entire market. In accordance with RBI and SEBI guidelines, BSE has developed a platform called ''E-settle'' to facilitate clearing and settlement of secondary market trades in corporate bonds, CPs and CDs on Delivery Vs Payment 1 ("DvP1") basis through the Indian Clearing Corporation Limited ("ICCL").

The settlement volume for corporate bonds witnessed business of Rs, 57,874 Crore in FY 2015-16 as against Rs, 44,432.72 Crore in the previous year.

BSE had launched the New Debt segment ("BSE-NDS") on March 20, 2014 in accordance with SEBI guidelines for new dedicated debt segment on stock exchanges issued in January 2013 and September 2013. 135 Trading Members and Institutional Members are registered on BSE NDS.

ebidXchange - Auction of FPI limits for debt

A custom designed platform called ''ebidXchange'' for allocation of FPI limits for investment in government securities and corporate bonds was launched by BSE in May 2009.

The ebidXchange platform pioneered the auction of multiple products - Infrastructure Bonds, Corporate Bonds and Government Securities. During FY 2015-16, BSE conducted 9 auction sessions, all of which were conducted seamlessly and received positive response from market participants. The total cumulative amount bid for these 9 auctions was Rs, 23,499 Crore.

Exchange Traded Funds ("ETF")

As at March 2016, BSE had 45 ETF listed. During FY 2015-16, the average daily turnover in ETFs increased nearly 459% i.e. Rs, 28.99 Crore from Rs, 6.32 Crore in FY 2014-15.

Employee Provident Fund Organization''s ("EPFO") investment in SENSEX based ETF

SBI Mutual Fund has created and listed the SBI Sensex ETF on BSE which is based on the most popular benchmark index of India, the S&P BSE Sensex and

Shri Ashishkumar Chauhan, MD & CEO, BSE along with Shri Mohit Kamboj, President - National Board, Indian Bullion & Jewellers Association Limited and other delegates from Indian Bullion & Jewellery Association during the signing of MoU between BSE and Indian Bullion & Jewellery Association on December 11, 2015. made available for trading on BSE''s platform. During the financial year, EPFO has commenced investing 5% of its incremental corpus in the SENSEX ETF. During FY 2015-16, average daily turnover in ETFs has increased nearly 459% i.e. from Rs, 6.32 Crore in FY 2014-15 to Rs, 28.99 Crore in FY 2015-16.

Mutual Fund Segment ("MF")

The MF industry pumped in significant funds in debt and equity funds leading to assets under management ("AUM") reaching Rs, 13,53,444 Crore as in FY 2015-16, an increase of 13.86 % over Rs, 11,88,690 Crore in FY 2014-15. Encouragingly, BSE''s online Mutual Fund platform "BSE StAR MF" continued to gain acceptance with turnover reaching Rs, 44,235 Crore in FY 2015-16, an increase of nearly 321% over the previous year compared to Rs, 10,462 Crore in FY 2014-15. With new features and continuous innovations to meet customer needs, the model of investment and redemption of mutual fund units through an exchange-provided infrastructure has gained tremendous response in the market.

BSE StAR MF is a web-based transaction processing system that can be accessed "anytime" and "anywhere", and enabled for Intra Asset Management Companies ("AMC") switches, Direct Pay-out to Clients ("DPC"), NRI transactions, Minor Transactions and a unique product called SIP or X-SIP. The BSE StAR MF platform has emerged as the largest online platform in mutual funds with:

- Number of Orders: Market share of 81%

- Traded Value: Market share of 85% (FY 2015-16)

- 40 AMCs with over 5,000 schemes, accounting for 99% of the MF Industry AUM, are available on the BSE StAR MF Platform

Shri Ashishkumar Chauhan, MD & CEO, BSE presenting a memento to Mr. Zhang Yuyan, Director of IWEP, CASS during his visit to BSE on September 14, 2015.

Shri Ashishkumar Chauhan, MD & CEO, BSE along with Shri Leo Puri, MD, UTI Asset Management Company Ltd.; Shri Imtaiyazur Rehman, CFO, UTI Asset Management Company Ltd. and other dignitaries at the lamp lighting ceremony of UTI MF SENSEX ETF on September 3, 2015 at BSE.

- Number of orders reached 32.8 Lakh in FY 2015-16, up by 106% from 15.91 Lakh orders in FY 2014-15, along with over 4,00,000 SIPs / X-SIPs registered on BSE StAR MF Platform, triggering every month.

Innovations and unique Features for on BSE StAR MF Platform

- OverNite Funds Management: The liquid-overnight investments are synchronized with BSE''s settlement. This creates a call money market equivalent product for liquid mutual funds on the platform to pool the brokers own funds as well as their clients'' money.

- X-SIP Facility: Under this product, a single mandate can be used for investing in SIPs across all schemes and all AMCs registered with StAR MF. The SIP administration and the cost of administration is borne by BSE and the money is debited to the client''s bank account directly instead of debiting the member pool account.

- X-SIP Facility with First order today flexibility: Enabling BSE StAR MF members to start SIP within couple of minutes instead of waiting for a month. This was in response to the demand from the market.

- Multiple mode of payments viz. payment gateway, one time mandate, cheque, RTGS/NEFT

- Completely digital and real time investors registration

- DPC Facility: Direct pay-out of units to client accounts option to member broker

- Connectivity: Multi mode of platform access;

a) Web - browser with CO-BRANDING facility,

Shri S.Ramadorai, Former Chairman, BSE along with Shri Ashishkumar Chauhan, MD & CEO, BSE; Shri Sudhakar Rao, Chairman, BSE; Shri Dhirendra Swarup, Public Interest Director, BSE Inaugurating the DR Room of BSE.

b) APIs over leased lines

c) WEB Services - APIs over internet

- SMS/email based redemption order authentication BSE SME Platform

The framework for SME Platforms to serve small and medium-size enterprises on stock exchanges were established by SEBI vide a circular on May 18, 2010. The BSE SME platform received the final approval of SEBI on September 27, 2011. BSE SME IPO Index was launched on December 14, 2012 with 100 as the base. On March 31, 2016 the value of this index reached 767.86. Additionally, the total market capitalization of all the 127 companies listed on BSE SME Platform reached Rs, 9,356.68 Crore.

During FY 2015-16 the SME platform continued to be a front-runner with a market share of over 90%. 38 companies raised Rs, 237.24 Crore from the market.

Migration to Main Board

BSE issued a circular on November 26, 2012 stating that companies have to be mandatorily listed and traded on the SME Platform for a minimum period of two years for them to migrate on to the Main Board as per SEBI guidelines. During FY 2015-16, 13 BSE SME Companies have migrated to the BSE Main Board.

Global Recognition for the BSE-SME platform

In its research report of July 2015, International Organization of Securities Commissions ("IOSCO") commended BSE''s SME platform for being the most cost effective platform for SME listing in the world. In March 2016, it also received the SKOCH Achiever Award from Shri. K. T. Rama Rao, Hon''ble Minister of IT, Government of Telangana. In March 2016, the World Federation of Exchanges, put forth a report on SME funding through exchanges and has taken the BSESME platform as a key case study.

BSE Hi-Tech

BSE has launched a new segment BSE Hi-Tech, following the announcement of the new Institutional Trading Platform Regulations by SEBI in August 2015. This platform will facilitate young, fast growing companies to access capital and provide liquidity to early stage investors. BSE has formed an Advisory Panel comprising eminent persons from the ecosystem and organized several knowledge sessions. Feedback has been gathered from the companies, investors and intermediaries in addition to the Advisory Panel and shared with SEBI.

Aadhaar based e-KYC

BSE has announced Aadhaar based e-KYC for intermediaries to facilitate an easy and simplified account opening process in the Securities Market.

This new facility is in line with SEBI''s initiative vide the SEBI Circular CIR/MIRSD/29/2016 dated January 22, 2016

SEBI has clarified that:

1. In-person verification of the client is not required to be carried out, if:

a. Verification of the client with UIDAI is carried out through biometric authentication (fingerprint or iris scanning).

b. Verification of the client with UIDAI is carried out through one time password ("OTP") received on client''s mobile number or on e-mail address registered with UIDAI provided, the amount invested by the client does not exceed '' 50,000 per financial year per Mutual Fund and payment for the same

Shri Ashishkumar Chauhan, MD & CEO, BSE along with Shri Arun Jaitley, Hon''ble Minister of Finance, Corporate Affairs, Information and Broadcasting, Govt. of India, and other dignitaries at the Asia Pacific Investment Co-operation Summit Hong Kong on September 25, 2015.

is made through electronic transfer from the client''s bank account registered with that Mutual Fund

2. eSign Electronic Signature Service is an innovative initiative that allows easy, efficient, and secure signing of electronic documents by authenticating signatory using Aadhaar e-KYC services. With this service any Aadhaar holder can digitally sign an electronic document without having to obtain a physical digital signature dongle.

The Electronic Signatures facilitated through eSign Online Electronic Signature Service is legally valid, provided the eSign signature framework is operated under the provisions of the Second Schedule of the Information Technology Act, 2000 and guidelines issued by the Controller.

3. If KYC verification of the client is carried out through Aadhaar based e-KYC service offered by UIDAI as per the aforementioned SEBI Circular and PAN of the client is verified from the income tax website, the information downloaded from UIDAI shall be considered as sufficient information for the purpose of KYC verification and the client is not required to fill up the KYC form and put his / her signature on the same.

. Business Operations Review Membership

During FY 2015-16, 46 new Deposit Based Membership ("DBM") applications were received at BSE. Since the launch of the new DBM scheme in April 2010, BSE has received a total of 789 DBM applications.

Corporate Services (Listing)

The Corporate Services segment of BSE registered healthy revenue growth in FY 2015-16. Annual Listing

Shri Ashishkumar Chauhan, MD & CEO, BSE along with Mr. David Thomson, Chairman, Thomson Reuters with the BSE Bull during his visit to BSE on April 15, 2016.

Shri Ashishkumar Chauhan, MD & CEO, BSE along with Shri P.K Tiwari, Director, FIU-IND and Shri Siddharth Shah, Chairman, BSE Brokers Forum on the dais at the Brokers Forum Event on August 27, 2015 at BSE.

Fees (equity, debt and MF) increased by 61.86% to Rs, 101.33 Crore compared to Rs, 65.60 Crore in FY 2014-15. This increase in Annual Listing Fees is mainly attributed to an increase effected in the Fee Schedule.

Overall the listing processing fees, reflecting activity in new listings and new issuances were Rs, 37.76 Crore in FY 2015-16 compared to Rs, 27.79 Crore in FY 2014-15 up 36% from the previous year on account of many IPOs, Debt Issuance, Direct Listings, new SME listings, QIP Issues, OFS, Mutual Funds Listings.

BSE also provides other services to corporate such as book building software, buy-back facilities, reverse book building software, etc. Fees earned from such services were Rs, 11.23 Crore in FY 2015-16 as compared to Rs, 5.53 Crore in FY 2014-15, a rise of 103% from the previous year on account of new primary market issuances including tax-free bonds and the newly introduced OTB facility.

Data Information Products

BSE and Deutsche Bourse have entered into a partnership in October 2013 under which Deutsche Bourse would act as the licensor of BSE market data and information to all international clients. Under the co-operation, Deutsche Bourse is responsible for sales and marketing of all BSE market data products to customers outside India, while BSE continues to serve its domestic clients. Deutsche Bourse also shares the joint responsibility along with BSE for product development and innovation, which includes extending its existing infrastructure and creation of new, market data solutions and infrastructure to support BSE''s product offerings.

The business for sales and marketing of BSE market data products to International customers by Deutsche Bourse commenced from April 2014. The total revenue from the sale of market data and information products was

Shri Nehal Vora, Chief Regulatory Officer, BSE addressing the audience at the launch of Non - Executive Directors in Conversation Trust on July 22, 2015 at BSE.

Rs, 22.42 Crore in FY 2015-16 as compared to Rs, 22.10 Crore in the previous year. The increase in revenue was mainly due to increase in subscription for BSE information products and services by new customers.

4. Secondary Market Policy Developments Periodic Price Bands ("PPB")

BSE, in order to prevent excessive price movement in the securities exclusively listed on its trading platform, has put in place an additional framework of PPB in addition to the SEBI prescribed daily price band framework. The PPB framework was introduced in September 2015 and specifies additional price bands for different periods (weekly, monthly, quarterly and yearly) for a security based on its daily applicable price band. The PPB framework also factors in, the likely movements in the security on account of overall market conditions and company level announcements/ developments by way of reflecting relevant adjustments in the price bands. PPB framework has been found to be working well as a systemic solution for fair and equitable price discovery in BSE exclusively traded securities including SME and SME-ITP securities.

Trade Annulment

Pursuant to SEBI circular, BSE introduced Trade Annulment Framework in August 2015. The framework specifies eligibility and processing criteria for trade annulment request and reviews submitted by trading members. Under this framework, the trading members can submit trade annulment requests through a workflow based electronic interface available to them. Such annulment requests are decided based on the laid down criteria by BSE. Further, the trading members can also seek review of BSE''s decision which would be put up before the Trading and Surveillance Oversight Committee for appropriate decision.

Price Reasonability Check ("PRC")

To reduce order entry errors and potential instances of market abuse, BSE had introduced PRC functionality in September 2014 for the currency futures segment. During January and March 2016, the functionality was extended to the equity derivatives and the currency options segments respectively. PRC ensures that the entered prices of Limit Buy Orders or Limit Sell Orders are not too far away from the actual market price by validating the new incoming limit order prices within the specified Price Reasonability Range ("PRR"). The PRR is dynamically computed and applied by the trading system using a real-time reference price.

Reversal Trade Prevention Check ("RTPC")

In March 2016, BSE introduced a new feature with an intention to prevent potential cases of trade reversal taking place on BSE''s trading platform. In this measure, the second leg (latest leg) of a reversal trade shall be automatically cancelled by BSE at the time of order matching in an online real time manner in the trading system. RTPC is being implemented in a phase-wise manner and to begin with, it has been made applicable on all contracts available for trading in the equity derivatives segment except for stock futures, futures contracts on S&P BSE Sensex, current and near month options contracts on S&P BSE Sensex.

Policy Measures taken by SEBI in FY 2015-16:

During FY 2015-16, SEBI communicated to the Exchanges that One Person Company ("OPC"), as permitted under the Companies Act, 2013, can be registered as stock broker and sub-broker, subject to certain conditions stipulated therein.

5. Regulation

The BSE Regulatory Group comprises Surveillance, Investigation, Broker Supervision, Investor Services,

Shri Ashishkumar Chauhan, MD & CEO, BSE and Mr. Thomas Bendixen, Shareholder Director, BSE with the Taiwan Stock Exchange team in Taiwan on May 5, 2015.

Listing Compliance, Legal Regulatory and Membership Compliance.

Surveillance & Investigation

As part of market monitoring activities during FY 2015-16, 79,798 surveillance alerts were generated, of which 1,009 alerts were taken up for snap investigations. Subsequently, 156 cases were taken up for preliminary / detailed investigations, of which 103 preliminary/ investigation reports have been forwarded to SEBI. Based on the findings, 843 observations letters were issued to various members/clients. Further, on account of surveillance measures, there were 3,000 price band reductions and suspensions in 158 securities during FY 2015-16. Actions were taken against 5 entities which were suspended for 1 day and 1 entity was suspended for 2 weeks for trading in illiquid stock options. BSE has also provided E-Boss, the member level surveillance system to trading members to monitor their clients positions and manage risk at a nascent stage.

Broker Supervision

574 inspections of members were conducted during FY 2015-16, which include 462 routine inspections and 112 special inspections. This also included 99 inspections on the basis of risk based supervision.

Investor Services

BSE redresses investor complaints against trading members and listed companies by taking prompt action upon receiving the complaints. Investor complaints against trading members are received through the SEBI Complaints Redressal ("SCORES") System of SEBI, a web based system where investors can lodge their complaints online. BSE in turn communicates the complaints to the members electronically through the BSE Electronic Filing System ("BEFS"), thereby reducing the communication

Shri Ashishkumar Chauhan, MD & CEO, BSE along with Shri Ananta Barua, Executive Director, SEBI and Shri Atul Joshi, Managing Director and CEO, India Ratings and other delegates during the Roundtable Conference for Municipal Bond Issuances on May 22, 2015 at BSE.

Shri Shankar Jadhav, Head Strategy, BSE along with China delegates during

their visit to BSE on November 20, 2015.

time resulting in expeditious resolution of investor complaints. All actions taken in the process of redressal are then updated on this system. The complaints against trading members were earlier redressed through mediation and counseling by Investor Grievances Redressal Committees ("IGRC").

IGRC of BSE has in the FY 2015-16 decided the claim values of 133 investors against the trading members amounting to Rs, 3.42 Crore. Further, in the case of 9 investors, payment amounting to Rs, 2.69 Lakh has been released from the Investor Protection Fund ("IPF") while for 48 investors, payment amounting to Rs, 87.83 Lakh, has been released from the deposits of the trading members.

BSE at present provides IGRC as well as arbitration services at its Regional Investor Service Centers located at Mumbai, Chennai, Delhi, Kolkata, Ahmadabad, Hyderabad, Kanpur, Indore, Jaipur, Pune, Bangalore, Patna, Vadodara and Luck now. BSE is the only Exchange in the country, where 15 Registrars and Transfer Agents ("RTAs") regularly visit its Investor Service Centre at Mumbai, for redressal of investor complaints against Companies listed on BSE.

6. Listing Compliance

Initiative of XBRL reporting

BSE has become the first Stock Exchange in India to introduce and implement XBRL based reporting in association with its partner in this endeavor, Microvista Technologies. eXtensible Business Reporting Language or XBRL is an electronic format for communication of business and financial data which is revolutionizing business reporting around the world. The standardization in-built in the XBRL documents provides significant benefits in the preparation, analysis and communication of business information. BSE had already launched its state-of-the-art exiling portal called "Listing Center" on

Smt. Sonal Chauhan along with Shri Ashishkumar Chauhan, MD & CEO, BSE and BSE management performing the lakshmi pujan during Muhurat Trading Day at BSE on November 11, 2015.

February 8, 2013 which enables all listed companies to file their submissions / disclosures online and even facilitates submission of digitally signed documents.

With a view to making reporting by listed companies to Stock Exchanges more accurate and efficient, BSE had introduced the globally recognized XBRL based reporting for Shareholding Pattern with effect from June 11, 2015 and Financial Results with effect from October 15, 2015.

As a further step to this initiative and in keeping with BSE''s commitment to transparency, BSE has now made available in public domain, the XBRL Taxonomies for 5 reports required to be filed by listed companies under the Listing Regulations. The same are disseminated on the BSE website under the tab: Corporate -- Corporate Filings -- XBRL.

Initiative to encourage suspended companies to complete compliances for resumption of trading in the interest of the investors - else face compulsory delisting.

Trading in the securities of certain listed companies has been suspended for a long period of time on account of non-compliance with the critical clauses of the erstwhile Listing Agreement.

BSE, mindful of the difficulties faced by investors on account of suspension of trading, has in the past written to such companies to initiate and complete the process of revocation so that the investors can take suitable investment decisions. However, the response to BSE initiatives has been tepid.

In order to once again encourage companies which have been under suspension for a period of 7 years or more, to expedite the completion of all formalities for revocation or else be compulsorily delisted from BSE, a detailed procedure has been formulated and disseminated to the listed companies vide Exchange

Circular dated February 12, 2016. BSE has also issued a Media Release on the same matter for the information of investors and the public at large.

Mandatory filing of Compliances/ Information in electronic mode

Pursuant to Regulation 10 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), BSE has made it mandatory for listed entities with effect from March 21, 2016, to submit filings for critical Regulations (mentioned in the circular of Standard Operating Procedure) through the Listing Centre. This would also make the filing process easier, more convenient and faster with BSE.

Further, effective from March 28, 2016, compliance filings in respect of Corporate Governance Report (Regulation 27) and Shareholding Pattern (Regulation 31) are required to be filed mandatorily by all listed entities, through XBRL mode only. This has been informed to all listed companies by way of emails and the same is posted on our website as a circular to listed companies under the tab Corporate.

7. State of Affairs

The financial performance of BSE for the financial year ended March 31, 2016 is summarized below:

(Rs, In Lakh)

Particulars	Standalone		Consolidated
	2015 16	2014 15	2015 16	2014 15
Total Revenue	51,589	43,918	65,827	62,475
Total Expenses	34,161	27,441	44,590	35,308
Profit before exceptional items & tax	17,428	16,477	21,237	27,167

Particulars	Standalone		Consolidated
	2015 16	2014 15	2015 16	2014 15
Exceptional items	7,327	4,920	4,660	5,075
Profit before tax	10,101	11,557	16,577	22,092
Provision for tax	(511)	1,413	3,241	4,378
Share of Minority & Share of Loss of Associate			3,662	2,161
Profit for the year	10,612	10,144	9,674	15,553
Balance brought forward from previous year	31,181	32,494	55,883	60,007
Setoff of Settlement Guarantee Fund	5,144		5,144
Rebate of Dividend Distribution Tax	1,796	628
Prior period Depreciation as per Schedule II		(327)		(329)
Amount available for appropriation	48,733	42,939	70,701	75,231
Appropriations
Interim and Proposed Dividend	8,188	5,459	8,188	5,459
Tax on Dividend	1,667	1,111	1,667	1,111
General Reserve	-	-	-	7

Shri S. Ramadorai, Former Chairman, BSE presenting the award to Shri Narayana Murthy, co-founder, Infosys during the ICSI National Awards for Excellence in Corporate Governance Awards on January 6, 2016.

Particulars	Standalone		Consolidated
	2015 16	2014 15	2015 16	2014 15
Core Settlement Guarantee Fund	-	5,188	3,456	12,771
Balance carried to Balance Sheet	38,878	31,181	57,390	55,883

7.1 BSE Performance Consolidated Results

The total income of the Exchange during the FY 2015-16 on a consolidated basis was Rs, 65,827 Lakh reflecting an increase of Rs, 3,352 Lakh (5.4%) over previous year. The total expenses for the year were higher by Rs, 9,282 Lakh (26.3%) at Rs, 44,590 Lakh. During the year, the expenses were higher mainly due to payments and provision towards Settlement Guarantee Fund and Core Settlement Guarantee Fund amounting to Rs, 9,463 Lakh in accordance with SEBI Regulations and Circulars. In view of the same, profit before tax was lower by Rs, 5,515 Lakh (25%) to Rs, 16,577 Lakh as against Rs, 22,092 Lakh in the previous year and profit for the year was lower by Rs, 5,879 Lakh (37.8%) to Rs, 9,674 Lakh as against Rs, 15,553 Lakh in the previous year.

Standalone Results

The total income of the Exchange during the FY 2015-16 on a standalone basis was Rs, 51,589 Lakh reflecting an increase of Rs, 7,671 Lakh (17.5%) over previous year. The total expenses for the year were higher by Rs, 6,720 Lakh (24.5%) at Rs, 34,161 Lakh. During the year, the expenses were higher mainly due to payments and provision towards Settlement Guarantee Fund and Core Settlement Guarantee Fund amounting to Rs, 9,463 Lakh in accordance with SEBI Regulations and Circulars. In view of the same, profit before tax was lower by

Shri Suresh Prabhu, Hon''ble Minister of Railways, Govt. of India, Shri Piyush Goyal, Hon''ble Minister of State for Power, Coal, New & Renewable Energy, Govt. of India & Member of Parliament, Rajya Sabha ; Shri Sudhir Mungantiwar, Hon''ble State Cabinet Minister of Finance, Planning and Forest departments, Govt. of Maharashtra flag off to start the BSE Bull Run on January 10, 2016.

Rs, 1,456 Lakh (12.6%) to Rs, 10,101 Lakh as against Rs, 11,557 Lakh in the previous year and profit for the year was higher by Rs, 468 Lakh (4.6%) at Rs, 10,612 Lakh as against Rs, 10,144 Lakh in the previous year.

7.2 Appropriations

Dividend

The Board, in its meeting held on February 3, 2016 declared an interim dividend of Rs, 3.50/- per equity share of the face value of Rs, 1/- each fully paid up. Further, the Board in its meeting held on May 5, 2016 has recommended a final dividend of Rs, 4/- per equity share of the face value of Rs, 1/- each fully paid up for the FY ended March 31, 2016 subject to the approval of the shareholders at the Eleventh Annual General Meeting.

The total dividend appropriation (excluding dividend tax) for the current year is Rs, 8,188 Lakh, as against Rs, 5,459 Lakh in the previous year. Total dividend (including dividend tax) as a percentage of consolidated net profit after tax is 102% as compared to 42% in the previous year.

Under Clause 5.3 of the BSE (Corporatization and Demutualization) Scheme, 2005 (the Scheme), the allotment of equity shares to 14 Trading Members of the erstwhile BSE has been kept in abeyance for various reasons as on March 31, 2016. Meanwhile, all corporate benefits including dividend as may be declared by BSE from time to time are being provided for and would be payable on the allotment of these shares.

Transfer to Reserves

BSE does not propose to transfer any amount to the General Reserve out of amount available for appropriations.

7.3 Internal Financial Control Systems and their Adequacy

The details in respect of Internal Financial Control Systems and their Adequacy are included in the Management Discussion and Analysis which form part of this report.

7.4 Particulars of Loans, Guarantees or Investments by BSE under Section 186 of the Companies Act, 2013

A detailed disclosure of the particulars relating to loans and investments by BSE as per Section 186 of the Companies Act, 2013 is provided in notes to the financial statements.

7.5 Particulars of Contracts or Arrangements with Related Parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013

BSE has formulated a Policy on Related Party Transactions. The same is available on BSE''s website at http://www. bseindia.com/downloads1/Related Party Transaction Policy.pdf. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between BSE and Related Parties. This Policy specifically deals with the review and approval of Material Related Party Transactions keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions. Prior approval was obtained of Audit Committee during July 2014 of all the Related Parties and Transactions thereof, entered in the Ordinary Course of Business and at Arm''s Length. All Related Party Transactions are placed before the Audit Committee for it review on a quarterly basis. All Related Party Transactions are subjected to independent review by a reputed accounting firm to establish compliance with the requirements of Related Party Transactions under the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

A detailed disclosure of these transactions with the Related Parties is annexed with this Report in Form AOC-2 as Annexure I.

7.6 Material Changes and Commitments Affecting the Financial Position of BSE

There have been no material changes and commitments affecting the financial position of BSE which have occurred between the end of the financial year of BSE to which the financial statements relate and the date of the report.

7.7 Change in the Nature of Business

BSE has not undergone any changes in the nature of the business during the financial year.

7.8 Deposits

BSE has not accepted any public deposits during FY 2015-16 and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

Details of Deposits not in compliance with the requirements of the Act.

Since BSE has not accepted any deposits during FY 2015-16, there has been no non-compliance with the requirements of the Act.

8. The details of Significant and Material Orders passed by the Regulators or Courts or Tribunals impacting the going concern status and BSE''s operation in future.

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and BSE''s operation in future.

9. Risk Management

Risk Management is an enterprise wide function at BSE which covers major business and functional areas including (a) strategy, (b) operations, (c) technology,

(d) personnel, (e) finance and (f) compliance. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. During the year, in order to strengthen the Risk Management, BSE has set up a Risk Management Committee comprising of Board members to assess and monitor the risks and their mitigating action plans. The risks in relation to internal control over financial recording and reporting is reviewed by the Audit Committee. BSE''s internal control systems are commensurate with the nature of its business and the size and complexity of operations. These systems are routinely tested and certified by Statutory as well as Internal Auditor. The Audit Committee reviews adequacy and effectiveness of BSE''s internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of BSE''s financial risk management policies and systems.

10. Report on performance of subsidiaries, joint ventures and associate companies

BSE has the following thirteen (13) subsidiary companies (direct and indirect), two (2) joint ventures and one (1) associate company during the year ended March 31, 2016 as follows:

Subsidiaries:

1) Indian Clearing Corporation Limited ("ICCL")

2) BSE Institute Limited ("BIL")

3) BFSI Sector Skill Council of India ("BFSI") (Section 8 Company)

4) BSE Skills Limited (w.e.f. March 26, 2014)

Shri Neeraj Kulshrestha, Chief of Business Operations, BSE; Shri Nehal Vora, Chief Regulatory Officer, BSE; Shri Nayan Mehta, Chief Financial Officer, BSE; Shri Kersi Tavadia, Chief Information Officer, BSE and Shri K Kumar, MD & CEO, ICCL along with Deutsche Borse Officials with the BSE Bull on February 8, 2016.

5) BIL - Ryerson Technology Startup Incubator Foundation ("BRTSIF") (Section 8 Company) (w.e.f. November 5, 2015)

6) Marketplace Technologies Private Limited ("MTPL")

7) Marketplace Tech Infra Services Private Limited

8) Central Depository Services (India) Limited ("CDSL")

9) CDSL Ventures Limited

10) CDSL Insurance Repository Limited

11) BSE Investments Limited

12) BSE Sammaan CSR Limited (w.e.f. September 10, 2015)

13) BSE CSR Integrated Foundation (Section 8 Company) (w.e.f. March 7, 2016)

Joint Ventures:

14) Asia Index Private Limited ("AIPL")

15) BOI Shareholding Limited ("BOISL") (upto January

8, 2016)

Associate:

16) Institutional Investor Advisory Services India Limited ("IIAS") (up to January 5, 2016)

There has been no material change in the nature of the business of the subsidiaries.

Pursuant to Rule 5 (1) of the Companies (Accounts) Rules 2014 the performance and financial position of the subsidiaries, joint ventures and associates companies is included for the financial year ended March 31, 2016 as per Form AOC-1 attached to the financial statements of the company.

The financial statements of the subsidiary companies are kept for inspection by the shareholders at the Registered Office of BSE. BSE shall provide free of cost, the copy of the financial statements of its subsidiary companies to the shareholders upon their request. The statements are also available on the website at www.bseindia.com.

Name of companies which have become or ceased to be its subsidiaries, joint ventures or associate companies during the year:

BSE incorporated the following subsidiaries during the year ended March 31, 2016:

1) BSE Sammaan CSR Limited (w.e.f. September 10, 2015)

2) BIL - Ryerson Technology Startup Incubator Foundation ("BRTSIF") (Section 8 Company) (w.e.f. November 5, 2015)

3) BSE CSR Integrated Foundation (Section 8 Company) (w.e.f. March 7, 2016)

Further following companies ceased to be a joint venture / associate during the year ended March 31, 2016:

1) Institutional Investor Advisory Services India Limited ("IIAS") ceased to be an associate on January 5, 2016.

2) BOISL ceased to be joint venture on January 8, 2016.

BSE holds 54.20% equity stake in its subsidiary CDSL. The shareholders of BSE have approved part divestment of equity stake in CDSL through a postal ballot during FY 2015-16. The said transactions would be executed after necessary regulatory approvals.

11. Significant Developments

Sammaan

Sammaan, has been developed by BSE in partnership with the Indian Institute of Corporate Affairs ("IICA"),

Dr. (CA). Kirit Somaiya, Member of Parliament, Lok Sabha along with Shri Ashishkumar Chauhan, MD & CEO, BSE with BSE Bull during the National Conference on XBRL on January 22, 2016.

a body under the Ministry of Corporate Affairs and the Confederation of Indian Industries ("CII"). As on March 31, 2016, 755 NGOs with 793 programs have been registered on Sammaan. The programs have funding requirements of Rs, 1,414 Crore. The programs of the NGOs are catering to various sectors, 341 programs are targeted at Education sector, 282 at Livelihood sector, 270 addressing Health sector and 69 Agricultural sector. All listed as well as unlisted corporate can access the Sammaan website to view and transact with the NGOs. BSE along with its partners is actively marketing Sammaan to Corporate and NGOs at all events and avenues.

Introduction of Overnight Investment product

BSE has introduced an Overnight (Liquid Fund) product on its Mutual Fund platform, BSE StAR MF - India''s largest MF platform. It allows the smallest investor or a corporate or a trust to invest even for one night in liquid funds anywhere in India.

MF Liquid Schemes are alternative investment avenue for idle money which provide better returns and relatively lower risk.

New Tenure for Interest Rate Derivatives

In June 2015, SEBI permitted introduction of Interest Rate Futures Contracts for 6 and 13 year duration, based on Government of India ("GOI") securities. On 28 July 2015, BSE introduced contracts for the new maturities in addition to Interest Rate Futures contracts on the existing 10-year GOI security. This is expected to expand the interest rate future market in India.

First exchange in India to implement Precision Time Protocol ("PTP")

BSE has implemented the PTP in its exchange trading platform and has also extended it to all the members

Smt. Nita Ambani, Mr. Ricky Ponting, Shri Rohit Sharma (Mumbai Indian''s Team) ringing the Opening Bell along with Shri Ashishkumar Chauhan, MD & CEO, BSE on April 7, 2016 at BSE.

Shri Ashishkumar Chauhan, MD & CEO, BSE along with Dr. Christoph Leitl, President, WKO and other delegates from Austria during their visit to BSE on February 19, 2016.

trading from collocation facility. World exchanges are slowly migrating to PTP because Network Time Protocol ("NTP") is not a suitable framework in today''s ultra-low latency trading platforms.

BSE uses the latest and most accurate time synchronization protocols like PTP for time synchronization of the entire trading infrastructure. PTP offers time synchronizations in the range of nanoseconds, due to which BSE has been able to leverage the accuracy in all its time stamps. This is the highest level of transparency and fairness which BSE has brought in for all its stakeholders. BSE has been the pioneer in making the measurements available for all the latencies across various stages of order route from the member server to BSE and back to member server. These latencies are reported in nanoseconds.

Launch of Algorithm Trading Test Environment

BSE has launched a new service for Algorithm Trading test environment on Cloud platform in partnership with Symphony Fintech Solutions Pvt. Limited and Amazon Web Services. This will enable all market participants to test their trading algorithms in equity, equity derivatives and currency derivatives segments free of cost. The members will be able to test their trading strategies with live market data feed during market hours and historical market data. There is also a provision to generate data analytics reports to check the performance of the strategies. BSE will provide individual test session for each member and there is no time slot booking for login sessions for trading members.

BSE and India Bullion and Jewellers Association ("IBJA") agreement to jointly setup a Gold Spot Exchange

In December 2015, BSE has signed an agreement with the IBJA for setting up a spot bullion exchange, the first of its kind in India. A Special Purpose Vehicle is to be formed, wherein IBJA and its constituents will hold 70

His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces interacting with Shri Ashishkumar Chauhan, MD & CEO, BSE during his visit to BSE on February 12, 2016.

per cent and BSE the rest. BSE will provide the trading technology, platform and technical knowhow. IBJA is to bring in the infrastructure, trading expertise and other necessary funds.

The spot bullion exchange will primarily trade in gold in the initial stages. Trading in silver would be launched once stability is established in gold trading. It would primarily offer three settlements a day for both buyers and sellers.

BSE and International Finance Corporation ("IFC") collaborate to develop India''s first Corporate Governance Scorecard

IFC, a member of the World Bank Group, has partnered with BSE, to develop a unique Corporate Governance Scorecard. The scorecard, a first-of-its-kind initiative, will help companies assess their corporate governance performances against national or international benchmarked practices.

Using the scorecard, companies can identify areas of further improvement and track progress over time. It can be used as a powerful analytical tool to make board processes more efficient, improve strategy, aid decision making, and manage risks. Companies can better understand governance and how it affects their operations. An improved governance framework can also help develop more efficient capital markets. IFC works across the region to strengthen capital markets. Increased access to capital enables new investments, improves economic growth, and creates jobs.

Launch of world''s first high-frequency data on unemployment in India

BSE and CMIE, have joined hands to launch world''s first high-frequency data on unemployment in India. Incidentally, this is the first instance of non-governmental organizations producing an unemployment measure for any country in the world.

India does not have a fast-frequency measure of unemployment. This joint effort by BSE and CMIE will produce a 30-day moving average measure of the unemployment rate in India on daily and monthly basis. It takes into account all observations available for a calendar month and is available from January 2016 onwards. State wise unemployment rates are also planned to be released after a few months.

Launch of Consumer Sentiments Indices in India

For consumer sentiment indices, University of Michigan''s Institute for Social Research, Survey Research Centre has partnered with BSE and CMIE. University of Michigan is a leader in producing consumer sentiment indices in the US that had commenced its first Survey of Consumers in 1946. These indices consist of 30-day moving average measures of consumer sentiments on a daily basis. Its two major constituents are index of current economic conditions and the index of consumer expectations.

The indices are based on response received from individuals in over 158,000 households, both in rural and urban India. All indices are being provided as public goods, free for public consumption. These vitally important indicators for India are expected to help policymakers, investors, entrepreneurs, academia, the media and the public at large get a better grip of macroeconomic status of Indian economy.

Clear stream and ICCL collaborate on trip arty margin collateral management

- ICCL linked to Clear stream'' s Global Liquidity Hub

- Clearing members/custodians may use the Global Liquidity Hub to manage margin requirements at ICCL

Shri Ashishkumar Chauhan, MD & CEO, BSE; Shri Morari Bapu; Shri Paresh Rawal, Actor & Member of Parliament, Lok Sabha; Shri Maulik Kotak, Chairman, Chitralekha on the dais at the 100 Birth Anniversary of Shri Vaju Kotak, Founder, Chitralekha at BSE on February 11, 2016.

- Collaboration extends the reach of the Global Liquidity Hub in Asia

ICCL and the Luxembourg-based international central securities depository Clear stream have collaborated on collateral management. They have signed an agreement on linking ICCL to Clear stream'' s integrated collateral management engine, the Global Liquidity Hub.

This step enables clearing members to manage their ICCL margin requirements resulting from trades executed on the BSE platform with the Global Liquidity Hub. Collateral can be pooled at the Global Liquidity Hub from assets held at Clearstream and partner agent banks to avoid bottlenecks in the sourcing of the right high-grade collateral to meet the CCP''s margin requirements.

This link to the triparty collateral management solution of Clearstream enables foreign investors trading on the BSE platform to deposit and use AAA-rated foreign sovereign bonds as collateral with ICCL towards their margin requirements within a highly automated and efficient triparty collateral environment. This setup is based on the guidelines prescribed by RBI and SEBI in this regard. It is in line with their objectives of strengthening the stability of Indian capital markets through the use of high-quality collateral for risk management purposes and of facilitating access for foreign investors to make India a globally competitive market.

ICCL renews Counterparty Default Insurance of ^ 411.24 Crore

ICCL has renewed its Counterparty Default Insurance cover to Rs, 411.24 Crore. Now in its third year, the objective of the Policy is to protect ICCL against counterparty defaults, and add a further capital cushion to the ICCL net worth making the resources of the no defaulting members even safer.

Shri Ashishkumar Chauhan, MD & CEO, BSE interacting with Shri Devendra Fadnavis, Hon''ble Chief Minister of Maharashtra & Chairman, MMRDA at the launch of the book “Pursuit of Affordable Housing" by Sanjay Shah & Naman Srivastava at BSE on February 3, 2016.

Shri Ashishkumar Chauhan, MD & CEO, BSE along with Mr. Kyungsoo Choi, CEO and Chairman, Korea Stock Exchange & Mr. Bo Chung, Managing Director, Client Coverage, S&P Dow Jones Indices (S&P DJI) with the signed MOU between BSE & Korea Exchange on April 27, 2016.

ICCL seeks to maintain sufficient financial resources to finance growth and ensure financial flexibility while maintaining its creditworthiness and liquidity. ICCL is the only CCP in the World with such a Default Insurance, which comes above the Default Fund of the CCP in the Default Waterfall. The policy further boosts the ability of ICCL to absorb losses before any resources of the non-defaulting members are put at risk. The magnitude of potential loss due to default a clearing corporation can undertake without affecting the capital of no defaulting members is contingent upon the net worth of the Clearing Corporation and additional capital cushions, which insulates the non-defaulting members'' resources from the default loss. The additional capital cushion, provided by the Insurance cover, along with ICCL''s own resources in the Default Waterfall, covers nearly 4 times the default fund requirement of ICCL and further increases the safety for domestic and international participants alike. This Default Insurance cover has been one of the enablers for ICCL to limit the liability of additional contributions by non-defaulting members to Rs, 10 Lakh.

ICCL''s application to ESMA for recognition under EMIR

ICCL has applied to European Securities and Market Authority ("ESMA") as a Third Country Central Counterparty ("TC-CCP") under the European Market Infrastructure Regulations ("EMIR") which is contingent upon India being rated "Equivalent" by the European Commission. ICCL has received a notification of completeness of application from ESMA and is currently awaiting recognition.

The European Commission is currently assessing the legal and supervisory arrangements of India, to verify whether they ensure that CCPs authorized therein comply with legally binding requirements which are

Shri Jayant Sinha, Hon''ble Minister of State for Finance and Shri Vivek Law, Co-founder and Editor-in-Chief, Investonomix & Author of the Money Book ringing the Closing Bell along with Shri Sudhakar Rao, Chairman, BSE and Shri Ashishkumar Chauhan, MD & CEO, BSE at BSE on April 18, 2016.

equivalent to the requirements laid down in Title IV of EMIR, that the legal and supervisory arrangements of India in respect of the CCPs authorized therein provide for effective supervision and enforcement on an ongoing basis and that the legal and supervisory arrangements of India provide for an effective equivalent system for the recognition of third-country CCPs.

12. Human Resources

Organizations that invest in human capital invest in the future. At BSE, the focus has been on making the right investments in human capital to take BSE and all its employees to the next level of competence and expertise. BSE has always believed that motivated employees are the core source of competitive advantage and these is continuous investments in training and development programs along with various other HR initiatives.

BSE has aligned the compensation packages of Management and successfully revamped many outdated HR policies to make benefits and compensation more transparent and employee-friendly.

Also, the organizational structure of BSE has undergone significant restructuring to enhance accountability and efficiency with a view to aligning performance management and reward strategies.

As of March 31, 2016 BSE had 382 officers and 124 staff level employees.

Material Developments in Human Resources / Industrial Relations Front, including number of people employed

BSE has been hiring talent both experienced as well as fresh graduates from leading Business Schools in the recent years with a focus on matching skills and expertise to the relevant roles to enhance employee satisfaction. The Employee Relations scenario has also been satisfactory during the year. The clerical and substaff are represented by an internal union.

13. Marketing and Communications

During the year, BSE continued with the task of educating investors and supporting key products.

Two of the key initiatives undertaken by BSE were the BSE Bull Run & Free Public Wi-Fi service. The BSE Bull Run, was a 7 km fun run which celebrated the vitality of the Indian Economy and optimism for the year ahead. It is a run which symbolizes BSE''s commitment not just for a healthy market but also for the community around it and general public at large. The event was a huge success with over 5,000 participants

As a token of our commitment and support to the Digital India initiative, BSE launched a free public Wi-Fi service wherein the common man on the street could access the internet and broaden his horizons.

BSE did get significant coverage in all leading national/ international newspapers & channels while BSE''s presence on social media grew manifold. BSE hosted more than 240 events ranging from international delegations to education programs to roundtables on important national and international topics.

During the course of the year BSE witnessed many high-profile visits and delegations from the government, industry and other sectors from India and abroad. The dignitaries include Shri Ravi Shankar Prasad, the Hon''ble Minister of Communications and Information Technology; Shri Suresh Prabhakar Prabhu, the Hon''ble Railway Minister of India, Gen. (Dr.) V.K. Singh (Retd.) the Hon''ble Minister of State for External Affairs ; Shri Jayant Sinha, the Hon''ble Minister of State for Finance; Shri Sudhir Mungantiwar, the Hon''ble Minister of Finance, Planning, and Forest Departments; Shri

Shri Zafar Sareshwala, Chancellor, Maulana Azad National Urdu University, Hyderabad; Shri Ashishkumar Chauhan, MD & CEO, BSE; Shri Kersi Tavadia, Chief Information Officer, along with the students of the university at the Bell Ringing ceremony on February 10, 2016 at BSE.

Piyush Goyal, Hon''ble Minister of State for Power, Coal, New & Renewable Energy, Govt. of India & Member of Parliament, Rajya Sabha; Shri Devendra Fadnavis, Hon''ble Chief Minister of Maharashtra & Chairman, MMRDA; Shri K. P. Bakshi, Additional Chief Secretary; His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces; Shri Ahmad Javed, (I.P.S.), former Commissioner of Police, Indian Ambassador to Saudi Arabia; Smt. Shaina N C, Politician; Shri Paresh Rawal, Actor; Hon. Adv. Shri Prakash Yashwant Ambedkar, Head, Bharipa Bahujan Mahasangh; Shri Arvind Sawant, Member of Parliament, Loksabha; Shri Ram Kadam, MLA of BJP; Shri Rakesh Jhunjhunwala, Investor and Trader; Dr. Swaroop Rawal, Educationist, Social Activist and Celebrity; Smt. Nita Ambani, Chairperson and Founder of Reliance Foundation; Shri Rohit Sharma & Shri Ricky Ponting, the Cricket team Mumbai Indians and Shri Milind Soman, Actor, Model.

14. Awards and Recognition

The financial year 2015-16 was a very eventful year. BSE and its group companies have received many awards & recognitions.

Awards

1. Golden Peacock Award 2015 for Corporate Governance.

2. Skoch Achiever Award 2016 for SME Enablement

3. Lions CSR Precious Awards 2016

4. InfoSec Maestros Awards 2016 HR Awards

1. World HRD Congress award for 50 most talented HR Leaders in Asia

2. Lokmat HR Leadership Award

Shri Alok Sharma, Member of Parliament, UK & British Prime Minister''s Infrastructure Envoy to India along with Shri Nayan Mehta, Chief Financial Officer, BSE with the BSE Bull on February 17, 2016.

Shri Nayan Mehta, Chief Financial Officer, BSE presenting a memento to Shri Rikhab C. Jain Chairman, TT Limited during the Silver Jubilee Bell Ringing on February 24, 2016

3. HR leadership award in 5th Asia Best Employer Brand Awards in Singapore

4. Best HR award in (IWP) Inspiring Workplaces Awards

5. Gold Winner Award for Best HR Leader - 2016 by Greentech Foundation

Recognitions

(a) SKOCH CEO of the Year awarded to Shri Ashishkumar Chauhan (MD & CEO, BSE)

(b) IDC Insights Award 2015 - Excellence in Customer Experience to Shri Kersi Tavadia (CIO, BSE)

(c) SKOCH CTO of the Year awarded to Shri Kersi Tavadia (CIO, BSE)

(d) Global Quality Leadership Awards to Shri Kersi Tavadia (CIO, BSE)

(e) SKOCH Order-Of-Merit Award - India''s Best - 2015

- Smart Technology For "Fastest Exchange In The World - BSE

(f) PC Quest Best IT Implementation Award 2016

- For New Data Centre and Disaster Recovery Automation, Most Complex Project Category.

15. Investor Protection Fund

BSE, through its IPF, regularly conducts Investor Awareness Programmes ("IAPs") throughout the country. IPF has conducted a total of 2,648 IAPs during FY 2015-16. During the year, IPF conducted 63 Regional Investor Seminars exclusively with SEBI across different parts of the country.

BSE IPF also periodically brings out advertisements on Do''s and Don''ts for investors to educate investors and enable them to safeguard their interests.

Shri Ashishkumar Chauhan, MD & CEO, BSE welcoming Shri Praveen Garg, Join t Secre tary, Departmen t of Economic Affairs, Minis try of Finance, GOI on January 15, 2016.

IPF has started publishing Research Reports on traded companies to fill the information gap for the benefit of investors in those companies. As of March 31, 2016 there were 1,472 Company Research Reports available on the BSE website free of cost for the investors. Search filters available on the BSE website give easy access to initiation research reports as well as quarterly reports.

During the year, several educational and other capital market awareness events were sponsored by BSE IPF to raise awareness about corporate best-practice. BSE IPF has also supported global conferences and seminars that enhance understanding of Indian markets both in India and abroad. IPF is currently managing 15 offices across India covering all the major state capitals.

In order to create Capital Market Awareness with Post Graduate college students, IPF Secretariat has conducted more than 600 programs with Universities and Educational Institutions across India.

Major Initiatives include:

1) Financial Literacy - Money Gurukul Series with Economic Times - Times Now across 12 cities.

2) Listing Obligations and Disclosure Requirements ("LODR") 2016 series with ICSI across 10 cities.

In order to spread awareness about capital market as part of financial inclusion and to educate investors at national level across India especially in tier 2, tier 3 & tier 4 cities, BSE IPF has used services of national level TV channels including leading Business channels and Doordarshan for spreading financial literacy programs related to capital market education, financial planning etc. BSE IPF has understanding with following TV channels in order to spread capital market awareness among masses:

a. CNBC TV18 and CNBC Awaaz

b. ZEE Business

c. Bloomberg TV

d. Doordarshan ("DD") - Prasar Bharati

16. Listing of BSE''s Shares

Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 allows, subject to certain regulatory conditions, an Exchange to list its equity on other exchanges. BSE has received in-principle approval for listing of its equity shares from SEBI on March 14, 2016. The Board has constituted an IPO Committee to review and facilitate IPO related activities.

17. Issue and Allotment of Equity Shares during the Financial Year

BSE has allotted 34,28,572 equity shares of Rs, 1/- each fully paid to the shareholders of United Stock Exchange of India Limited ("USE") on June 4, 2015 pursuant the Scheme of Amalgamation (scheme) of United Stock Exchange of India Limited ("USE") with BSE in the ratio of 1:385 i.e. for every 385 equity shares of Rs, 1/- each fully paid-up in USE, one share of Rs, 1/- each fully paid-up of BSE.

The allotment of equity shares pursuant to the BSE (Corporatization and Demutualization) Scheme, 2005 against 14 membership rights held by 14 Trading Members of erstwhile BSE continue to remain in abeyance as at the end of the financial year.

18. Directors and Key Managerial Personnel ("KMP") Chairman

Shri Sudhakar Rao was appointed as Chairman of Board of Director w.e.f. March 22, 2016.

Shri S. Ramadorai ceased to be Chairman and Public Interest Director w.e.f. March 8, 2016 due to completion of his term.

Shri Ashishkumar Chauhan, MD & CEO, BSE interacting with Prof Sanjay Bakshi at the Moneylife Event - “Investing Traps & How To Avoid Them" By Prof Sanjay Bakshi on January 23, 2016.

Managing Director

Shri Ashishkumar Chauhan, is the Managing Director and Chief Executive Officer of BSE.

Public Interest Directors

Shri S. Ravi was appointed as Public Interest Director w.e.f. February 5, 2016.

Dr. Sanjiv Misra ceased to be Public Interest Director w.e.f. April 22, 2016 due to completion of his term.

Shri S. H. Kapadia ceased to be Public Interest Director w.e.f. January 5, 2016, due to his sudden demise.

Shri Sudhakar Rao, Dr. Krishnaswamy Kasturirangan and Shri Dhirendra Swarup, continue to remain the Public Interest Directors of BSE.

Shareholder Directors

Shri Thomas Bendixen was re-appointed as Shareholder Director in the 10^th Annual General Meeting held on September 25, 2015.

Dr. Sriprakash Kothari, Smt. Usha Sangwan and Smt. Rajeshree Sabnavis were appointed as Shareholder Directors w.e.f September 4, 2015.

Smt. Rajeshree Sabnavis is liable to retire by rotation at ensuing Annual General Meeting and being eligible has offered herself for re-appointment.

Key Managerial Personnel

Shri Ashishkumar Chauhan, Managing Director & CEO, Shri Nayan Mehta, Chief Financial Officer and Smt. Neena Jindal, Company Secretary are the Key Managerial Personnel of BSE pursuant to the Companies Act, 2013.

Shri Ashishkumar Chauhan, Managing Director & CEO, Shri Nayan Mehta, Chief Financial Officer, Shri Nehal Vora, Chief Regulatory Officer, Shri V. Balasubramaniam, Chief Business Officer and Shri Kersi Tavadia, Chief Information

Shri Neeraj Kulshrestha, Chief of Business Operations, BSE speaking at Bombay Chartered Accountants'' Society & BSE Lecture Meeting on Crowd Funding, Newcomers IPO, and SME IPO on January, 13, 2016

Shri Ashishkumar Chauhan, MD & CEO, BSE along with delegation of US Congressmen during their visit to BSE on January 22, 2016.

Officer are the Key Management Personnel of BSE pursuant to the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012.

19. Declarations by Independent Directors

All Public Interest Directors / Independent Directors have given declarations that they meet the criteria of independence as laid down in Section 149(6) of the Companies Act, 2013.

20. Board Evaluation:

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015, the Board has carried out the annual performance evaluation of its own performance and the Directors individually.

21. Policy on Directors'' appointment and remuneration

The Board has on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The remuneration policy is stated in the Corporate Governance report.

22. Number of Board Meetings:

During the year, five Board Meetings were held on May 18, 2015, July 31, 2015, September 24, 2015, November 10, 2015 and February 3, 2016.

23. Directors'' Responsibility Statement

Pursuant to sub-section (5) of Section 134 of the Companies Act, 2013 with respect to the Directors'' Responsibility Statement, it is hereby confirmed:-

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

Dr. Oskar Andesner, Commercial Counsellor, Austrian Embassy with the BSE Bull along with Shri Ramesh Kalnawat, Director, Austrian Trade Officer, Mumbai and Shri Nayan Mehta, Chief Financial Officer during the visit to BSE on January 27, 2016.

b. the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of BSE at the end of the financial year and of the profit and loss of BSE for that period;

c. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of BSE and for preventing and detecting fraud and other irregularities;

d. the directors had prepared the annual accounts on a going concern basis; and

e. the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

24. Auditors

Statutory Auditors

The Auditors, Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018), Mumbai, had been appointed as statutory auditor, in the Ninth Annual General meeting held on August 1, 2014, for a period of three years to hold the office from the conclusion of the Ninth Annual General Meeting until the conclusion of the Twelfth Annual General Meeting to be held in the year 2017, subject to ratification by shareholders at every Annual General Meeting. The Auditors have confirmed that, their appointment would be in accordance with the Section 139 of the Companies Act, 2013 and the rules made there under and that they are not disqualified in terms of Section 141 of the Act.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the rules framed there under, BSE has appointed M/s. Ragini Chokshi & Co., Practicing Company Secretary firm to undertake its Secretarial Audit. The Secretarial Audit Report is annexed to the Board Report as "Annexure II"

25. Auditors'' Report and Secretarial Auditors'' Report

The auditors'' report and secretarial auditor''s report does not contain any qualification, reservation or adverse remarks.

26. Vigil Mechanism

BSE has a Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The details of establishment of such mechanism has been disclosed on the website.

27. Particulars relating to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

BSE has always believed in providing a safe and harassment free workplace for every individual working in its premises through various policies and practices. BSE always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment.

BSE has adopted a policy on Prevention of Sexual Harassment at Workplace which aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of undesired behavior. An Internal Complaints Committee ("ICC") has been set up from the senior management (with women employees constituting the majority) which is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the Policy.

During the year ended March 31, 2016, no complaints pertaining to sexual harassment have been received. 28. Conservation of Energy, Technology Absorption,

Foreign Exchange Earnings and outgo

Conservation of Energy

(i) The steps taken and their impact on conservation of energy;

BSE uses electricity to run its electronics and the offices. During the year we have regularly replaced the induction ballasts with electronic ballasts and also replaced the fluorescent lights with LED lights where feasible. We conserve energy by switching off lights & other equipment when they are not required. We prefer to use lighter and brighter colors in our offices to maximize efficiency of lighting. Wherever possible, we have coated the glass windows to reduce the heat entering the building which reduces the air-conditioning load. BSE continuously strives to optimize its energy usage and efficiency.

(ii) The steps taken by BSE for utilizing alternate sources of energy;

Since our building has a large surface covered by glass windows we also use the ambient light for lighting purposes as much as possible. This reduces the electricity consumption due to lesser need of lighting during the day.

(iii) The capital investment on energy conservation equipment;

Nil

(L to R) Shri. V. Balasubramaniam, Chief Business Officer, BSE along with Shri. Samir Somaiya, President, Somaiya Vidyavihar; Smt. Jyotsna Sitling, Joint Secretary, Ministry of Skill Development & Entrepreneurship, Govt of India; Shri. Prabodh Thakker, President, IMC, Dr Mukund G Rajan, Chief Ethics Officer, Tata Group & Member Group Executive Council, Tata Sons; Shri. Bijay Sahoo Chairman, IMC Skill Development Committee Chairman RASCI & President HR, Reliance Industries at the lighting of the lamp ceremony at Mission Skill Development Leveraging CSR event on May 7,2015.

Shri Ashishkumar Chauhan, MD & CEO, BSE presenting a memento to Shri Rakesh Kumar Kakkar, Commissioner of Income Tax, Mumbai during his visit to BSE on May 20, 2015.

Technology absorption

Fastest trading system with response time of 6 microseconds:

Continuing the momentum of implementing newer and faster Trading Technologies, BSE Ltd achieved a revolutionary milestone by providing 6 microseconds response time for order confirmation, making BSE the fastest Trading System in the world.

As part of the initial implementation of the BOLTPLUS trading system in April 2014, BSE had achieved a target of 200 microseconds response time. It was BSE''s phase 2 goal of reducing this latency. In order to further reduce the latency, we have implemented a new order confirmation response of 6 microseconds.

Tick-by-Tick Order data:

BSE introduced a new market data feed called Enhanced Order Book Interface ("EOBI") to provide Tick-by-Tick order data as per international standards. This feed is completely free of cost to all its trading members. It is disseminated on multicast to ensure all members get data in a fair manner.

Self-Trade Prevention checks for all segments based on PAN:

The Feature of preventing the self-trade execution, was further fine-tuned to check at PAN level, thereby ensuring the prevention of self-trade across the brokers / market.

Multi-legged Orders for Currency Derivatives and Equity Derivatives Segment:

BSE introduced facility to enter multi-legged orders up to

4 legs. This enables members and ISV''s to easily execute derivative strategies. BSE guarantees the execution of all the legs of the multi-leg order or the entire multi-leg order gets cancelled.

Shri Ashishkumar Chauhan, MD & CEO, BSE interacting with other dignitaries at the Zee Markets Conclave on May 22, 2015 at BSE.

Introduction of Paired Options and Straddle Strategy for Currency Derivatives and Equity Derivatives Segment:

In order to further the business in the derivatives segments, BSE also introduced paired options in currency and equity derivatives segments and straddle contracts in currency derivatives segment.

Time synchronization in trading system with nanosecond accuracy:

High volume trading demands extremely accurate time synchronization amongst / across all its systems. BSE is the 1^st Exchange in the country to achieve Time synchronization in trading system with nanosecond accuracy, by deploying Precision Time Protocol ("PTP") technology. BSE also extends this time synchronization facility to its members trading from collocation and is currently being used by many collocation members.

Process Automation:

BSE has been working towards the automation of all its daily ''beginning of day'' and ''end of day'' manual operations. This activity has been completed and all operations are now being carried out without any manual intervention with the deployment of the online Automation tool. Apart from saving time, the automation has eliminated the possibility of human errors.

The automation tool has a facility to log every action, in addition to Audit Trail with crucial elements as essential for any IT audit and regulatory compliance requirements.

Automation of switchover/switchback between PR & DR:

BSE has successfully deployed fully automated process for switchover from Primary site to Disaster Site (and reversal from Disaster Site as well) in event of Disaster to ensure Business Continuity at all points. This automation includes handling interdependencies of all applications

BSE member''s placing their first trade on the auspicious Muhurat Trading day of Diwali on November 11, 2015 at BSE.

(database links, file interchange mechanisms, messaging etc.) as well as taking appropriate backups before the switch. The tool provides a real-time dashboard showing the status of data synchronization between PR and DR. This has helped complying with the Regulatory requirements of RPO & RTO.

New State-of-Art Data Centre.

BSE''s old data centre was built about 20 years back and was facing typical challenges of foot-print crunch / space crunch, with very little scope of further expansion. Since all other areas of application and hardware infrastructure were growing exponentially it was essential to relocate IT Infrastructure to a new state-of-art data centre.

The new data centre of BSE is approx. 3,200 sq. ft. and has provisioned zones for server farm area, network access room, network core room, staging area, BMS room, console room, separate utility area for electrical & UPS.

The migration from the old data centre to the new data centre was a humongous activity and was very time critical and sensitive in nature. This activity was done in

5 phases. The liberty of downtime available was barely 12-24 hours for each phase.

There were more than 250 people working throughout the migration. By the end of the migration, BSE had shifted about 1,400 network links and the entire infrastructure including servers, network and storage devices for about 60 applications.

Also during the migration, BSE successfully demonstrated its DR capability, by running its entire operation for a day from its DR Site. This was done in order to use one additional day at PR site for the migration activity. The entire switchover and switchback between PR and DR was completely automated. During the entire 5 phases of migration, there had been no disruption in any of the services of BSE. The new data centre was fully operational by end of November 2015.

For this project, BSE was awarded the "PC Quest Best IT Implementation Award" in the ''Most Complex Project Category''.

Information Technology ("IT") Infrastructure Management:

BSE has implemented a comprehensive IT Infrastructure Monitoring Solution. This solution enables it to monitor the networks for outages on Primary & Disaster recovery ("DR") Site and other regional offices. Along with monitoring of various crucial equipment and servers for system generated events, the tool also manages logging of the events, provides alerts and publishes dashboards and reports as desired.

This tool also doubles as an Asset Management System maintaining a centralized inventory for IT and also as an IT Helpdesk service management system. IT services required by all departments are approved and serviced through this helpdesk system.

Cyber Security Framework and Governance:

BSE has been constantly in the process of keeping its Information Security Management System upto date by periodically reviewing the systems and processes and making appropriate amendments in its policies and governance.

BSE has been successfully audited for recertification of ISO27001:2013, international standard for Information Security Management System.

In pursuance to the SEBI Cyber Security Circular Implementation, BSE has brought about the changes in its procedures and policies as required.

BSE has an in-house Security Operations Centre ("SOC") which monitors and inspects various events and incidents. A comprehensive monitoring system has been implemented to aid the SOC team to carry out its responsibility.

Shri Shankar Jadhav, Head Strategy, BSE along with the delegation of Japanese bank during their visit to BSE on November 16, 2015.Shri Ashishkumar Chauhan, MD & CEO, BSE with the NIFM students during their visit to BSE on October 26, 2015.

BSE is identified as the National Critical Information Infrastructure by National Critical Information Infrastructure Protection Centre ("NCIIPC"). BSE is continuously strengthening its cyber security under the guidance from NCIIPC and other national agencies like the Indian Computer Emergency Response Team "(CERT-In"), National Security Council Secretariat ("NSCS"), Ministry of Home Affairs ("MHA") and SEBI.

Other Initiatives:

As part of the new initiatives to improve the trading system performance, BSE is exploring the possibility of implementing the exchange modules on Field Programmable Gate Arrays ("FPGA"). These are essentially hardware chips that are programmable. FPGAs inherently provide excellent performance as they are independent of any software like Operating systems, drivers etc. Additionally, they also provide a deterministic response that is critical for exchange functionality.

Further, BSE is also looking at consolidation of the infrastructure and services by moving key systems to a Cloud based implementation. Here, we are looking at Private, Public and Hybrid Clouds based on the application needs. Cloud implementation will allow us to leverage infrastructure sharing, service utilization and host of other Cloud based facilities.

Foreign Exchange Earning and Outgo

The particulars of Foreign Exchange Earnings and outgo during the year under review are furnished hereunder:

Foreign Exchange Earning: Rs, 1,999 Lakh (Previous Year Rs, 1,592 Lakh)

Foreign Exchange Outgo: Rs, 663 Lakh (Previous Year Rs, 1,758 Lakh)

29. Particulars of Employees

In compliance with the requirements of Rule 5(2) of

Dr. Habil Khorakiwala, Chairman, Wockhardt ringing the Opening Bell with Shri Nayan Mehta, Chief Financial Officer, BSE during the ETNow BSE Day on October 27, 2015 at BSE.

The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Securities Contracts (Regulations) (Stock Exchanges and Clearing Corporations) Regulations, 2012, a statement containing details of employees is annexed as Annexure III.

30. Corporate Social Responsibility ("CSR")

BSE has constituted a CSR Committee in accordance with Section 135 of the Companies Act, 2013. The details of BSE''s CSR Policy, its development and initiatives taken on CSR during the year as per annexure attached to the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been appended as Annexure IV to this Report.

31. Extract of Annual Return (sec 92)

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as per Annexure V.

32. Management Discussion & Analysis

The Management Discussion & Analysis Report forms part of this Annual Report.

33. Corporate Governance

Pursuant to the Securities Contracts (Regulation) (Stock Exchanges & Clearing Corporations) Regulations, 2012 ("SECC Regulations 2012"), corporate governance norms as specified for listed companies mutatis mutandis applies to a recognized Stock Exchange.

In accordance with good corporate governance practices and in order to comply with the SECC Regulations 2012, a report on Corporate Governance as at March 31, 2016 forms part of the Annual Report. A Certificate from a Practicing Company Secretary, Mumbai confirming status of compliances of the conditions of Corporate Governance is annexed to this Report.

34. Acknowledgements

The Board thanks the Government of India, the Securities and Exchange Board of India, the Reserve Bank of India, the Government of Maharashtra and other State Governments and various government agencies for their continued support, cooperation and advice.

The Board is grateful to the members of various committees constituted during the year.

The Board also acknowledges the support extended by trading members, issuers, investors in the capital market and other market intermediaries and associates.

The Board expresses sincere thanks to all its business associates, consultants, bankers, auditors, solicitors and lawyers for their continued partnership and confidence in the Exchange.

The Board wishes to thank all the employees for the exemplary dedication and excellence displayed in discharge of their duties for the Exchange.

Further, the Board expresses its gratitude to you as shareholders for the confidence reposed in the management of the Exchange.

For and on behalf of the Board of Directors

sd/-

Place: Mumbai Sudhakar Rao

Date: May 5, 2016 Chairman

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Mar 31, 2012

The Directors take great pleasure in presenting the Seventh Annual Report of BSE Limited along with the audited financial statements for the year ended March 31, 2012.

I The Economic Environment

1.1 Global Outlook

The global recovery, from the aftermath of the global financial crisis, in some way continues to get a firmer footing. But it also has experienced wrenching strains and uncertainty because of the crisis in the Euro area. Estimates of global output from the IMF forecast global growth in calendar 2012 at 3.5%. This is clearly a disappointing slowdown from the 5.2% growth rate achieved in 2010 and even the 3.8% growth rate recorded last year. While growth rates are less robust, there are some signs, at least in some of the developed economies, that economic growth is at least becoming sustainable.

The developed economies, as a group, are expected to grow at an anemic 1.4% in 2012 - in large part because of continued troubles in the Euro zone. The developing economies overall - growing much faster at 5.6% - are obviously now the main engine of growth. But even the traditional emerging market heavyweights - China and India - have seen their growth rates decelerate in the last few years. China, for example, has declined from 10.4% in 2010 to 9.2% in 2011 to 8% in 2012 (proj. - IMF).

1.2 India Outlook

For the full calendar year 201 I, Indian economic growth also decelerated significantly from the year before - to 7.4% from a strong 9.9% in 2010, according to IMF numbers. By the last quarter of the 201 I -12 fiscal year, moreover, the economic growth rate had stalled to 5.3%.The slowdown in growth was due to a number of causes. The growth of private consumption moderated to 6.5%, from 8.1% in the previous fiscal year while government spending also slowed from 7.9% to 3.9%, and the most troubling factor - because it underpins long term economic growth potential - the investment growth was down from 7.5% to 5.6%. As a consequence, most analysts expect continued moderation of Indian economic growth, at least for the next year or two. The IMF''s current projection of Indian growth in 2012 is 6.1%.

India''s inflation rate continued to be a major concern of policy makers in 201 I. The Wholesale Price Index remained consistently above 9% throughout 201 I - touching a high of 9.7% in August 2011.To counter rising inflation, the Reserve Bank of India (RBI) raised interest rates six times during the year. The repo rate on March 31, 2012 stood at 8.5% and base rates for the largest private and government-owned banks are close to 10%.

Rising interest rates contributed to the slowdown in 201 1-12, as did the declining foreign investment flows and policy gridlock on certain key issues.

While the Indian Government budget deficit also continues to be a concern, 201 1-12 saw significant improvement in the situation from the previous year. The 201 1-12 deficit is expected to come in around 5.7% of GDP, down from 6.9% the previous year and recent government projections put the target number for the 2012-13 fiscal year at 5.1%.

India''s current account deficit has also improved in 2011, narrowing to 2.7% of GDP from 3.2% the previous calendar year.

2 The Capital Markets

2.1 Overview

2011 was a difficult year for investors in the Indian stock market. The Sensex fell by a total 5,054.17 points (24.6%) in the calendar year 201 I, compared to a gain of 3,044 points (17%) in the previous year 2010 and 7,817 points (81%) in 2009. The weak performance in 2011 was partly offset by a very strong performance in the first quarter of 2012, with the Sensex gaining 12.3%.

Negative net Full flows in the equity market for the calendar year 2011 (Rs. -2,812 crores or -$454 million) were clearly a large part of this story in 2011; linked to difficult global market conditions and the continued uncertainty about the domestic economic situation. Fll flows into Indian equities in calendar year 2010, by way of comparison, were Rs. 1,33,266 crores ($29.3 billion).

The early months of 2012 have seen a positive shift in sentiment of the foreign investors and net flows into equity for the first quarter of 2012 have been Rs. 36,496.2 crores (or $7,353.94 million). As a result, the net Fll equity flows for the 2011-12 fiscal year were Rs. 43,737.6 crores compared to Rs. 1,10,120.8 crores for 2010-11.

2.2 Primary Market

During the financial year 2011-12, 32 companies came out with IPOs as against 53 companies in 2010-11.The amount raised through IPOs in 2011-12 was Rs. 5,506.81 crores as against Rs. 33,592.36 crores in 2010-11. Further, one company raised Rs. 3,494.95 crores through Follow-on Public Offers (FPOs) in 2011 -12. There were 4 FPOs in 2010-11. The'' total amount mobilized through privately placed debt securities in 2011 -12 was Rs. 1,03,114.13 crores.

The total number of companies listed on BSE as on March 31, 2012 was 5133 as against 5067 as on March 31, 2011.The BSE remains the number one exchange in the world in terms of number of listed companies.

2.3 Secondary Market

2011 was a challenging year for equity markets. Not only did the Sensex benchmark index decline by 24.6% for the calendar year, but equity volumes were also down significantly. Equity turnover on the BSE has declined in recent years from an average daily value of Rs. 5,630 crores in FY 2009-10, to Rs. 4,318 crores in 2010-11 and Rs. 2,671 crores in 2011-12. BSE declines mirror the overall pattern of the industry as derivatives activity has grown to dwarf equity trading volumes.

The Mutual Fund industry also faced continued difficulties. The total Assets Under Management (AUM) of the Mutual Fund industry as of March 31, 2012 stood at Rs. 6,70,931 crores, down about 4.7% from Rs. 7,03,680 crores the previous year.

On a more positive note, the BSE''s StAR MF platform continues to gain acceptance, with 2011-12 activity up almost 250% compared to 2010-1 I. Further, efforts by the MF team to get Asset Management Companies (AMCs) to list their close ended schemes/ETFs at BSE have paid off with the revenues from the same rising in FY 2012 by 600% as compared to last year.

The number of Fills registered with SEBI rose slightly to 1759 at the end of 2011, from 1718a year earlier. But the number of registered sub-accounts of these Fills rose substantially to 6222 from 5503 a year earlier.

2.4 Secondary Market Policy Developments

- SEBI Changes to Annual Exchange System Audit Rules

SEBI has required annual system audits for all securities exchanges and depositories in India since 2008. However, in 201 I these audit requirements were tightened, providing more transparency to SEBI and limiting an auditor to a maximum of three successive audits.

- SEBI announcement of new KYC (Know Your Customer) regulations and KYC Registration Agency (KRA) Regulations SEBI introduced a unified system for KYC and In- Person Verification (IPV) for all registered intermediaries, reducing duplication of KYC efforts. Now, once KYC procedures have been fulfilled by one intermediary, details are uploaded to a central KRA. .Subsequently, other intermediaries can rely on information at the KRA to meet further KYC requirements. CDSL Ventures Ltd. (CVL) is one of the three KRAs registered with SEBI.

- New Category of Qualified Foreign Investors (QFI) allowed to invest in Indian equity shares

The Government of India announced in early 2012 that it would further open up the Indian equity market to certain foreign entities deemed Qualified Foreign Investors (QFIs).The category of QFIs will include foreign individuals and signatories to the multilateral MoU of the International Organization of Securities Commissions (IOSCO). Previously, only Foreign Institutional Investors (Fills) and their sub-accounts registered under the SEBI (Foreign Institutional Investors) Regulations, 1995 (Fll Regulations) and Non Resident Indians (NRIs) were permitted to directly invest in shares listed/traded on Indian stock exchanges. For QFIs, the individual and aggregate investment limits have been set at 5% and 10% respectively of the paid-up capital of an Indian company.

- Composition of Arbitration Committees at Stock Exchanges SEBI announced on January 20,2012 that trading members would, from now on, be excluded from arbitration committees. In the past, not more than twenty percent of the members of the arbitration committee could be trading members.

- Call Auction in pre-open session for Initial Public Offering (IPO) and other scrips SEBI announced on January 20, 2012 that a call auction mechanism, similar to that used in the pre-open at BSE, would now be used for IPOs and re-starts of trading for suspended stocks.

3 Audited Financial Results

3.1 The financial performance of the Exchange for the year ended March 31,2012 is summarized below:

(Rs. in lakh) Standalone Consolidated 2011-12 2010-11 2011-12 2010-11

Total Revenue 40,256 44,075 57,842 53,806

Total Expenses 18,964 19,765 24,832 22,866

Profit before exceptional items & tax 21,292 24,310 33,010 30,940

Exceptional items 6,049 - 6,049 -

Profit before tax 15,243 24,310 26,961 30.940

Provision for tax 3,514 5,686 6,426 7,766

Minority Interest & Share of Profit/Loss of Associates - - (2,722) (1,610)

Profit for the year 11,729 18,624 17,813 21,564

Balance brought forward from previous year 29,518 27,225 38,938 33,050

Adjustment to Opening Reserve - - - 680

Amount available for appropriation 41,247 45,849 56,751 55,294

Appropriations

Proposed Dividend 6,345 4,230 6,345 4,230

Tax on Dividend 1,029 686 1,029 686

General Reserve 1,500 10,000 1,751 10,025

Trade Guarantee Fund (Cash & Derivatives) - 1,300 - 1,300

Trade Guarantee Fund (G-Sec) - 24 - 24

Trade Guarantee Fund (CDX) - 91 - 91

Balance carried to Balance Sheet 32,373 29,518 47,626 38,938

3.2 Company Performance

3.2.1 Consolidated Results

During the financial year 2011-12, all major revenue streams of the Exchange showed steady or improved performance despite a continued challenging industry environment. During the financial year 2011 -12, the Exchange recorded total income of Rs. 57,842 lakh reflecting a growth of 7.5% year-on-year.

The total expenses for the year was Rs. 24,832 lakh. Profit before tax & before Exceptional items rose to Rs. 33,010 lakh as against Rs. 30,940 lakh in the previous year and profit for the year was Rs. 17,813 lakh after considering exceptional expenses of Rs. 6,049 lakh.

3.2.2 Standalone Results

On account of depressed market conditions and consequent fall in trading volumes on the Exchange during the financial year 2011-12, the total revenue reduced from Rs. 44,075 lakh to Rs. 40,256 lakh.The total expenses for the financial year 2011 -12 was Rs. 18,964 lakh reflecting a decrease of 4% year-on-year.

Profit before tax & before Exceptional items was Rs. 21,292 lakh and profit after tax was Rs. 11,729 lakh after considering exceptional expenses of Rs. 6,049 lakh in the financial year 2011 -12 as against Rs. 18,624 lakh in the previous year.

3.2.3 Financial Situation as on March 31,2012

The net worth of the Exchange on consolidated basis grew to Rs. 223,022 lakh, an increase of 5% over Rs. 212,481 lakh as ; on March 31, 2011.The level of deposits from deposit based trading members increased to f 30,440 lakh. Investments were also made in bonds & debentures of corporates and units of dividend/growth oriented Debt Schemes of Mutual Funds. A substantial amount continues to be invested in fixed deposits with Scheduled Banks.

3.3 Appropriations

3.3.1 Dividend

Your Directors have recommended dividend on equity shares at the rate of Rs. 4/- per equity share and a one-time special dividend of Rs. 21- per equity share of the face value of Rs. I/- each fully paid up for the year ended March 31, 2012, aggregating to Rs. 61- per equity share (previous year Rs. 4/- per equity share) subject to the approval of the shareholders at the Seventh Annual General Meeting.

Under Clause 5.3 of the BSE (Corporatisation and Demutualisation) Scheme, 2005 (the Scheme), the allotment of '' equity shares to 17 Trading Members of the erstwhile BSE has been kept in abeyance for various reasons on March 31, 2012. Meanwhile, all corporate benefits including dividend as may be declared by the Exchange from time to time are being provided for and would be payable on the allotment of these shares.

3.3.2 Transfer to Reserves

The Exchange proposes to transfer Rs. 1,500 lakh to the general reserve out of amount available for appropriations and an amount of Rs. 32,373 lakh is proposed to be retained in the profit and loss account.

4 Significant Developments

4.1 Management Changes

A number of changes took place at the management level. Mr. Madhu Kannan, MD & CEO, demitted office with effect from May I 1, 2012 pursuant to the expiration of his contract with the Exchange. The Executive Management Committee as on date consists of Mr. Ashishkumar Chauhan, Interim CEO; Mr. V. Balasubramaniam, Chief Business Officer; Mr. Nayan Mehta, Chief Financial Officer; Mr. Nehal Vora, Chief Regulatory Officer; Mr. Kersi Tavadia, Chief Information Officer; Mr.V.K.R. Agrawal, Officer on Special Duty and Mr. Lakshman Gugulothu, Officer on Special Duty.

4.2 Change of Name

During the financial year under review, the name of the Exchange has been changed from ''Bombay Stock Exchange Limited'' to ''BSE Limited'' with effect from July 8, 201 I.

4.3 Securities Contracts (Regulations) (Stock Exchanges and Clearing Corporations) Regulations, 2012 SEBI vide notification dated June 20, 2012 and in exercise of powers conferred by Section 4, 8A and 31 of the Securities Contracts (Regulations) 1956 read with Sections 11 and 30 of the SEBI Act, 1992 has notified new Regulations - The Securities Contracts (Regulations) (Stock Exchanges and Clearing Corporations) Regulations, 2012 - to regulate recognition, ownership and governance in stock exchanges and clearing corporations and matters connected therewith or incidental thereto.

With the notification of these Regulations, The Securities Contracts (Regulations) (Manner of Increasing and Maintaining Public shareholding in recognized Stock Exchanges) Regulations (MIMPS), 2006, which dealt only with the stock exchanges stand repealed.

4.4 Transfer of Clearing and Settlement Division of BSE to Indian Clearing Corporation Limited (ICCL)

During the financial year under review, the Board approved the transfer of clearing and settlement division of BSE Limited to Indian Clearing Corporation Limited (ICCL), a wholly owned subsidiary of BSE Limited, which was subsequently approved by shareholders in the court convened meeting. The proposed scheme, for transfer of clearing and settlement division, was filed with the Humble High Court, Bombay, for its approval. The Humble High Court, Bombay, vide its order dated January 20, 2012 approved the proposed scheme of arrangement for transfer of clearing and settlement division to ICCL.

Pursuant to the approval of the scheme of arrangement, the clearing and settlement division of BSE Limited was transferred to Indian Clearing Corporation Limited from the date of filing of the Order of the Humble High Court, Bombay, with the Ministry of Corporate Affairs on February 24, 2012.

4.5 Introduction of Market Making in Derivatives Segment

- LEIPS

Pursuant to SEBI Circular CIR/DNPD/5/2011 dated June 2, 2011 (BSE Notice No. 20110602-18, dated June 2, 2011), permitting stock exchanges to introduce Liquidity Enhancement Schemes (LES) for illiquid securities in their equity derivatives segment, the BSE has launched a series of Liquidity Enhancement Incentive Programmes (LEIPS) with the goal of creating lasting, self-sustaining liquidity in BSE''s futures & options Segment.

The first programme in the series, LEIPS-I (BETA), was launched on September 28, 201 I with a focus on getting the members ready for the full implementation. The second programme in the series, LEIPS-II, was launched on October 26, 2011, with a focus on SENSEX futures products.The LEIPS-III programme, launched on February I, 2012 focused on the options on the SENSEX.

Various adjustments to the programmes have been made periodically in response to market reaction. The impact on trading volume and open interest in BSE derivatives products has been quite positive. For the quarter ending March 31, 2012, average daily volume in BSE futures and options was 76,870 contracts (Rs. 1,992.74 crores) and 3,93,451 contracts (Rs. 9,818.43 crores) respectively.

4.6 Launch of SME (Small-Medium Enterprise) platform

On September 27, 2011 Securities and Exchange Board of India (SEBI) granted approval to BSE to launch an SME platform. On March 13, 2012, marked by a well-attended bell-ringing ceremony, BSE Ltd. began operations of its SME platform with the first listing ceremony of BCB Finance Ltd., in the presence of Shri R. K. Mathur, Secretary, MSME, Gol., Shri Rajeev Agarwal, Whole Time Member, SEBI, and Shri C. S.

Mohapatra, Adviser (FSDC), DEA, MoF.

The BSE SME platform was developed after studying the salient features, best practices and the business model of similar exchanges globally.The listing norms have been simplified and made more convenient for SMEs compared to listing norms on the main board.

4.7 BRICS Exchange Alliance

On October 12, 2011 executives of stock exchanges from the BRICS countries convened at the WFE (World Federation of Exchanges) meeting in Johannesburg to sign an MOU to form the BRICS Exchange Alliance. In the following months, the five founding members of the Alliance - BM&FBOVESPA from Brazil, Open Joint Stock Company MICEX-RTS from Russia, BSE Limited from India, Hong Kong Exchanges and Clearing Limited (HKEx) as the initial China representative, and JSE Limited from South Africa - finalized an agreement to expand their product offerings beyond their home markets and give investors of each exchange exposure to the dynamic, emerging, and increasingly important BRICS economies.

The initial phase of the alliance began on March 30, 2012 with the cross-listing of the following derivatives products offered in the local currency and local trading hours of each of the exchanges:

- Brazil''s iBOVESPA futures

- Russia''s MICEX Index futures

- India''s Sensex Index futures

- Hong Kong''s Hang Seng Index futures

- South Africa''s FTSE/JSE Top40 futures

5 Business and Operations Review

5.1 Trading Business

5.1.1 Equities Segment

Equities turnover continued to decline in 2011-12, with an average daily turnover ofRs. 2,671 crores compared to Rs. 4,318 crores in the previous year. This is in part & result of the weak performance of the market in 2011 and in part the erosion of BSE''s market share in cash equity trading. As a result, BSE net revenue from its cash equities business declined in 2011-12 compared to a year earlier, from f 6,030 lakh to Rs. 3,600 lakh.

5.1.2 Derivatives Segment

In the current financial year, the following steps have been taken to stimulate trading in the Equity Derivatives Segment of the BSE, which will be critical in turning around market share losses in the cash equity segment as well:

- Applied for and obtained the regulatory approval to allow delivery-based single stock futures and single stock options contracts. Delivery-based derivatives are the norm in most markets around the world and have proven superior as investment vehicles since they are much less susceptible to manipulation than cash-settled derivative products.

- Expanded order handling capacity to facilitate auto- quoting and algo trading.This has resulted in a significant increase in the order/trade ratio at the BSE and added substantially to on screen visible liquidity.

- Signed agreements to allow SENSEX futures and options to trade on EUREX and the BRICS Alliance Exchanges.

- Obtained regulatory approval to introduce derivatives based on foreign stock indices of BRICS countries and other major markets.

5.1.3 Debt Segment

The Fixed Income Market provides an array of products and services to market participants. This segment at the Exchange currently includes:

- Reporting of secondary market trades in government securities, treasury bills, corporate bonds, Certificate of Deposit (CD) and Commercial Paper (CP) on the Wholesale Debt Market segment platform called Indian Corporate Debt Markets (ICDM).

- Trading in non convertible debentures and bonds on ''F'' group on BOLT.

Trading in government securities on the Retail Debt Market (RDM) ''G'' group on BOLT.

- In accordance with RBI and SEBI guidelines, the Exchange developed a platform called ''e-settle'' to facilitate clearing and settlement of secondary market trades in corporate bonds on Delivery Verses Payment (DVP I) basis through Indian Clearing Corporation Limited (ICCL).

Statistics relating to the growth of this business in 2011-12 are summarized below:

Fiscal year FY 2011-2012 FY 2010-2011

Particulars ICDM F-Group ICCL ICDM F-Group ICCL

Turnover (Rs. crores) 49,841.7 3,644.4 10,086.1 36,084.5 3.103.1 17,491.7

Number of members/ participants 821 1356 821 670 1310 670

During the year, reporting of debt securities on ICDM and in F-Group grew 39% and 18% respectively. Several Public Sector Undertakings listed their bonds on the Exchange for the first time during this fiscal. The value of trades in corporate bonds settled through ''e-settle'' has reduced by approximately 38% over the previous fiscal; efforts to increase the participation in this platform are being made.

ebidXchange - Auction of Fll limits for debt

A custom designed platform called ''ebidXchange'' for allocation of Fll limits for investment in government securities and corporate bonds was launched by the Exchange in May 2009. The ebidXchange platform pioneered the auction of multiple products - infrastructure bonds, corporate bonds and government securities. During 2011-12, the Exchange conducted three auction sessions, all of which were conducted seamlessly and received positive response from market participants.

5.2 Membership

During 2011-12, 57 new Deposit Based Membership (DBM) applications were received at BSE. Since the launch of the new deposit based membership scheme, BSE has received 590 new DBM applications out of which 374 applicants have received SEBI registration and 292 members have commenced business on BSE.These new DBMs contributed 6.34% of total turnover at BSE in FY 2011-12.

Several automation projects were introduced during the year specifically focused on serving the regulatory and business needs of the BSE members. Automation is a key element of the membership compliance process and one of the primary ways that BSE is improving membership services.

The following modules were developed in BSE''s Electronic Filing System (BEFS) portal used by BSE members:

- On-line submission of applications, tracking of the approval process and updating of details such as change in Authorized Person/s Name, Trade Name, Address, Partners, Directors, additional Branch office/s and Terminal IDs details pertaining to an Authorized Person/s.

- Online registration of market makers for SME Platform through BEFS.

- Online confirmation of IBT (Internet Based trading)/ STWT/SOR (Smart Order Routing) turnover for both cash and derivative segments through BEFS.

5.3 Corporate Services

The corporate services segment of the BSE registered healthy revenue growth in 2011-12. Overall annual listing fees (Equity, Debt and Mutual Funds) increased 42.11 % to Rs. 2,899 lakh compared to Rs. 2,040 lakh in 2010-11.

Overall listing processing fees, reflecting activity in new listings and new issuance were Rs. 1,775 lakh compared to Rs. 2,652 lakh in 2010-11 down 33.08% from the high levels of the previous year.

The Exchange also provides other services to corporate such as book building software, buy-back facilities, reverse book building software, etc. Fees earned from such services were Rs. 2,940 lakh, up 59.78% from the last year''s level of Rs. 1,840 lakh.

5.4 Data Information Products

Revenue from the sale of market data and information products was Rs. 2,076 lakh in 2011-12, up 6.9% from the Rs. 1,942 lakh registered in the previous year.

New developments this year included the release of the daily bulletin in text format as a new product and the development of Phase III of the distribution of Corporate Action data to custodial customers through the SWIFT network. In addition, the real-time data-feed system is being revamped to improve the customer experience and enhance the delivery capacity of the system.

5.5 Index

The BSE''s overall index licensing business grew slightly from t 147 lakh in 2010-11 to Rs. 155 lakh in 2011-12. But this year was a year of important developments which should lay foundation for future revenue growth.

A joint licensing agreement with the BRICS exchanges from Brazil, Russia, Hong Kong (China) and South Africa will bring license revenue as trading volume in the SENSEX futures and options gradually grows in these markets in the next few years.

A new Carbon Index called BSE-GREENEX was developed in collaboration with g-Trade and launched on February 22, 2012. The Hon''ble Minister for Corporate Affairs - Dr. M. Veerappa Moily officiated at the launching ceremony at BSE.

5.6 BSE StAR MF Platform - Online Mutual Fund Platform

The exchange''s online mutual fund transaction platform - BSE StAR MF - completed its second year of operations in December 201 I and has retained its dominant status in the exchange traded MF space with a 55% market share in FY 2011-12.

This year, in the Mutual Fund segment, BSE:

- Introduced a facility for custodians to enter transactions on behalf of their clients, routed through a trading member.

- Launched a dedicated mutual fund website for investors in partnership with Morningstar India Ltd. The website offers the investors information related to performance of mutual funds across the industry and also gives investors access to a number of state-of-the-art analytical tools which are widely used internationally, such as style box, star ratings and analyst ratings.

- Launched a unique mutual fund year-book encapsulating the performance of the MF industry and analyzing the various trends that prevailed through the year. This was also a collaborative effort with Morningstar India Ltd.

- Launched a unique product called Any Day SIP (ADS). By using this facility, the investor can select any day of the month to schedule the regular installments (orders) of a SIP (Systematic Investment Plan). This gives complete flexibility to the investor, instead of having to select from certain pre-specified dates of the AMC as was the case in the past.

- Launched tax savings schemes (ELSS) of mutual funds.

- Rationalized the listing fees schedule at BSE and began aggressive marketing of the listing of closed-end funds to all AMCs. These marketing efforts to list the AMCs closed-end schemes/ETFs at BSE have paid off with revenues rising 600% compared to last year.

The total Assets Under Management (AUM) of the Mutual Fund Industry as of March 31, 2012 stood at Rs. 6,70,931 crores, down about 4.7% from Rs. 7,03,680 crores the previous year. The StAR MF AMC family has now grown to 29 AMCs that collectively account for over 92% of the industry AUM in India. During 2011 -12 we received 1,74,951 orders, generating a transaction value aggregating to over Rs. 1,703 crores. Today StAR MF offers over 2200 investment scheme options.

5.7 SME Platform

SEBI issued a circular on May 18, 2010 with a framework for setting up the SME platform. BSE SME platform received the final approval of SEBI on September 27, 201 I.

A key distinguishing factor for the BSE SME platform is that it is integrated with the main exchange of the BSE. It leverages the existing infrastructure of BSE''s trading systems and network. There is also a provision for migration from the SME platform to the main board and vice versa. Listed SMEs will be part of the existing BSE BOLT system and would be traded in ''M'' and ''MT groups. As per SEBI (Issue of Capital and Disclosure Requirements) Regulations (ICDR), a company listing on a regular exchange is required to offer a minimum of 25% of the post-issue paid-up capital to investors at the time of the IPO. There is no such restriction on the size of the IPO on the BSE SME platform.

The listing process on SME has been simplified to facilitate the raising of equity capital by SMEs. The recurrent cost of compliance is also substantially reduced for listed SMEs:

- Financial results are submitted on a half yearly basis instead of on quarterly basis;

- An abridged version of the annual report is allowed, with details of P&L account and balance sheet distributed to shareholders, instead of the full annual report; and

- A soft copy of the annual report and website publishing can be utilized.

NBFC and brokerage firm - BCB Finance - was the first SME to get listed on the BSE SME platform on March 13,2012.

5.8 Technology

5.8.1 Enterprise System Management

Numerous milestones were reached in 2011 -12 in the area of Enterprise System Management. New dashboard tools are now in operation within BSE that allow enterprise level monitoring of capacity, change management, incident management, asset management, service request management and network performance monitoring. Monitoring of all BSE websites is now integrated'' into these tools as well.

5.8.2 Audits and Process Improvements

The SEBI technology advisory team successfully conducted an inspection of BSE''s DR (Disaster Recovery) and BCP (Business Continuity Plan) at our backup site on January 12, 2012.

An Information Security Surveillance audit for IS027001:2005 certification was also completed successfully on November 18, 2011.

A Quality Management IS0900I audit was also completed successfully during the 2011 -12 fiscal year.

Earlier, risk management was an integrated function within the BOLT Trading system. The risk management function has now been segregated from the trading system and moved into a separate system called RTRMS (Real Time Risk Management System). RTRMS manages post-trade risk management functions instantaneously and also performs cross-margining functions across equity and derivatives segment.

The trading function of derivatives was moved to the BOLT trading system in the previous year. This year, however, the balance of all derivatives risk management functions were moved to RTRMS and all settlement functions to CLASS (Clearing & Settlement System). As a result of these two developments, the former Derivatives Trading and Settlement System (DTSS) has been totally phased out.

In order to boost derivatives segment participation, a liquidity enhancement program was launched. This program requires extensive monitoring of various quoting and trading activities of market makers and general participants. LEIPS was the system developed to manage the liquidity enhancement program. This system provides real-time monitoring of participants activity and helps participants track their status and progress toward fulfilling their obligations.

FASTRADE ON WEB (FOW) is a web-initiative, providing an internet or "cloud" trading facility to all investors. In order to provide a single platform for trading, the ability to trade on National Stock Exchange (NSE) was integrated and extended to the FOW user community. FOW users can now trade on-line seamlessly on BSE as well as on NSE.

5.9 Marketing and Communications

A new BSE tag line or slogan ("Experience the New") was introduced that reflects a new approach and attitude to business. A new logo was also introduced for the BSE SME Platform this year. During the year, several high-profile visits by leading dignitaries and delegations from the government, industry and other sectors from India and abroad were conducted.

6 Regulation

The BSE Regulatory Group comprises of Membership Compliance, Listing Compliance and Surveillance.

In 2011-12 there were 32063 surveillance alerts generated. These alerts led to 965 snap investigations and 137 full investigations.

2875 complaints against members were resolved this year as well as 5830 complaints against listed companies.

Several key regulatory projects undertaken during the year were:

- Automating significant elements of the listing operations and compliance process.

- Improving the membership, inspection and investigation interface using BEFS (BSE Electronic Filing System).

- Providing trade information to clients automatically through SMS and email.

6.1 Investor Services

BSE redresses investor complaints against trading members through mediation and counseling through its Investor Grievances Redressed Committees. BSE provides these services as well as arbitration at its regional arbitration centers at Mumbai, Chennai, Delhi and Kolkata. To further serve investor needs, BSE has set up Investor Grievance Redressed Mechanism at its Investor Service Centres located in Ahmedabad and Hyderabad from March 30,2012 in addition to the pre-existing Investor Services Centers at Kochi and Rajkot.

BSE is the only Exchange in the country, where 15 Registrar and Transfer Agents (RTAs) regularly visit its registered office, for redressed of investor complaints against companies listed on BSE.

6.1.1 New Initiatives in 2011-12

BSE Investor Services took the following new initiatives in 2011-12

- BSE has successfully implemented SEBI''s SCORES (SEBI Complaints Redressed System) at all its regional Investor Service Centers in June 2011 which facilitated online registration of investor complaints against trading members of the Exchange as well as continuous monitoring/follow up of the same until resolution. Investors can lodge complaints through this system and also view the status of their complaints.

- To protect investors from unauthorized trading, BSE has begun to issue SMS alerts and email alerts directly to investors for trades executed on the BSE platform. SMS alerts and email alerts began from November 28, 2011 and December 2, 2011 respectively.

- For the convenient access of investors, BSE has shifted its Investor Service Centre to the adjacent Cama Building premises. All the queries relating to complaints against members, companies and arbitrations are attended to under one roof.

6.2 Investor Protection Fund

BSE through its Investor Protection Fund (IPF) regularly conducts Investor Awareness Programmes (lAPs) throughout the country. It has conducted 1129 programmes during 2011-12. During the year, IPF conducted 17 lAPs exclusively with SEBI across different parts of the country. The IPF also sponsors workshops arranged for investors by The Institute of Company Secretaries of India (ICSI), the Investors'' Associations recognized by the Securities and Exchange Board of India (SEBI), the local chamber of commerce, etc. In addition, it periodically brings out advertisements on Do''s and Don''ts for investors in print media in order to enable them to safeguard their interests.

In 2011-12, various activities were undertaken to promote awareness and to educate investors. Investor-oriented advertising in business dailies and magazines was rolled out during the year. A new BSE IPF TV campaign was also aired on all business channels for several months and a year-long BSE IPF radio property on a leading national radio channel (Radio Mirchi) was rolled out. Several programmes on TV to educate investors about personal finance and derivative products were also sponsored by BSE IPF. It also sponsored various educational and award events during the year with institutions, media houses, institutes and other corporations to enhance investor awareness and educate people about corporate best- practice. BSE IPF also participated in global conferences and seminars to enhance understanding of Indian markets both in India and abroad.

7 Human Resources

Organizations that invest in human capital invest in the future. Today at BSE we realize this truth and are increasing our focus on having the right investments in human capital to take BSE and all its employees to the next level of competence. BSE has always believed that motivated employees represent a core source of competitive advantage. For this reason we continue to invest in training and development programmes along with various HR initiatives.

BSE has aligned the compensation packages of management and successfully revamped many outdated HR policies to make benefits and compensation more transparent and employee- friendly.

Also, the organizational structure of BSE has undergone significant restructuring to enhance accountability and efficiency with a view to aligning performance management and reward strategies.

In compliance with the requirements of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, a statement containing details of employees is annexed.

As of March 31, 2012 the BSE had 302 officers and 173 staff employees.

8 Management Discussion & Analysis

The Management & Discussion Analysis Report forming part of Directors'' Report for the year under review is part of the Annual Report. The report provides strategic direction and a more detailed analysis on the performance of individual businesses and their outlook.

9 Report on Subsidiary Companies

The Company has following 8 subsidiary companies (direct and indirect) as on March 31, 2012:

- Central Depository Services (India) Limited (CDSL)

- Indian Clearing Corporation Limited (ICCL)

- BSE Institute Limited (BIL)

- Marketplace Technologies Private Limited (MTPL)

- BFSI Sector Skill Council of India (BFSI)

- . Marketplace Tech Infra Services Private Limited

- CDSL Ventures Limited (CVL)

- Central Insurance Repository Limited (CIRL)

There has been no material change in the nature of the business of the subsidiaries.

Pursuant to the provision of Section 212(8) of the Act, the Ministry of Corporate Affairs vide its circular dated February 8, 2011 has granted general exemption from attaching the balance sheet, statement of profit and loss and other documents of the subsidiary companies with the balance sheet of the Company. A statement containing brief financial details of the Company''s subsidiaries for the financial year ended March 31, 2012 is included in the Annual Report.

The Company shall make available, the annual accounts and related information of its subsidiaries, to those shareholders who wish to have the copies of the same. Further, these documents shall be available for inspection by a shareholder at the registered office of the Company as well as of its subsidiaries.

9.1 CDSL and its subsidiaries

BSE owns 54.20% of CDSL, which provides depository and record-keeping services to the securities industry in India, facilitating dematerialization of holding of securities and book- entry settlement.

CDSL witnessed steady growth in 2011-12 despite challenging industry conditions. Operating income was up 3.37% from the previous year. Other metrics, such as number of demat accounts and value of securities held also grew over the period.

CDSL Ventures Limited (CVL) saw continued progress in its mutual fund KYC registration product as well as the new KYC Registration Agency (KRA) which was inaugurated on January 4, 2012. Already, as of March 31, 2012, the number of intermediaries registered with the Agency is 1175 and the number of KYCs submitted is 5.50 lakh.

The establishment of the Central Insurance Repository Ltd.

(CIRL), which will hold (life and non-life) policies for beneficiaries in electronic form, is in final testing and auditing phases.

In addition, several new projects are underway. The National Academic Depository (NAD) will hold records of academic awards and credentials in electronic form. CDSL''s e-Voting initiative for corporate resolutions at AGMs and EGMs has completed 8 e-Voting implementations and 21 companies have signed up for the service so far. CVL''s Green Initiative which would allow companies to send Annual Reports, quarterly results, ballot resolutions and other corporate communications to shareholders by email is now underway, with 7 companies signed up so far.

9.2 Indian Clearing Corporation Ltd. (ICCL)

ICCL is a wholly owned subsidiary of BSE Ltd. and carries out the functions of clearing, settlement, collateral management and risk management for various segments of different stock exchanges.

ICCL provides the clearing and settlement functions for trades reported on the debt and mutual fund segments of BSE and for trades executed on all the other segments of BSE and the currency derivatives segment of United Stock Exchange (USE).

While over 20 banks are empanelled with ICCL as clearing banks for BSE activities, ten banks have been empanelled as clearing banks for providing clearing and settlement services for trades executed on USE platform.

9.3 BSE Institute Limited (BIL)

BIL is incorporated as a wholly-owned subsidiary of BSE for development of financial education, training and certification in India.

Training Initiatives in 2011-12

During the year in review, BIL witnessed significant growth. Revenues were up 173.7% in 2011-12 compared to the previous year. During the year, BIL offered over 91 short- term courses, 6 international programs, and over 22,000 certification examinations on financial and securities markets.

BIL''s many new initiatives in the current year include:

- MBA-Financial Markets in collaboration with IGNOU. This program has received an excellent response from students all over the country with over 500 applications in March 2011 and equal number of applications in March 2012.The first batch commenced from June 2011 comprising two sections with a total of 138 students.

- Post Graduate Diploma in Stock Markets (PGDSM) program was launched in August 2011 with the commencement of first batch in January 2012. It is a

- distance mode program in collaboration with IGNOU and provides convenience to professionals interested in financial markets, who can pursue the course while continuing with their jobs.

- A program for undergraduate skill development called the ''Global Financial Markets Professional Program'' (GFMP) was launched in May 2011.This is a part time program that students can pursue along with their studies, The unique aspect of this program is a six month industry practice which is provided at the end of the program.

- BIL initiated the setting up of the BFSI Sector Skill Council of India under the aegis of the National Skill Development Corporation (NSDC). This is a major national level skill development initiative aimed at addressing over 4.5 million skill requirements by the year 2022.The Skill Council has already signed up major banks, insurance companies, broking houses and other players from the BFSI sector as co-members of the council.The Council has received an in principle approval for grant of Rs. 2 crores from NSDC.

- BIL launched many other new programs targeting experienced professionals across numerous sectors and subjects.

9.4 Marketplace Technologies (MTPL)

MTPL is a wholly-owned subsidiary that is a leading provider of cutting edge IT solutions with focus on equity, stock, commodities, banking and financial services markets in India. Key projects that MTPL has rolled out this year are:

- A multi-asset Online Collateral Management System.

- A Clearing & Settlement System for delivery-based derivatives.

- RTRMS (Real Time Risk Management System) with integrated collateral management system software to implement LEIPS, the Liquidity Enhancement Program for BSE derivatives trading.

- NSE on FOW (Fastrade on Web) which is being used by over 1400 members.

- Settlement Software for BOISL to handle settlement pertaining to various segments of BSE Ltd.

- An end-to-end system for Offer for Sale that has already handled 2 offers from ONGC and Wipro. The system integrates everything from Collateral, to RTRMS, to I BBS, to Clearing & Settlement.

10 Fixed Deposits

The Exchange has not accepted any fixed deposits and as such, no amount of principal or interest was outstanding as on the Balance Sheet date.

11 Issue of Equity Shares during the Financial Year

Pursuant to the Demutualisation Scheme, the Exchange is required to allot 10,000 equity shares against each of the membership rights held by Trading Members of erstwhile BSE; however, allotment of such equity shares may be kept in abeyance, on account of suspension on the said membership rights. Accordingly, at the beginning of the financial year, the allotment of 10,000 equity shares of Rs. I/- each against 18 membership rights held by 18 Trading Members of erstwhile BSE (out of 73,50,000 equity shares against 735 membership right of erstwhile BSE) was kept in abeyance for specific reasons, viz., Trading Member being a notified person, attachment of membership right by the Income Tax Department, legal dispute for the ownership of the membership rights etc. During the financial year, 10,000 equity shares of Rs. I/- each against one membership right held by one Trading Member of erstwhile BSE was allotted pursuant to the Scheme, upon revocation of suspension on such membership rights. The said Trading Member was also given the Corporate Benefits i.e. prior year dividends and 1,20,000 bonus shares emanating from the allotment of 10,000 equity shares.

The allotment of equity shares pursuant to the Scheme against 17 membership rights held by 17 Trading Members of erstwhile BSE continue to remain in abeyance as at the end of the financial year.

12 Listing of the Exchange''s Shares

Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 which is effective from June 20, 2012, subject to certain regulatory conditions, allows an Exchange to list its equity on other exchanges. The Exchange plans on taking steps to become a publicly traded company through the listing of its shares.

13 Conservation of Energy, Technology Absorption and Foreign Exchange Earning and Outgo Since the Exchange does not own any manufacturing facility, Directors have nothing to report with regard to Conservation of Energy and Technology Absorption in terms of Section 2l7(l)(e) of the Act read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

The particulars with regard to foreign exchange earnings and outgo appear in Note No. 31 of Audited Accounts.

14 Corporate Social Responsibility

Corporate Social Responsibility (CSR) in BSE is aligned with its tradition of creating wealth in the community with a three pronged focus on Education, Health and the Environment. Besides funding charitable causes for the elderly and the physically challenged, the major notable, activity in 2011-12 was expenditure from the Gujarat Earthquake Relief Fund. The Fund was utilized towards the restoration and rehabilitation of a girls'' school in Porbandar, Gujarat that was damaged badly during the earthquake of 2001. A hostel wing and washroom facilities were renovated and a water tank was built providing functional basic amenities to the students of the school run by a well-known local trust.

15 Corporate Governance

Pursuant to the new Regulations namely Securities Contacts (Regulations) (Stock Exchanges & Clearing Corporations) Regulations, 2012 ("SECC Regulations 2012") notified by Securities and Exchange Board of India vide notification dated June 20, 2012, corporate governance norms as specified for listed companies mutatis mutandis applies to a recognised stock exchange.

In accordance with good corporate governance practices and in order to comply with the SECC Regulations 2012, a report on Corporate Governance as at March 31, 2012 forms part of the Annual Report. A Certificate from M/s. Mehta & Mehta, Company Secretaries, Mumbai regarding status of compliances of the conditions under Clause 49 of the Listing Agreement is annexed to this Report.

A Certificate on Secretarial Compliance for the year ended March 31, 2012 issued by M/s. Mehta & Mehta, Company Secretaries, Mumbai in terms of the provisions of Section 383A of the Act is attached with this Report.

16 Directors'' Responsibility Statement

Pursuant to the requirement under Section 2I7(2AA) of the Act, with respect to Directors'' Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the accounts for the financial year ended March 31, 2012, the applicable accounting standards have been followed and there was no material departure from such standards;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Exchange as at the end of the financial year on March 31, 2012 and of the profit of the Exchange for the said financial year;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Exchange and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the accounts for the financial year ended March 31, 2012 on a ''going concern basis''.

17 BSE Board Structure and Governance

Securities and Exchange Board of India (SEBI) while prescribing governance structure of the Exchange vide its letter no. MRD/48511105 dated August 31, 2005, has provided for various categories of Directors viz. Public Interest Directors, Shareholder Directors and Trading Member Directors with the extent of their representation on the Board.

Further, pursuant to SECC Regulations 2012 notified by SEBI on June 20, 2012, the Governing Board of every recognised stock exchange shall include:

(a) Shareholder Directors;

(b) Public interest Directors; and,

(c) Managing director.

The number of public interest directors shall not be lesser than the number of shareholder directors in a recognised stock exchange. No Trading members or their associates and agents shall be on the Governing Board of any recognized stock exchange.

The appointment and re-appointment of all shareholder directors on the governing board of every recognised stock exchange(s) shall be with the prior approval of the Board. The public interest directors on the governing board of the recognised stock exchange(s) shall be nominated by the Board.

Additionally, pursuant to the said Regulations, every recognised stock exchange shall ensure compliance with the provisions of the aforesaid within three months from the date of commencement of these Regulations. The Exchange shall take commensurate steps within the stipulated time, to comply with the new Regulations.

However, the SECC Regulations 2012 prescribes that an Advisory Committee comprising of trading members shall be constituted by the Governing Board of every recognized stock exchange to advise the Governing Board on non- regulatory and operational matters including product design, technology, charges and levies. The Chairperson of Governing Board shall be head of Advisory Committee and Managing Director shall be permanent invitee to every meeting of Advisory Committee. The recommendations of the Advisory Committee will be required to be placed in the next meeting of the Governing Board of stock exchange for consideration and appropriate decision of the Governing Board. The recommendation of the Advisory Committee with the decision of the Governing Board shall be disclosed on the websites of the Stock Exchange.

17.1 Managing Director

Mr. Madhu Kannan has ceased to be MD & CEO of the Exchange with effect from May II, 2012. In the absence of Managing Director, Mr. Ashishkumar Chauhan, Deputy CEO has been appointed as Interim CEO of the Exchange with effect from May 11, 2012.

17.2 Public Interest Directors

Mr. Sudhakar Rao was appointed by the Board as a Public Interest Director of the Exchange with effect from June 29, 2011 in place of Mr. S.N. Menon, who retired from the office at the same meeting due to completion of his second term in terms of Article I3.I6B.2 of AOA of the Exchange.

17.3 Shareholder Directors

Mr. Dipak Chatterjee was appointed as a shareholder director of the Exchange, at the Sixth Annual General Meeting held on June 29, 2011 in place of Mr. Sudipto Sarkar who retired from the office at the same meeting due to completion of his second term in terms of Article I3.I8A of AOA of the Exchange.

However, Mr. Chatterjee resigned from the office of Shareholder Director with effect from January 25, 2012.

Mr. Thomas Lars Bendixen acts as an alternate director to Mr. Andreas Preuss, Deputy CEO Deutsche Borse AG, Shareholder Director of the Exchange.

17.4 Trading Member Directors

Mr.Anil Maneklal Shah, Designated Director of SPAN Caplease Pvt. Ltd, (Trading Member of the Exchange) was appointed as a trading member director of the Exchange, at the Sixth Annual General Meeting held on June 29, 2011 in place of Mr. Balkishan Mohta, who retired from the office at the same meeting due to completion of his second term in terms of Article 13.18A of AOA of the Exchange.

Mr. Anil Shah is currently serving on the Board of BSE as a trading member director.

18 Auditors

The Auditors, M/s Deloitte Haskins & Sells, Chartered Accountants, Mumbai, hold office until the conclusion of the forthcoming Annual General Meeting and are recommended by the Board for re-appointment to hold the office from the conclusion of the forthcoming Annual General Meeting until the conclusion of the next Annual General Meeting. The Auditors have confirmed that, their re-appointment, if made, would be within the limits prescribed under Section 224( IB) of the Act and that they are not disqualified in terms of Section 226 of the Act.

19 Auditors'' Report

The Auditors'' Report dated April 27, 2012 on the financial statements of the Exchange for the financial year ended March 31, 2012 does not have reservation, qualification or adverse remarks.

20 Acknowledgements

The Board thanks the Government of India, Securities and Exchange Board of India, Reserve Bank of India, the Government of Maharashtra and other State Governments and various government agencies for their continued support, cooperation and advice.

The Board is grateful to the members of various standing, SEBI-mandated and other advisory committees constituted during the year. The Board also acknowledges the splendid support extended by the trading members, issuers, investors in the capital market, market intermediaries and their various associates. The Board expresses sincere thanks to all the business associates, consultants, bankers, auditors, solicitors and lawyers for their continued patronage, partnership and confidence in the Exchange.

The Board wishes to thank all the employees for the exemplary dedication and excellence displayed in discharge of their duties for the Exchange.

Finally, the Board expresses its gratitude to you as shareholders for the confidence reposed in the management of the Exchange.

For and on behalf of the Board

Place: Mumbai S. Ramadorai

Date: July 27,2012 Chairman

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Mar 31, 2011

The Directors take great pleasure in presenting the Sixth Annual Report of Bombay Stock Exchange Limited along with the audited financial statements for the year ended 31st March, 2011.

I The Economic Environment

1.1 Global Outlook

The global economy, still emerging from the aftermath of the global financial crisis, consolidated its recovery in 2010. The signs are good that despite the shocks of the first quarter of 2011 - including instability in the Middle East and the earthquake, tsunami and radiation disasters in Japan - growth in the U.S., Europe and several significant emerging markets are supporting the global recovery. But significant risks continue to hamper global growth, including rising oil and commodity prices and persistent global imbalances resulting from a slowdown in the Chinese economy and the fiscal challenges in the U.S. and Eurozone. These global developments will have an impact in the coming year not only on international investors but also on the domestic Indian investment climate.

1.2 India Outlook

In 2010, the Indian economy rebounded strongly - in large part because of robust domestic demand - and growth exceeded 8% year-on-year in real terms. Exports returned to pre-financial crisis levels. The big risk was inflation, as industrial expansion and high food prices, caused headline inflation numbers to peak at about 11 % in the first half of 2010. This level has moderated to single digits - around 7 to 8% - following a series of Reserve Bank of India (RBI) interest rate hikes, but it remains a significant worry to policy-makers and consumers.

The Economist Intelligence Unit analysts forecast that India''s real GDP will grow 8.4% in 2010-2011, 8.6% in 2011-2012, and 8.7% per year in 2012-2013 to 2014-2015. Most other forecasts are broadly consistent with these numbers.

Monthly trade deficit numbers also improved in 2010, narrowing to an (annualized) rate of 7.1% of GDP in November from 10.8% in August 2010.

The Indian Government budget deficit continues to be a concern for policy-makers and investors, although the situation here too appears to be improving. Official targets aimed to reduce the fiscal deficit to 5.5% of GDP in FY 2010-11, down from 6.8% in the previous fiscal year. Public debt is at manageable levels (55.9% of GDP in 2010), but will continue to grow given the substantial deficit. Large and growing demands for government spending in infrastructure, education and other public goods are unlikely to abate. Some of this gap can be financed through public sector disinvestment, but few expect an acceleration of sales of stakes in public sector enterprises.

Positive factors for the Indian economic outlook for 2011-12 include

- Global economic situation stabilizing

- Chinese economic slowdown has been less disruptive on the global economy than initially feared

- US economy has not fallen back into recession, nor has financial instability returned to the major developed economies

- Foreign investor interest in the large, rapidly growing economies like India has been strong

- Indian economic policy environment has remained stable and reassuring to investors Negative factors for the Indian economic outlook for 2011-12 include

- Significant risk of a further rise in oil prices considering the turmoil in the Middle East

- Continued risk of financial market instability in the developed economies

- Accelerating inflation would likely trigger further monetary tightening by RBI

2 The Capital Markets

2.1 The capital and commodity markets in India continued to perform well in calendar year 2010. Although the acceleration of net FI I flows slowed somewhat in 2010, to $29.3 billion into the equity market and a total of $39.4 billion into debt and equity, the positive net inflows continued to boost prices and liquidity in the domestic markets. Continued interest from international investors and continued net positive Full flows, are expected in 2011 because of strong predicted economic growth and corporate earnings growth in the next few years.

The Indian equity markets, which had declined sharply during 2008 and recovered dramatically in 2009, reflected the recovery from the global economic crisis in 2010, with the SENSEX witnessing a 17.4% return for the year. This put India in the top spot in terms of performance for the ten largest global markets in 2010. Against the backdrop of these trends in Indian equity markets, regulatory changes and market innovation continued support the broadening and deepening of the markets.

2.2 Primary Market

During the financial year 2010-11, 53 companies came out with Initial Public Offerings (IPOs) as against 40 companies in 2009-10. The amount raised through IPOs in 2010-11 was Rs. 33,592.36 crores as against Rs. 24,935.40 crores in 2009-10. Further, 4 companies raised Rs. 9,427.74 crores through Further Public Offerings (FPOs) in 2010-11. There were 5 FPOs in 2009-10.

The total amount mobilized through privately placed debt securities on the Exchange in 2010-11 was Rs. 65,415 crores. The total number of companies listed on BSE as on 31st March, 2011 was 5067 as against 4975 as on 31st March, 2010.

2.3 Secondary Market

The Secondary Market consolidated the dramatic gains of 2009 in 2010, with the SENSEX benchmark index closing at 20,509 at the end of 2010, up 17.4% for the calendar year. But 2010 was a year where policy-makers, particularly at RBI, were closely watching a number of continued risks to the Indian economy. First and foremost was the fact that both financial and real sectors were still under significant stress in the major advanced economies throughout 2010. Consequently, Indian policy-makers needed to be on guard against vulnerabilities arising from risks to global growth and financial stability. Other economic risks throughout the year, more domestically oriented, were the continued inflation pressures and the fact that these pressures constrained RBI from pursuing a looser monetary policy.

Despite these challenges, the Indian equity market was one of the best performing major markets in the world in 2010. Some of this performance was surely attributable to the continued Full interest in the Indian growth story and their broad participation. The number of Fills registered with Securities and Exchange Board of India (SEBI) rose to 1718 at the end of 2010, from 1706 a year earlier. The number of registered sub-accounts rose to 5503 as of 31st December, 2010 from 5,331 a year earlier.

Despite this positive performance, as of 3 Ist December, 2010 the total Assets Under Management (AUM) of Mutual Funds (MFs) in India were Rs. 6,78,047 crores - a 17.2% decrease from a year earlier. While changes in regulation during the year disrupted some distribution channels, the new stock exchange platforms such as BSE StAR MF, have been growing in popularity and investment and redemption activity has started to shift to this efficient and low cost mechanism.

SEBI does not allow Asset Management Companies (AMCs) to apply entry loads at the time of investors entering into the schemes, as they were allowed to do in the past. Moreover, the maximum exit load that can be charged to an investor is now 1% and the proceeds thus collected should be maintained in a separate account which can be used by the AMCs to pay trail commissions to the distributors and to cover marketing and selling expenses. Any remaining balance must be credited to the scheme. AMCs also have to ensure that there is no distinction being made between clients, based on the amount of subscription while charging exit loads.

2.4 Secondary Market Policy Developments

- SEBI published a framework through which registered Stockbrokers can provide "Smart Order Routing" (SOR) to their customers and for their own proprietary order flow, enabling, for the first time, brokers to achieve "best execution" through increased automation of their order handling.

- Exchanges were authorized in April 2010 to launch separate SME segments.

- Exchanges were authorized in July 2010 to issue delivery- based futures and options, in addition to cash settled instruments.

- Exchanges were authorized in October 2010 to issue European-style options, in addition to existing American- style options.

- Derivatives products on Foreign Stock Indices were authorized for exchange trading in January 2011.

3 Audited Financial Results

3.1 During the financial year 2010-11, all major revenue streams of the Exchange showed continued strength despite the low volumes experienced in the early first half of the year. During the financial year 2010-11, the Exchange recorded total income of Rs. 4,408 million, profit before tax of Rs. 2,431 million as well as profit after tax of Rs. 1,862 million. The financial performance is summarised in the following table:

(Rs. in millions)

Particulars 2010-11 2009-10

1. Total Income 4407.50 4852.14

2. Total Expenditure 1976.53 1970.10

3. Profit Before Tax 2430.97 2882.04

4. Provision for Tax 568.59 752.61

5. Profit After Tax 1862.38 2129.43

6. Balance brought forward from Previous Year 2722.63 2280.21

7. Available for Appropriation 4585.01 4409.64

Appropriations to:

- General Reserve 1000.00 1000.00

-Trade Guarantee Fund (Cash & Derivatives) 130.01 183.58

-Trade Guarantee Fund (G-Sec) 2.43 2.06

- Trade Guarantee Fund (CDX) 9.13 8.13

- Proposed Dividend 422.99 422.99

- Corporate Tax on Dividend 68.62 70.25

- Balance carried to Reserves & Surplus 2951.83 2722.63



3.2 Income - Rs. 4,408 Million

The depressed volumes in the market overall resulted in the Exchange''s Average Daily Turnover (ADT) in cash segment to Rs. 43,333 million in financial year 2010-11 as compared to Rs. 56,510 million in the previous financial year. The above decrease in the average daily turnover resulted in lower earnings from transaction charges to the Exchange.

During the year, the Exchange invested a part of its funds in long dated and high rated bonds and debentures of the Corporate, both taxable and non-taxable. These initiatives resulted in the Exchange earning an income of Rs. 2,172 million from investments and deposits during the financial year 2010-11. ''

The income from services to corporate for the financial year 2010-11 was Rs. 716 million, an increase of 21% over the previous year. This increase in the income from services to corporate was mainly on account of book building software charges and listing processing fees for further issue of capital by the listed companies.

3.3 Expenditure -Rs. 1,977 Million

During the financial year, the Exchange continued to invest in technology and people to improve its competitiveness in its business segments. The Computer Technology related expenses during the financial year 2010-11 were Rs. 618 million. This was mainly to continue the program of increasing order handling capacity and the speed of execution of orders and confirmations for the trades at the Exchange.

Recognizing the continued need to pay competitive compensation levels to attract needed talent in key areas, the Exchange continues to adjust and fine-tune compensation levels and policies for its employees.

The provision for taxes for the financial year was Rs. 569 million.

3.4 Financial Situation as on 31st March, 2011

The net worth of the Exchange grew to Rs. 20,291 million as on 31st March, 2011, an increase of 7.24% over Rs. 18,921 million as on 31st March, 2010. The level of deposits from deposit based trading members increased to Rs. 2,973 million.

The Exchange acquired additional shares in Central Depositary Services Limited (CDSL), from existing shareholders, raising its stake in this subsidiary to 54% on 5th July 2010.

Investments were also made in bonds & debentures of corporate and units of dividend/growth oriented Debt Schemes of Mutual Funds, full details of which are provided, vide Note No. 12 Schedule ''N'' of Annual Accounts for the financial year. A substantial amount continues to be invested in fixed deposits with Scheduled Banks.

3.5 Dividend

Your Directors have recommended Dividend on equity shares for the year ended 31st March, 2011 at Rs. 41- per equity share of face value of Rs. I/-, (previous year Rs. 41- per equity share) subject to the approval of the shareholders at the Sixth Annual General Meeting.

Under Clause 5.3 of The BSE (Corporatisation and Demutualisation) Scheme, 2005 (the Scheme), the allotment

of equity shares to 18 Trading Members of the erstwhile BSE has been kept in abeyance for various reasons on 31st March,

2011. Meanwhile, all corporate benefits including dividend as may be declared by the Exchange from time to time are being provided for and would be payable on the allotment of these shares.

3.6 Transfer to Reserve

The Company proposes to transfer Rs. 1000 million to the General Reserve out of funds available for appropriation Rs. 4585.01 million.

4 Significant Developments @ BSE

4.1 Management Changes

During the financial year the Exchange continued to strengthen the management across various levels.

4.2 Change of Name

It is appreciated that globally whether in India or abroad, the Exchange for a long period of time, is widely known and recognized as ''BSE'' among the investing community i.e. small retail investor, trading members, FIs, MFs, Banks, Fills or even a common man who may have never invested in securities. The logo ''BSE'' is universally accepted to recognize and identify anything that is associated with the Exchange. Further, the Exchange is the exclusive owner and user of the trade mark ''BSE'', which is registered under trade mark laws, and finally, it is the brand ''BSE'' that has long been exploited by the Exchange on every front for every purpose.

In view of the above and in order to leverage the brand equity of the Exchange by linking it to the name, it was proposed to change the name of the Exchange from ''Bombay Stock Exchange Limited'' to ''BSE Limited'' by passing a resolution in the Board Meeting of the Exchange held on 5th December, 2009 subject to approvals of all competent authorities including SEBI and the shareholders of the Exchange in a general meeting with requisite majority and pursuant to Section 20 and 21 and other applicable provisions, if any, of the Companies Act, 1956 (the Act).

Subsequent to the resolution passed by the Board in its meeting held on 5th December, 2009, the Exchange had applied to SEBI vide letter dated 11th December, 2009 seeking its In Principle approval/ No Objection. The SEBI vide its letter viz MRD/DSA/5646/2011 dated 17th February, 2011 communicated to the Exchange that "no objection" may not be required from SEBI with regard to the proposed change of name from Bombay Stock Exchange Limited to BSE limited, subject to compliance with other regulatory requirements.

The Registrar of Companies, Maharashtra, Mumbai vide its letter dated 16th April, 2011 has given their No objection to the availability of the proposed name i.e. "BSE Limited"

Your Directors recommend the proposal of change of name of the Exchange for members'' approval in the ensuing Annual General Meeting.

4.3 Proposed Demerger of Clearing & Settlement Division/Undertaking of the Exchange to Indian Clearing Corporation Limited (ICCL)

Pursuant to the best national and international practices and a Scheme of Arrangement under Sections 391 to 394 of the Act, the Exchange proposed to transfer the Clearing and Settlement Division/Undertaking of BSE to ICCL.

ICCL had been incorporated by Bombay Stock Exchange Limited (the Exchange) as its wholly owned subsidiary to carry out Clearing and Settlement activities for the trades executed on the Exchange platform in 2007 and to ensure effective risk management. Presently, ICCL is carrying out Clearing and Settlement activities for Mutual Fund segment and Debt segment.

Your Directors recommend the transfer of Clearing and Settlement Division/Undertaking of the Exchange to ICCL pursuant to Sections 391 to 394 the Act, for approval of Equity Shareholders in the ensuing Annual General Meeting.

4.4 BSE Training Institute becomes separate corporate entity BSE Training Institute (BTI) was started 21 years ago by the Exchange to provide training programs to market intermediaries.

The Board of Directors of the Exchange in its meeting held on 30th July, 2010 decided to spin off BTI into a separate "for profit" wholly owned subsidiary company of the Exchange to be incorporated under Companies Act, 1956 under the name of ''BSE Training Institute Limited'' (BTIL).

The Board of BSE Training Institute Limited is made up of a rich pool of professionals with substantial experience in the industry:

Mr. Sudhakar Rao, Chairman,

Mr.Ambarish Datta, Managing Director

Mr. Praveen Chakravarty, Director

Mr. Rangarajan Sundaram, Director

Mr. Madhu Kannan, Director

Mr. Ashishkumar Chauhan, Director

Mr.Venkatramani Balasubramaniam, Director

4.5 Listing of the Exchange''s Shares

The Exchange still plans on taking steps for Listing of its shares. Efforts initiated in FY 2009-10, were delayed while the SEBI Committee namely "Review the Ownership and Governance of Market Infrastructure institutions in India," chaired by Dr. Bimal Jalan, deliberated and issued its final report on 22nd November, 2010. While SEBI rule-making or guidance in this area is likely, BSE management believes that it should proceed with its planned Self Listing and make appropriate adjustments to its corporate and regulatory structure in anticipation of a SEBI approval of its listing.

5 New Initiatives

5.1 BSE StAR MF Platform

The Exchange''s online Mutual Fund transaction platform - BSE STAR MF, completed one year of operations in December

2010 and has retained its dominant status in the exchange traded MF space with a 70% market share, till date. The BSE STAR MF platform has evolved considerably to suit the needs of its members - notably with the introduction of Phase

2 routing of subscription units and redemption proceeds through brokers pool account), the addition of a Systematic Investment Plan (SIP) facility, and the introduction of ELSS (tax savings schemes) on the platform. The StAR MF platform is also kept open for extended hours during NFOs of various Mutual Fund Schemes thus providing greater services to the AMCs as well as members and investors.

The total Assets Under Management of the Mutual Fund Industry as of 31st March, 2011 stood at Rs.7,03,669 crores down about 6% from Rs. 7,48,547 crores the previous year. But during this year the StAR MF AMC family has grown to 26 AMCs that collectively account for over 90% of the industry AUM. During the year 2010-11 we received 62693 orders, generating transactions aggregating to over Rs. 477 crores. The platform, in its endeavor of servicing the Mutual Fund Industry, has been handling schemes with settlements up toT 6 thus widening its ability to provide more schemes. Today STAR MF offers over 1500 scheme options.

The Exchange in the coming year will continue to work to bring 100% of the Asset Management Companies operating in India on board. We are also working on providing access to existing members to STAR MF through the IML, Leased lines etc. We are expanding STAR MF membership by recruiting MF distributors as new BSE members.

5.2 Debt Segment

Product and Services offered:

The Debt Segment provides a range of products and services to investors and market participants of the Fixed Income Markets. The debt segment at the Exchange currently includes:

(i) Reporting of Secondary Market trades in Government securities, treasury bills, Corporate Bonds, Certificate of Deposit (CD) and Commercial Paper (CP) on the Wholesale Debt Market segment platform called Indian Corporate Debt Markets (ICDM),

(ii) Trading in non convertible debentures and bonds on ''F'' group on BOLT.

(iii) Trading in Government securities on the Retail Debt Market (RDM) ''G'' group on BOLT.

In accordance with RBI and SEBI guidelines, the Exchange has also developed a platform called e-Seth'' for facilitating clearing and settlement of Secondary Market trades in Corporate Bonds on DVP I basis through ICCL.

Statistics relating to the growth of this business in 2010-11 are summarized below:

Particulars 2010-2011 2009-2010 ICDM F-Group ICCL ICDM F-Group ICCL

Turnover Crores) 36084.51 3103.13 17491.70 55459.45 706.06 5482.47

Number of members/ participants 670 1310 1310 456 988 988

During the year, there was significant increase (over 300%) in the volume of business in the ''F'' group of debt securities which was mainly attributed to the widespread participation of retail investors when SBI Bonds were listed on the Exchange. The value of trades in corporate bonds settled through ''e-settle'' also registered growth of over 200% during the year as more and more market participants became registered with ICCL.

ebidXchange

A custom designed platform called ''ebidXchange'' for allocation of Full limits for investment in Government Securities and Corporate Bonds was launched by the Exchange in May 2009. During the year, the Exchange witnessed substantial success with this Full debt limit bidding platform. There were two auction sessions conducted during the year. For the first time, the auction held in December 2010 was for multiple products

- Infrastructure Bonds, Corporate Bonds and Government Securities. This auction received an overwhelming response from market participants.

Investors awareness in the Debt Segment With the view of providing an open platform for the discussion of current practices prevailing in the Indian debt markets, a series of seminars were scheduled across India by the Exchange. The seminars received an overwhelming response from market participants.

The Exchange was one of the sponsors of Fixed Income Money Market and Derivative Association (FIMMDA) annual conference held in January 201 I wherein market participants, regulators discussed various issues relating to fixed income market.

In keeping with the growing interest in the Indian Debt Market, the Exchange has introduced a "Daily Market Analytics" report, a newsletter which is freely available on the bseindia website.

5.3 BSETasis Shariah 50 Index

In December 2010, the Exchange Tasis Shariah 50 index was launched. The index, produced in partnership with Tasis, an Indian Shariah advisory firm, is composed of 50 of the largest Shariah compliant companies in the BSE 500 index. A number of firms are already benchmarking to the index and several firms have begun providing structured products based on the new index.

5.4 Smart Order Routing

Smart Order Routing (SOR) allows customers of firms who are members of multiple exchanges to achieve best execution by deploying software programmers that optimize access to the best price and the available liquidity wherever and whenever it is available.

When SOR guidelines were announced by SEBI, it was possible for other exchanges not to favor all algorithmic trading software that involved routing or trading of the order on BSE.

Subsequently, SEBI changed the regulatory framework to ensure that no exchange could block the implementation of SOR technology and other multi-exchange algorithmic trading. Consequently, SOR and multi exchange algorithm have been allowed by other Exchanges. However, the processes for the same need to be made simple and non-discretionary.

5.5 Introduction of Call Auction mechanism at the opening

The call auction trading mechanism has various desirable properties. Most importantly it provides fast and equitable flow of information and facilitates price discovery based on this information. A call auction mechanism is intended to minimize volatility and improve liquidity of a stock.

The call auction trading mechanism was re introduced in the Indian capital markets on 18th October, 2010. This trading mechanism had been in practice in the late 90''s, but was discontinued.

The call auction mechanism was introduced as a pilot project in the pre opening session for a basket of 50 stocks consisting of the constituents of the BSE Sensex and the NSE Nifty. The pre opening call auction session is conducted for a 15 minute period from 09:00 - 09:15. With the launch of the pre opening session, the start of the continuous trading markets (trading in other segments like derivatives markets, SLB etc. and stocks that are not eligible for call auction) has been deferred by 15 minutes.

The 15 minute call auction window is broken up into 3 periods. From 09:00 a.m. - 09:08 a.m., investors are able to place their ''buy'' and ''sell'' orders for the basket of participant stocks. During this time all orders being punched into the system will be accumulated in the order book but there will be no trades. Investors will be allowed to add or modify their orders. The order entry period will come to an end randomly between 09:07 and 09:08 a.m. This random stoppage will be system driven. This means that the stop time will be arbitrary and may differ between Exchanges. Between 9:08 a.m. - 09:12 a.m., the final opening price will be determined for every stock and it is

during this time that all eligible orders will be converted into trades at the single determined opening price per stock. The opening price that is applied to all eligible orders that is all bids higher than and offers lower than opening price is calculated through an algorithm that maximizes the total traded volume at that price. A buffer period of 3 minutes has been allotted to ensure a seamless transition to the continuous markets.

The pricing engine for call auction starts running from 09:00 a.m. onwards and disseminates the indicative prices and indicative indices based on the orders accumulated until that point. These indicative prices keep changing through the course of the 7-8 minutes as more orders are entered into the system. The ''indicative'' information provides a sense for the direction the markets will be taking and help investors placed informed orders.

The system was built with sufficient flexibility so as to incorporate any future amendments to the system. BSE recently extended the call auction in the pre open to stocks exclusively traded on BSE on 4th April, 2011. The Exchanges and the regulator are in talks to extend the call auction to additional stocks in the future as acceptance grows.

5.6 BSE opens Co-location facility

Net Magic Solutions and Thomson Reuters have teamed up with the Exchange to provide a co-located data center connected to the Exchange''s matching engine at R J. Towers. The Co-location facility began operations in January 2011 and as of 31st March, 2011 provided services to 5 customers. Customers of the Co-location facility are free to route orders to BSE or to any other exchange.

5.7 Derivatives Segment

5.7.1 Equity Derivatives Segment

In the current financial year, the following steps have been taken to stimulate trading in the Equity Derivatives Segment of the BSE:

- Applied for and obtained the regulatory approval to allow delivery-based Single Stock Futures and Single Stock Options contracts. Delivery-based derivatives are the norm in most markets around the world and have proven superior as investment vehicles since they are much less susceptible to manipulation than cash-settled derivative products.

- Expanded order handling capacity to facilitate auto- quoting and algo trading. This has resulted in a significant increase in the order/trade ratio at the BSE and added substantially to on screen visible liquidity.

- Signed license agreements to allow SENSEX futures and options to trade on EUREX.

- Applied for regulatory approval to introduce derivatives based on foreign stock indices.

5.7.2 Currency Derivatives

The United Stock Exchange (USE), a BSE affiliated exchange, launched Currency Futures on 20th September, 2010 and introduced Currency Options with effect from 29th October, 2010. The Exchange is a strategic partner of USE and provides clearing, trading technology and other operational support. The Exchange holds a 15% stake in the USE, which is the maximum allowed under current regulations. Other shareholders include 21 public sector banks, several international and domestic private banks, and other market participants. The total volume on the segment since its launch till 31st March, 2011 was Rs.762,549.79 crores. The average daily turnover on the segment was Rs. 5,733.46 crores till 31st March, 2011.

5.8 Business Development & Marketing

The Business Development & Marketing (BDM) Department is responsible for expanding the Exchange revenue lines and promoting various products and services of the Exchange such as new memberships, the BSE StAR MF platform, Fast Trade, Stock Lending and Borrowing, Direct Market Access, SOR, Automated trading, etc.

Besides marketing activities, the BDM group also looks after managing relationships with existing Trading Members and ensuring a high level of customer service to these Trading Members. In-order to provide hassle-free services to Trading Members, Relationship Managers (RMs) have been appointed. Product brochures, leaflets, booklets, and other promotional material are distributed to Trading Members as well as investors. Training programmers are also arranged for Trading Members. Recently, BSE has also started a weekly newsletter in order to develop a regular communication channel with all our members and buy-side clients.

Notable initiatives in 2010-11 were

I. Derivatives incentive programmers: BDM team has been meeting with members in order to get them set-up for derivatives market making and other incentive schemes in the derivatives segment. Members have begun to test out their systems, including post-trade functionalities. As a result the Exchange has seen some initial derivatives volume in the last months of the fiscal year.

II. New memberships: During 2010-11,544 new membership applications were received at the Exchange. SEBI has cleared 296 applications and out of the 296, 221 have commenced business. The 221 new Deposit Based Membership (DBM) members currently contribute around 3.6% to total turnover with an Average Daily Turnover Volume of approx. Rs. 140 crores. This translates to a contribution of each new members of about Rs. 167 crores per annum.

III. SOR/Algos and Co-location: As of 25th April, 2011, the Exchange has received 14 applications of which 12 have been approved and remaining 2 are awaiting for system readiness at the members'' end. 5 customers have co-located at our data centre. The Data Center was launched in January 2011. Our systems have been continually enhanced to support faster throughput and shorter turnaround-time, in order to facilitate a more conducive platform for ago traders.

IV. Physical settlement: Delivery based single stock derivatives were launched in the final months of 2010-11. BDM got members to do test trades in order to ensure post trade functionalities of BSE systems and operation support were in place.

V. New Regional Offices: As part of our on-going expansion of operations across the country, BSE inaugurated two newly expanded offices in Kolkata on 23rd March, 2011 and in New Delhi on 29th March, 2011.

VI. Image re-building: All these marketing initiatives have contributed to the growth in membership and have created a personalized service oriented-image in the minds of trading members.

6 Technology Initiatives at BSE

Throughout 2010-11 the transformation of the Exchange''s technology platform continued. The year witnessed consolidation of various initiatives on the IT front and the upgrade of our systems and capacities at our Disaster Recovery site.

Customers deploying automated or Ago trading strategies continued to grow in importance during the year. These advanced trading strategies require the Exchange systems to be more intelligent and amenable to end user requirements. New and upgraded hardware were deployed, thereby, consolidating many functions to meet growing and future demands of market. This resulted in a substantial boost in our trading system capabilities and will enable us to compete in this area more effectively.

During the year, the Exchange handled an average of 19 million orders per day, which is more than 2 times the previous year''s number. Current system capacity provides for enough head room to handle any sudden surge in order load today and can meet anticipated future requirements.

Notable IT developments

BSE Trading capacity was enhanced in multiple ways during the year. Continuous efforts to optimize existing hardware and software helped to reduce end-user response time and provide faster market data. This was supplemented with advanced functional releases on the Trading terminal of BSE as well as on those offered by third-party vendors. The migration to a single platform for multiple trading segments like Options and SLB provided trading members greater ease of trading and operations. The Trading terminal was also enhanced to allow for new market structures such as Pre-open Call Auction.

A new dimension in our market data feed allows customers to get a more in-depth view of the Order Book. This is popularly known as E-cast (Enhanced Market Picture). Capabilities of third-party software using BSE''s Trading Gateway were also enhanced to allow Admin Functions to be managed more efficiently. The year also recorded a surge in the use of third- party software for trading on the Exchange, reflecting the growing popularity of ago-based trading.

Many of the following enhancements supported these developments:

FOW - Fast Trade On Web powers the user to Trade on BSE without a Terminal or a third-party software solution. All the customer needs is an internet connection. The new application is enriched with advanced Risk Management features. The other Web-based initiatives for Trading members recently introduced are, an Extranet for data/report downloads and BEFS (BSE''s Electronic Filing System) for various data uploads.

i-BBS - i-BBS is a revamped internet-based Book-building system providing greater convenience and comfort for all market participants, with enhanced features for ASBA compliance. This allows members as well as Banks to participate in Book Building (IPO) from any location that has an internet connectivity.

SLB - The SLB (Stock lending & Borrowing) system was revamped following changes in the regulatory framework provided by SEBI.

CLASS - CLASS is a software application that handles multiple Post trade activities such as Collateral management, RMS and Settlements. CLASS is now integrated to handle settlement in the SLB and Derivatives segments.

PoP - To reach out to local users and facilitate faster and more secure access to BSE''s trading facilities at lower costs, BSE POPs (Point of Presence) were commissioned in Delhi, Kolkatta. Ahmedabad and Chennai in 2010-11.

As the Trading system was enhanced in 2010-1 I, additional support systems were added to ensure improved and continued support. Important support enhancements this year were:

Tivoli - For Enterprise level service monitoring and management, a new IBM tool called Tivoli was deployed successfully to manage and monitor the various systems in the Exchange.

BOSS-1 - The Online surveillance function of the Exchange is done using BOSS-1, which was first deployed in year 2005. Considering the future load and expectations from the regulator and Surveillance Department, the application was substantially revamped this year and new Hardware was added.

SAS - BSE Surveillance deployed the Insider Trading module of SAS. SAS is the leader in Business analytics software and its use for monitoring and risk management. The new solution implemented at BSE will enhance this critical surveillance function of the Exchange.

ERP - The BSE''s legacy system was replaced by Oracle Application Financials for the Financial Accounts and HR function at the Exchange. The result has been further automation, reduction of paper work and improved integration of Accounts & HR functions to support management processes at the Exchange.

BSEindia - The BSEindia website continues to be the most viewed Exchange website, drawing millions of investors and other market participants every day. The website provides real-time information, advanced charting tool, company filings, historical data and all important communications of the Exchange. Significant upgrades were made to the website in 2010-11.

BSEPIus - For more serious users, who wish to remain connected with BSE, BSEPIus was launched. BSEPIus, an extension to BSEindia website, allows registered users to create profiles and customized views. The site is multilingual and offers a variety of analytical tools. BSEPIus can be used as an advanced tool to track stock and company information.

Marketplace Technologies, the wholly owned subsidiary of BSE, played an important role in providing the technology support, development and deployment of new applications/platforms, some of which are deployed in FOW, CLASS, i-BBS, Member Extranet, etc.

Business Continuity Plan & Disaster Recovery

As a part of BSE''s commitment to provide continued and un-interrupted service to its customers, continuous and regular efforts are made to review and enhance BSE''s IT systems at its disaster recovery site. During the year additional steps were taken to implement an enhanced Business Continuity Plan (BCP). The Exchange has procured land in Hyderabad, and construction of a state-of-art BCP center has commenced.

7 Training Initiatives

During the year in review, BTIL offered over 50 courses and 200 programmers. Approximately 8500 participants attended these programmers including 3 International programmers.

During the year, BTIL launched 15 new programmers namely:

Advance Programmed on Stock Market, Accounting Of Financial Instruments & Derivatives, Automobile Industry - An Analyst''s Perspective, Certificate Programmers on Currency Markets, Economics for Non-Economists, Equity Portfolio Structuring & Stock Analysis, Financial Statement Analysis (Banking Sector), Investment and Trading Psychology, Islamic Finance and Capital Market, Market Crashes - Catalyst to Evolution of Stock Markets, Overview of Asian Capital Markets, The Art of Reading an Annual Report, Valuation & Modeling for FMCG Sector, Valuation & Modeling for Pharmaceutical Sector, and Wealth Management: A practical approach.

In addition, BTIL continues to conduct certification examinations on Financial & Securities Markets. BTIL also offered customized programmes for various leading Corporate, Financial Institutions and Educational Institutions.

New Initiatives of BTIL

BTIL has taken many new initiatives in its first year as a stand- alone subsidiary, moving into many new domains. ''

Destination Australia

With rapid globalization it is essential to continuously interact with both peers as well as experts from all over the world. In the Asia Pacific, Australia is a very significant presence, especially in the financial markets. To leverage the knowledge and domain expertise available in Australia, BTIL. and the Australian Trade Commission, The Australian Government''s Trade and Investments Promotion Arm, signed a Memorandum of Understanding. As a part of this initiative many programmesare being organized to help professionals from both countries learn from each other.

MBA in Financial Markets

With the Financial Markets in India maturing and more complex products and services being introduced, there is an increasing need for a specialized and focused competency building for new recruits. This was the primary driver behind the launch of the MBA in Financial Markets in collaboration with the Indira Gandhi National Open University, the world''s largest Open University. With a curriculum designed with inputs from industry experts and leading academicians from India and abroad this programmers is positioned to greatly enhance the talent pipeline in the financial markets industry.

Chair on Capital Markets at IGNOU

Since financial markets is a dynamic, continuously evolving field there is a need for focused study and extensive research. To help achieve this, BTIL has established a chair on capital markets at the Indira Gandhi National Open University. The first occupant of the prestigious professorship will be Mr. M. Damodaran, former SEBI Chairman.

Post Graduate Certificate Programmers in Capital Markets

With the financial market industry developing at a rapid pace there is a need for augmenting the skills of professionals to meet increasingly complex challenges. Many professionals from the industry with a few years of experience feel that they need to sharpen their skills to avoid stagnation.

To meet this objective BTIL in collaboration with the Indian Institute of Management Indore (IIMI) have launched the "Post Graduate Certificate Program in Capital Markets". This programmers is expected to meet the developmental needs of working professionals from the industry. The program will run over weekend sessions to provide the professionals with the flexibility to learn without disrupting their busy work schedules.

Launch of Part-time programme for Under- graduates

The need for graduate level courses to build financial market competencies has already been recognized with Universities like the Mumbai University introducing a B.Com in Financial Markets. However these courses are more academic in nature and do not build the hands-on skills required to enable a graduate to take up a job in the industry immediately after passing out of the program. To fill this lacuna BTIL has launched the Global Financial Markets Professional (GFMP) programmers. A unique feature of this programme is the Industry Practice semester. This is essentially an effort to establish institutionalized linkages between the working world and the academic world. Industry practice will create classrooms in the finance industry where the student will learn on the job. Here the students will be linked with the world of work, and thus the academic and industry gap will be reduced.

Building Financial Competencies in the East Zone

The equity cult and investors'' penetration in the Eastern part of the country is not as widespread as observed in Kolkata. This has resulted in lower participation of investors at BSE from Eastern region of India. To build the financial market competencies in the Eastern region, BTIL has launched a program to groom financial market professionals in the region in collaboration with Kolkata''s premier management institute, the Indian Institute of Social Welfare and Business Management. This three month part-time programme is titled "Certified Financial Markets Associate Program".

Creating Risk Professionals of the Future

The acknowledgement that risk exists in all investments is the first step to financial wisdom. A big second step is, understanding that although risk cannot be eliminated, it can be reduced through proper management. To address this segment of specialized knowledge and skill requirements BTIL has launched a "School of Risk Management". The Institute is uniquely placed to offer a full range of professional solutions to those working or aspiring to work in the area of risk management. It will offer professional recognition through Institute membership, internationally recognized qualifications, and practical day-to-day professional development activities designed to offer continuous learning opportunities for risk management professionals.

Catch Them Young

To tap the potential of young minds and introduce them to financial market concepts, BTIL conducted a series of workshops on money management for school children. The programme was designed around a set of games and activities. The children not only picked up the rules of the games and activities quickly, but were soon masters playing as if they had years of experience behind them. For instance within moments of starting the "Hollywood Stock Market" game all the kids were trading like veteran traders.

New Certifications

BTIL has also launched many new certification exams in new areas like credit rating, and International Financial Reporting Standards (IFRS). The objective of these new certifications is to build a set of benchmark qualifications for financial market professionals.

8 Investors Service

8.1 BSE redresses investors'' complaints against Trading Members through mediation and counseling by appointing investors'' Grievances Redressed Committees, for the purpose. The Exchange provides these services as well as Arbitration at its Regional Arbitration Centers at Mumbai, Chennai, Delhi and Kolkata for redressed of disputes, expeditiously and in most cost-effective manner. Additionally, it has Investors'' Services Centers at Ahmedabad, Kochi and Rajkot.

BSE is the only Exchange in the country, where 14 Registrars and Transfer Agents (RTAs) regularly visit its Registered Office, for redressed of investors'' complaints against Companies listed on BSE.

8.2 BSE Investors'' Service Cell took the following initiatives in 2010-1 I

- Exempted all constituents from payment of arbitration fees and charges in Arbitration References for a claim up to an amount of Rs. 10 lacs, filed with BSE on or after 6th February, 2010.

- Raised the maximum amount of compensation payable from BSE''s Investors'' Protection Fund, from Rs. 10 lacs to Rs. 15 lacs to the clients of Trading Members declared as defaulters on or after 5th December, 2009.

- As a part of its continuing efforts to add investor-friendly services, the Exchange has begun sending trade details to investors. This facility provides details of trades executed by a Trading Member on behalf of his clients who have been selected on a random basis.

- The Exchange now posts on www.bseindia.com data relating to investors'' complaints against Companies listed on the Exchange and against BSE''s Trading Members. These data are updated on a weekly basis. Other data intended to protect investors, such as Arbitration Awards and Regulatory Orders given by the Exchange from 1st April, 2007, are also published on the website.

- The limitation period for filing an Arbitration case was extended from 6 months to 3 years (from the date of the initial claim).

8.3 During the financial year under review, the Exchange redressed 3065 and 5387 complaints against the Trading Members and Listed Companies respectively, besides deciding 208 Arbitration References filed with it. The corresponding numbers during the previous financial year were 2722, 3395 and 634 respectively

8.4 The Exchange through its Investor Protection Fund regularly conducts Investor Awareness Programmes throughout the length and breadth of the country and has conducted 596 programmes during 2010-11. It also sponsors workshops arranged for investors by the Investors'' Associations recognised by the Securities and Exchange Board of India (SEBI). In addition, it periodically brings out advertisements on Do''s and Don''ts for investors in print media in order to enable them to safeguard their interests.

9 Human Resources

Organizations that invest in human capital invest in the future. Today at the Exchange we realize this truth and are increasing our focus on having the right investments in human capital to take people to the next level of competence. The Exchange has always believed that motivated employees represent a core source of competitive advantage. For this reason we continue to invest in training and development programmes along with various HR initiatives.

The Exchange has aligned the compensation packages of Management and successfully revamped many outdated HR policies to make benefits and compensation more transparent employee friendly.

Also, the organizational structure of the Exchange has undergone significant restructuring to enhance accountability and efficiency with a view to aligning performance management and reward strategies.

In compliance with the requirements of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Amendment Rules, 2011, a statement containing details of employees is annexed.

10 Risk Factors, Risk Management

Some of the major risk factors that could adversely affect the Exchange''s business and operations are:

- The Exchange''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 new/further issues, number of active traders in the market etc. Adverse macro-economic climate and political uncertainty may dampen the sentiments of the capital markets. Post liberalization, Foreign Institutional Investors have played a dominant role in generating volumes in the Capital Markets. However, the downturn and related problems in many developed economies may have a negative influence on Fll investments in the country which in turn would adversely affect the trading volumes of the Exchange.

- The Exchange generates substantial revenue from listing fees and Book Building Services provided to corporations during their new/further issues. Factors like the macroeconomic environment, industry specific conditions, overall capital market sentiments, political stability and regulatory requirements would influence corporate decision to tap the capital markets. The extent of such influences may impact the Exchange''s revenues. Indian capital markets, post liberalization, are at par with most of the developed capital markets in risk management. However, failure on the part of the Exchange to adapt itself to dynamic changes in business, regulatory and technological environment will adversely affect its operations and financial results.

- The competitive landscape for the securities transactions business in India continues to be challenging. Our 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.

11 Report on Subsidiary Companies

As of the end of the financial year 2010-2011, the Exchange had four immediate subsidiaries i.e., Central Depository Services (India) Limited (CDSL), Indian Clearing Corporation Limited (ICCL), BSE Training Institute Limited (BTIL) and Marketplace Technologies Private Limited (MPT). CDSL is 54% owned by BSE and provides depository and record-keeping services to the securities industry in India, facilitating dematerialization of holding of securities and book-entry settlement. ICCL is incorporated as a wholly-owned subsidiary of the Exchange to carry out the functions of clearing, settlement, collateral and risk management for both cash and derivatives segments. BTIL is incorporated as a wholly-owned subsidiary of BSE to develop financial education, training and certification in India. MPT is a wholly-owned subsidiary that is a leading provider of cutting edge IT solutions with focus on Equity, Stock, Commodities, Banking and Financial Services markets in India.

Presently, ICCL is managing the clearing and settlement functions for the Mutual Fund segment of the BSE, for the Bond trading platform and for the Currency Derivatives Segment (USE). Remaining operations will be brought under the fold of ICCL in a phased manner.

As of the end of the financial year 2010-2011, the Exchange had two step down subsidiaries i.e. CDSL Ventures Limited and Marketplace Tech Infra Services Private Limited (Marketplace Tech). CDSL Ventures Limited is 100% owned by CDSL, the immediate subsidiary of the Exchange which provides services in relation to establishment, setting up, operating and maintenance of depository systems with electronic connectivity for creating holding and maintaining information and records in electronic form. Marketplace Tech was incorporated on 9th February, 2011 which is 100% owned by MPT, the immediate subsidiary of the Exchange to act as an application service provider and support services in computer software, hardware and information technology. Thus, pursuant to provisions of Section 4(l)(c) of the Companies Act, 1956, CDSL Ventures and Marketplace Tech become the subsidiary of the Exchange as well.

There has been no material change in the nature of the business of the subsidiaries. A statement pursuant to Section 212 of the Companies Act, 1956 (the Act) relating to all the subsidiaries is attached to the Accounts. Further, Annual Accounts for the financial year ended 31st March, 2011, along with Directors'' Report and Auditors'' Report thereon of the subsidiaries are made available in this Annual Report.

12 Fixed Deposits

The Exchange has not accepted any fixed deposits and as such, no amount of principal or interest was outstanding as of the Balance Sheet date.

13 Issue of Equity Shares during the Financial Year

Pursuant to the Demutualization Scheme, the Exchange is required to allot 10,000 equity shares against each of the membership rights held by Trading Members of erstwhile BSE; however, allotment of such equity shares may be kept in abeyance, on account of suspension on the said membership rights. Accordingly, at the beginning of the financial year, the allotment of 10,000 equity shares of Rs. I/- each against 19 membership rights held by 19 Trading Members of erstwhile BSE (out of 73,50,000 equity shares against 735 membership right of erstwhile BSE) was kept in abeyance for specific reasons, viz., Trading Member being a notified person, attachment of membership right by the Income Tax Department, legal dispute for the ownership of the membership rights etc.

During the financial year, 10,000 equity shares of Rs. I/- each against I membership right held by I Trading Member of erstwhile BSE was allotted pursuant to the Scheme, upon revocation of suspension on such membership rights. The said Trading Member was also given the Corporate Benefits i.e. prior year dividends and 1,30,000 bonus shares emanating from the allotment of 10,000 equity shares.

The allotment of equity shares pursuant to the Scheme against 18 membership rights held by 18 Trading Members of erstwhile BSE continue to remain in abeyance as at the end of the financial year.

14 Conservation of Energy, Technology Absorption and Foreign Exchange Earning and Outgo Since, the Exchange does not own any manufacturing facility, Directors have nothing to report with regard to Conservation of Energy and Technology Absorption in terms of Section 217( I )(e) of the Act read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

The particulars with regard to foreign exchange earnings and outgo appear at Note No. 13 of Schedule ''N'' of the Audited Accounts.

15 Corporate Social Responsibility

Corporate Social Responsibility (CSR) in the Exchange is aligned with its tradition of creating wealth in the community with a three pronged focus on Education, Health and the Environment. The Exchange is committed to support the society at large. Notable activities in 2010-11 are:

Celebration of the completion of 20 years of CCDT

Committed Communities Development Trust (CCDT) completed its 20 years in June 2010. They wanted to use this opportunity to highlight challenges faced by children in today''s time. On 6th August, 2010, the Exchange hosted an event "Hamari Adalat" on the 20th Year Celebration of CCDT where the underprivileged children asked questions to functionaries in the field of social development.

Social and Corporate Responsibility Awards 2010

The CSR Awards is an Annual flagship event sponsored by the Exchange. The Exchange has been sponsoring Corporate and Social Responsibility Awards from the year 2005 onwards. The aim of the event is to bring together organizations working towards the betterment of society, the environment and the country and to reward those who have excelled in doing so. Over 100 companies were nominated for the CSR Awards out of which 18 companies made it through to the final and emerged as winners in different categories.

Arya Kanya Vidhyalay Trust-Porbandar

Considering the importance of health and the environment in education, the Exchange is supporting the Arya Kanya Vidhyalay Trust at Porbandar with a sum of Rs. 60 lacs for building an Elevated Water Storage Reservoir - 50000 Liters capacity, Repair & Renovation of 145 Toilets & Bathrooms, Repair & Renovation of Hostel Wing. Through this effort, the Exchange aims to improve the life of the students. Tenders for building the water tank were invited and have been sanctioned. The work for building the water tank has been started and will see completion by the end of July 2011.The new water tank will provide water for 1200 girls studying in the above trust at Porbandar.

Advertisement in Souvenir to support Deaf Way

Deaf Way, a voluntary organization to tackle the problems faced by the deaf community and to enhance opportunities available to them, conducted its 53rd International Week of the Deaf Celebration from 2nd October, 2010. As a CSR initiative, the Exchange supported their cause by taking an advertisement in the 53rd International Day of the Deaf Commemorative Souvenir.

16 Corporate Governance

Being an unlisted entity, the Exchange is not bound to comply with the provisions of Clause 49 of the Listing Agreement. However, as a measure of good Corporate Governance, the Exchange voluntarily adopts most of the Corporate Governance practices as provided in Clause 49. In keeping with the best practices, a report on Corporate Governance as at 31st March, 2011 forms a part of the Annual Report. A Certificate from M/s. Mehta & Mehta, Company Secretaries, Mumbai regarding status of compliances of the conditions under Clause 49 of the Listing Agreement is annexed to this Report.

A Certificate on Secretarial Compliance for the year ended 31st March, 2011 issued by M/s. Mehta & Mehta, Company Secretaries, Mumbai in terms of the provisions of Section 383A of the Act is attached with this Report.

The Exchange has a comprehensive Code of Ethics for Directors and its functionaries (selected employees), supervised by an independent Ethics Committee. The Exchange has also formulated a Whistle Blower Policy.

17 Directors'' Responsibility Statement

Pursuant to the requirement under Section 217 (2AA) of the Act, with respect to Directors'' Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the accounts for the financial year ended 31st March, 2011, the applicable accounting standards have been followed and there was no material departure from such standards;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Exchange as at the end of the financial year on 31st March, 2011 and of the profit of the Exchange for the said financial year;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Exchange and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the accounts for the financial year ended 31st March, 2011 on a ''going concern basis''.

18 Directors

SEBI while prescribing governance structure of the Exchange vide its letter no. MRD/485II/05 dated 31st August, 2005, has provided for various categories of Directors viz. Public Interest Directors, Shareholder Directors and Trading Member Directors with the extent of their representation on the Board.

As per the said governance structure, it is implied that one-third of the Directors from each category would retire by rotation and if eligible, may offer themselves for re-appointment. Further, in terms of Article I3.I8A of the Articles of Association, no Director shall hold office for more than two consecutive terms.

18.1 Public Interest Directors

Dr. Sanjiv Misra, was appointed by the Board as a Public Interest Director of the Exchange with effect from 22nd April, 2010 in casual vacancy created due to the resignation of Mr. Jitesh Khosla, under Section 262 of the Act read with Article 13.27 of the Articles of Association (AOA). Dr. Misra holds office up to the date of forthcoming Annual General Meeting and being eligible, has offered himself for appointment. In terms of Article 13.16B.2 of AOA, Board has appointed him as Public Interest Director in the Board meeting held on the date of the last Annual General Meeting i.e. 29th May, 2010.

Mr. S. N. Menon, a Public Interest Director will be retiring by rotation and will be completing two consecutive terms as a Public Interest Director at the forthcoming Annual General Meeting. In accordance with Article 13.18A of AOA, Mr. Menon will not be eligible for re-appointment. The Board places on record its appreciation for the valuable contributions made by Mr. Menon as Public Interest Director during deliberations in the Board and various committees.

18.2 Shareholder Directors

Mr. Keki Mistry .Vice-Chairman and Chief Executive Officer of HDFC Limited, was appointed by the Board as a Shareholder Director of the Exchange with effect from 22nd June, 2010 under Section 260 of the Act read with Article 13.28 of AOA. Mr. Mistry holds office up to the date of forthcoming Annual General Meeting and being eligible, has offered himself for appointment at the said Meeting.

Mr. Vivek Kulkarni, resigned from the Board with effect from 15th October, 2010. The Board places on record its appreciation for the valuable contribution made by Kulkarni as Shareholder Director during deliberation in Board and various committees.

Mr. Sudipto Sarkar, Shareholder Director will be retiring by rotation and will be completing two consecutive terms as a Shareholder Director at the forthcoming Annual General Meeting. In accordance with Article 13.18A of AOA , Mr. Sarkar will not be eligible for re-appointment. The Board places on record its appreciation for the valuable contributions made by Mr. Sarkar as Shareholder Director during deliberations in the Board and various committees.

18.3 Trading Member Directors

Mr. Uttam Bagri, Designated Director of BCB Brokerage Private Limited (Corporate Trading Member of the Exchange) was elected as a Trading Member Director of the Exchange, at the Fifth Annual General Meeting held on 29th May, 2010 in place of Mr. Prakash Kacholia, who retired from the office at the same Meeting due to completion of his second term in terms of Article I3.I8A of AOA of the Exchange.

Mr. Balkishan M. Mohta will be retiring by rotation and will be completing two consecutive terms as a Trading Member Director at the forthcoming Annual General Meeting. In accordance with Article 13.18A of AOA, Mr. Mohta will not be eligible for re-appointment.The Board places on record its appreciation for the valuable contributions made by Mr. Mohta as Trading Member Director during deliberations in the Board and various committees.

Nomination for filling the vacancy in the Trading Member Director category will be invited from Trading Members by issue of an appropriate Notice.

18.4 Governing Council & Clearing Council of Derivatives Segment

During the year under review, Mr. R. V. Iyer - Banker, Ms. Dharmistha N. Raval - Advocate, Dr. Dilip Nachane

- Academician and Mr. P. P. Vora - Chartered Accountant continued as Public Representatives on the Council while Mr. N. Subramanium and Mr. Vineet Bhatnagar continued as Members in the Trading Member category on the Council.

Mr. Madhu Kannan being the Managing Director & CEO of the Exchange is an Ex-officio Member on both the Councils.

Mr. Ashishkumar Chauhan, Deputy CEO of the Exchange continues to be a Member on both the Councils.

18.5 Governing Council & Clearing Council of Currency Derivatives Segment

The Exchange has stopped all its operations in the Currency Derivatives Segment with effect from 7th April, 2010.

19 Auditors

The Auditors, M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai, hold office until the conclusion of the forthcoming Annual General Meeting and are recommended by the Board for re-appointment to hold the office from the conclusion of the forthcoming Annual General Meeting until the conclusion of the next Annual General Meeting. The Auditors have confirmed that, their re-appointment, if made, would be within the limits prescribed under Section 224(IB) of the Act and that they are not disqualified in terms of Section 226 of the Act.

20 Auditors Report

The Auditors'' Report dated 20th April, 2011 on the financial statements of the Exchange for the financial year ended 31st March, 2011 does not have reservation, qualification or adverse remarks.

21 Acknowledgements

The Board thanks the Government of India, Securities and Exchange Board of India, Reserve Bank of India, the Government of Maharashtra and other State Governments and various government agencies as also the Depositories for their continued support, cooperation and advice.

The Board is grateful to the members of various standing, SEBI mandated and other advisory committees constituted during the year. The Board also acknowledges the splendid support extended by the trading members, issuers, investors of the capital market, market intermediaries and the various associates. The Board expresses sincere thanks to all the business associates, consultants, bankers, auditors, solicitors and lawyers for their continued patronage, partnership and confidence reposed in the Exchange.

The Board wishes to thank all the employees working at different levels for the exemplary dedication and excellence displayed in discharge of duties for the Exchange.

Finally, the Board expresses its gratitude to you as a shareholder for the confidence reposed in the management of the Exchange.

For and on behalf of the Board

Place: Mumbai S. Ramadorai

Date: 18th May, 2011 Chairman

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Mar 31, 2010

The Directors have pleasure in presenting the Fifth Annual Report of Bombay Stock Exchange Limited along with the audited financial statements for the year ended 31st March 2010.

2 AUDITED FINANCIAL RESULTS

2.1 During the Financial year 2009-10, all major revenue streams of the Exchange showed a healthy increase. During the financial year 2009-10, the Exchange recorded its ever highest total income of Rs. 4852 million, profit before tax of Rs.2882 million as well as profit after tax of Rs.2129 million. The financial performance is summarised in the following table:

(Rs. in Million)

Particulars 2009-10 2008-09 I.-Total Income 4852.14 4210.94

2. Total Expenditure 1970.10 1550.72 3. Profit Before Tax 2882.04 2660.22

4 Provision for Tax 752.61 538.43 5. Profit After tax 2129.43 2121.80

6. Balance brought forward from 2280.21 1800.88 Previous Year

7. Available for Appropriation 4409.64 3922.67 Appropriations to:

- General Reserve 1000.00 1000.00

- Trade Guarantee Fund 183.58 137.96 (Cash & Derivatives)

- Trade Guarantee Fund (G-Sec) 2.06 6.39

- Trade Guarantee Fund (CDX) 8.13 3.23

- Proposed Dividend 422.99 422.99

- Corporate Tax on Dividend 70.25 71.89

- Balance carried to Reserves

& Surplus 2722.63 2280.21

3.2 Income - Rs.4852 Million

The revision in transaction charges and improved secondary market conditions resulted in the Exchanges Average Daily Turnover (ADT) in cash segment increasing by about 25% i.e., Rs. 56510 million in financial year 2009-10 as compared to

Rs.45270 million only in the previous financial year. The above increase in the average daily turnover resulted in higher earning from transaction charges to the Exchange. During the year, the Exchange invested a part of its funds in long dated and high rated bonds and debentures of the Corporates, both taxable and non-taxable. In view of low interest rate prevailing for short term investments, the exposure to such investments was reduced. These initiatives resulted in the Exchange earning an income of Rs. 2457 million from investments and deposits during the financial year 2009-10, an increase of about 11% over the previous year. The income from investment and deposit includes estimated income of about Rs.632 million on float/funds from deposit based members/ clearing banks, margins from trading members, securities transaction tax and early pay-ins by the institutional investors. The income from such floats/funds in the previous year was estimated at Rs.684 million.

The income from services to corporates for the financial year 2009-10 was Rs. 592 million, an increase of more than 100% over the previous years amount. This increase in the income from services to corporates was mainly on account of book building software charges and listing processing fees for further issue of capital by the listed companies.

3.3 Expenditure - Rs. 1970 million

During the financial year, the Exchange continued to invest in technology and people to improve its competitiveness in its business segments. The Computer Technology Related Expenses during the financial year 2009-10 was Rs. 606 million, an increase of 26% over the previous years amount. This was mainly to increase the speed of execution of orders and confirmations for the trades at the Exchange. The computer technology-related expenditure for the financial year 2009-10 also includes Rs. 107 million paid to an overseas software vendor for improvement in the trading, clearing and settlement system of the Exchange. The above amount has been expensed after adjusting Rs. 17 million, refunded by the software vendor, upon termination of the contract and settlement with them.

Recognizing the need to align the salaries of its staff and officers to market and to attract talent, the Exchange revised the compensation for its employees.

The provision for taxes for the financial year increased to Rs.753 million as against Rs.538 million in the previous year, due to higher Profit before Tax and lower tax free income from units of mutual funds during the financial year.

3.4 Financial Situation as on 31st March, 2010

The net worth of the Exchange grew to Rs. 18,921 million, an increase of 9.48% over Rs. 17,282 million as on 31st March, 2009. The level of deposits from deposit based trading members increased to Rs. 2,782 million.

The Exchange capitalized its wholly owned subsidiary, Indian Clearing Corporation Ltd., by investing an additional amount of Rs 499.50 million in its equity shares during the year. As part of strategic investment, the Exchange acquired 100% equity shares of Marketplace Technologies Pvt. Ltd., for Rs.425 million. Further, the Exchange acquired 15% stake in United Stock Exchange of India Ltd., for Rs.225 million.

Investments were also made in bonds & debentures of corporates and units of dividend/growth oriented Debt Schemes of Mutual Funds, full details of which are provided, vide Note No. 12 Schedule N of Annual Accounts for the financial year. A substantial amount continues to be invested in fixed deposits with Scheduled Banks.

3.5 Dividend

Your Directors have recommended Dividend on equity shares for the year ended 31st March, 2010 at Rs. 41- per equity share of face value of Re. I/-, (previous year Rs.4/- per equity share) subject to the approval of the shareholders at the Fifth Annual General Meeting.

Under Clause 5.3 of The BSE (Corporatisation and Demutualisation) Scheme, 2005 (the Scheme), the allotment of, equity shares to 19 Trading Members of the erstwhile BSE has been kept in abeyance for various reasons on 31st March, 2010. Meanwhile, all corporate benefits including dividend as may be declared by the Exchange from time to time are being provided for and would be payable on the allotment of these shares.

4 Significant Developments @ BSE

4.1 New Management Team

Mr. Madhu Kannan took over as the Managing Director and CEO in May 2009 and has started implementing a strategy to enhance BSEs competitiveness and ensure its future development and growth. A key step has been the creation of a new Executive Management Team structure which comprises of Mr. Ashishkumar Chauhan as the Deputy CEO, Mr. James EShapiro as Head - Market Development, Dr. Sayee Srinivasan as Head - Product Strategy, Mr. Nehal Vora as Head - Planning & Policy and Mr. V. Balasubramaniam as Head - Special Initiatives. Mr. LP. Aggarwal - CFO and Mr. Anjan Choudhury - CTO complete the composition of the Executive Management Team.

4.2 Marketplace Technologies

BSE has acquired 100% stake in Marketplace Technologies Private Limited (MPT) which is a niche exchange access solution provider. MPT is a leading provider of stock broker backoffice solutions CLASS and also an empanelled vendor providing front-office trading software FASTRADE ™ to stock and commodity brokers across all the leading exchanges in India. The benefits of this acquisition has already begun with the launch of a state of the art internet based trading platform for mutual funds developed by MPT and roll out of the front office trading software to allow customers to trade across all the segments on a single screen.

With this acquisition, BSE has improved its ability to provide customers with quotes in all its segments and compete more effectively.

4.3 Listing of the Exchanges Shares

The Exchange has taken steps for Self Listing of its shares, including presentations to SEBI on the various issues relating to its Initial Public Offering (IPO). A study of self listing process adopted by self listed stock exchanges in other countries, mainly to understand conflict resolution model adopted by those stock exchanges and regulators as well as alternative models for dealing with conflict resolution were also submitted to SEBI. Request for Proposals (RFPs) for the Exchanges proposed IPO and Self Listing of its shares were also received from reputed Merchant Bankers.

In its meeting held on 22nd December 2009, SEBI Board discussed certain issues on "Corporate Governance and Ownership Structure of Stock Exchanges", and a Committee under the Chairmanship of Dr. Bimal jalan has been constituted. The Committee, inter-alia, is likely to discuss/examine the "Need for strategic investors/owners in Stock Exchanges" as well as "Self Listing by an Exchange and possible conflict of interest". In view of the above, BSE may have to wait few more months for IPO and Self Listing of its shares.

5 New Initiatives

5.1 BSE StAR MF Platform

SEBI has issued a circular on November 13, 2009, giving guidelines for facilitating transactions in Mutual Fund schemes using the Stock Exchange infrastructure. BSE launched its BSE STAR MF platform on December 4, 2009 in the presence of the Honble SEBI Chairman Shri C.B. Bhave and a galaxy of CEOs of Mutual Funds and the AMFI Chairman.

The BSE STAR MF platform was launched with 7 participating AMCs, having over 100 schemes and a record 334 scheme options amounting to a record transaction value of Rs. 8.44 crores on the first day.

BSE StAR MFTM is a browser based platform that provides scalable operation, flexible deployment options while ensuring data integrity for improved performance and several user-friendly features. Transactions are accepted in both demat as well as physical form and BSE is the first exchange to have tied up with both the depositories. Presently, BSE has registered over 150 brokers on its platform as Mutual Fund Intermediaries or MFIs. BSE has already conducted several seminars and meetings with brokers and distribution firms to get them actively participating as MFIs.

BSE now offers schemes of a total of 18 AMCs with over 1000 scheme options listed. In terms of value and number of transactions, BSE is the leading exchange platform. The 18 AMCs that have tied up with us at present, cover approximately 80% of the Assets Under Management (AUM) of the Mutual Fund industry aggregating to about Rs. 8 lakh crores.

BSE has also partnered with various Mutual Funds and broking firms to conduct a series of nation-wide seminars/awareness programs targeting the MF intermediary community.

BSE continues to be in constant touch with other AMCs/broking firms for similar programs. In order to take constructive feedback from all stakeholders and with a view to build on the same, a Mutual Fund Advisory Committee comprising representatives from AMCs, RTAs, CDSL, top national level distributors and broking entities, has been constituted by BSE.

5.2 BSE IPO Index

Robust growth of the Indian economy during the current year, and the expectation of higher growth in the future are expected to boost the primary market. For this and other reasons, it was an appropriate time to introduce to the market an indicator that will track the performance of the newly listed stocks in the Indian Capital Market.

BSE therefore launched a new BSE IPO index that will track the value of companies for two years after listing subsequent to successful completion of their Initial Public Offering (IPO).

5.3 BSEPSU website

Public Sector Undertakings (PSUs) have the potential for even a more dominant role, with a large number of profitable unlisted Central Public Sector Enterprises that can go to the market and for the already listed ones to offer more floating stock.

BSE has launched a website to provide a single, updated platform to PSUs with all information relating to disinvestments and public offerings. The website: www.bsepsu.com which has been created with a total focus on Disinvestments was inaugurated by Shri Vilasrao Deshmukh - Honble Union Minister for Heavy Industries and Public Enterprises on January 20, 2010.

www.bsepsu.com is Indias first website covering detailed information and data on all aspects of disinvestments, including database of all past disinvestments, pertaining to PSUs. This website is intended to be useful to academicians, researchers, investors as well as any person or organization, including the media, having an interest in this subject. The purpose of the website is to create a central repository of high quality useful information pertaining to PSUs to generate greater awareness and information sharing among the PSUs and the government, as also among investors and market participants that follow the PSUs. This website has received good feedback from the relevant stakeholders. This website complements BSEs initiative to track PSUs stocks by the introduction of the BSE PSU Index in 2001, the first and only Index of its kind in India.

5.4 Derivatives Segment

5.4.1 Equity Derivatives Segment

In the current financial year, the following steps have been taken to revive the Equity Derivatives Segment of BSE:

- Product Innovation - Successfully obtained the Regulatory approval to change the Product Design in the Index Futures, Index Options, Single Stock Futures and Single Stock Options contracts by introducing mid-month expiry;

- Pricing Innovation - For the first time in India, BSE has levied a variable transaction fee based on a maker/taker model widely used in other markets. Passive orders which provide liquidity (Maker) get a rebate/incentive and active orders which consume liquidity (Taker) pay the transaction fees.

5.4.2 Currency Derivatives Segment

For the Currency Derivatives Market, BSE have taken an inorganic approach by investing in equity of the United Stock Exchange of India Limited (USE) for facilitating trading on Currency and Interest Rate Derivatives. In the USE initiative, we have created a unique consortium including equity participation from ALL the 21 Public Sector Banks in India, which is the first of its kind for any Indian Stock Exchange. In addition, several leading Private Sector Banks and some of the largest trading companies in India like Jaypee Capital Services, MMTC and Indian Potash are also shareholders. USE has recently been granted final approval by SEBI for operating the trading platform on all four currency pairs (USD-INR; EURO-

INR; GBP-INR and JPY-INR) and is expected to commence operations shortly. BSE has suspended operations in the Currency Derivatives segment.

5.5 Debt Segment

5.5.1 The Debt Segment which commenced its operations in June 2001, provides a range of products and services to investors and participants of the Fixed Income Markets. The debt segment currently includes reporting on Indian Corporate Debt Markets (ICDM) platform (Wholesale Debt Markets, Specific Bargains), trading on the Retail Debt Market (RDM) and trading on the "F" Group and bidding platform for Fll for their Debt Limits (ebidXchange).

5.5.2 Secured Settlements Secured Markets

The BSE Fixed Income segment has introduced a range of products and services to the market in the financial year. Most significant is the development of a clearing and settlement system for corporate bonds "e-settle" which has number of quintessential features and facilities, critical for the participants in the fixed Income markets.

Following RBI and SEBIs directive issued in October 2009, trades reported by specified entities on the ICDM platform and FIMMDA platform are settled and cleared through the Exchanges clearing corporation, Indian Clearing Corporation Limited (ICCL).

A total trade volume of Rs. 53,324 crores was reported during the financial year on the ICDM platform and Rs. 5477 crores (ICDM and FIMMDA) was cleared and settled from December 7th 2009 till end of the year through ICCL.

With a view to provide open discussion platform for the intricacies involved in current practices prevailing in Indian debt markets, a series of seminars have been scheduled across India by BSE, in collaboration with leading broker members, across all metros in India. The seminars received an overwhelming response, attracting all major participants across Indian debt market spectrum. A major focus was given to secure settlement of OTC trades and Repo of corporate Bonds.

5.5.3 Daily Market Analytics

BSE, in keeping with the dramatic strides in the expansion of the Indian Debt Market, has introduced to the market participants a "Daily Market Analytics" report, freely available on the BSEs website www.bseindia.com. An encouraging response has been received from market participants and investors.

5.5.4 ebid Xchange-

This is a custom designed platform for the allocation of debt investment limits for Foreign Institutional Investors. After the launch, BSE has witnessed success of the Fll debt limit bidding platform twice during the year in May 2009 and in December 2009. The allotted available amount for bidding of Rs. 10,000 crores and Rs. 3000 crores for the Government Securities was oversubscribed by 122% in May 2009 and by 165% in December 2009.

5.6 Business Development & Marketing

Business Development & Marketing (BDM) Department carries out marketing activities for promoting various products and services of the Exchange like new membership offers, expanding membership in F&O segment, BSE StAR MF platform, FasTrade, Webex, Stock Lending and Borrowing, Direct Market Access, Automated trading, etc.

Besides marketing membership, service to the trading members is also a key focus area. In order to provide hassle-free services to trading members, Relationship Managers (RMs) have been put in practice. Product brochures, leaflets, booklets, etc are developed as promotional material for distribution to trading members as well as investors to create awareness about various products and services offered by BSE. Training programmes are also arranged to acquaint trading members about new products and services launched by BSE. Recently, BSE has also started a Fll mid-month e-newsletter to develop a regular communication channel with all our Fll customers to provide up-to-date information on product offerings, technological developments, regulatory announcements and other happenings at BSE.

All these marketing initiatives have contributed to growth in membership and created a personalized service oriented-image in the minds of trading members.

- During 2009-10, 29 new trading memberships have been added taking the total number of registered trading members to 1017. Also, welcome and induction programmes were conducted for new trading members commencing business at BSE, in Mumbai.

- BSE has received installation requests from 76 members for FasTradeTM - a terminal based and internet based market access solution. Additionally, BSE has crossed a milestone of 1,00,000 users on FasTrade TM thereby making it the fastest growing trading terminal in India this year.

- BSE has allowed trading members to send orders through automated trading facilities since April, 2009. While the BSE monitors and regulates automated trading through its platforms, the process is simple & user-friendly. BSE has also arranged for members co-location facilities, at very competitive rates, which is expected to become operational soon.

6 Technology Initiatives

The financial year 2009-10 saw significant technology transformation at BSE. Major enhancements were made, both in capacity and speed of execution, at the exchange end. BSE systems are quite capable of handling enhanced load due to automated/program trading which is gradually picking up in India. In this regard, BSE Technology team started an initiative towards very fast processing and data dissemination to support automated trading.

Another big initiative to fulfil the same objective was enhancement of WAN bandwidth. BSE Technology team started an initiative to enhance the bandwidth till the customer premises for leased lines and MPLS connection to a minimum capacity of 2 Mbps reaching upto 45 Mbps.

Other than the above business facing applications and infrastructure, BSE also took up a few big internal facing initiatives having great impact on BSEs core business. The applications are Enterprise Data Warehouse (EDW), Enterprise Content Management (ECM), Enterprise Management System (EMS) and enhancement of Oracle ERP system in the financial year 2009-10.

Major Achievements for the year are as follows-

- Major enhancement in trading capacity and speed of execution

- The speed of execution of order matching in BSEs trading system BOLT has been enhanced to double the capacity over the past year

- Data dissemination refresh frequency has improved almost by three times

- SENSEX refresh frequency has improved five fold

- Round trip order confirmation has doubled

- System capacity enhanced to twice that of existing capacity through deployment of new infrastructure

- Major enhancement in WAN connectivity for all local and outstation leased lines as well as MPLS connections

- Migration of all VSAT connections from INSAT 3B to INSAT3A

- Implementation of EDW

- Successful creation of enterprise data model

- Implemented data warehouse and migrated present as well as history data

- Most of the MIS reports and data required for data vendor and investigation purpose are generated from the data warehouse system

- Business Intelligence and Analytics are being developed on the data warehouse platform

- New Products in association with Marketplace Technologies Private Limited -

- FasTrade™ : Front-office solution for providing streaming quotes and order routing. With FasTrade™ , BSE got a foothold in the Front-office technology space, an area where competing exchanges are already present. The terminal is provided free of cost to BSE members in order to increase access to BSE cash and derivatives segment. The terminal has gained prominence with the broking community and continues to be enhanced in the current year.

- CLASS TM I SPARK ™ : Back-office solutions for trading members. Both products are already segment leaders and are the preferred platform by institutional and retail trading members of the exchange

- BSE StAR MF: BSE enabled trading on Mutual fund units in the current financial year. The trading platform for the same was created by Marketplace Technologies and was christened as BSE StAR MF. It is a web-based system, wherein the participants can log on from any internet enabled system and purchase-sell mutual fund units. The platform is already the order routing channel of choice, within 4 months of its launch

- CITRUS is a member enrolment system customized to suit the requirements of various BSE segments to record, update and maintain member details in a smooth manner. With CITRUS, the entire process flow of enrolling and maintaining a new member will become centralized and stream-lined.

- Revamp of www.bseindia.com: BSE website is one of the most viewed websites in the world in the Exchange sector, a feat confirmed by the web information company ALEXA. it receives approximately I million unique visits per day accounting for 50 million page views. The entire web-site was revamped and made more user-friendly with better data-dissemination and layout

- The highlight on the website is the addition of a "SENSEX streamer". It allows visitors to view live streaming quotes of the SENSEX 30 stocks on the website

- To make the website more useful for the members, a new "Members" section, which endeavors to provide all necessary information on products, services & compliances and requisite formats to members, has been created under a single location with a user-friendly navigation

- SENSEX on mobile: A JAVA based plug-in was launched which allows streaming quotes of the SENSEX stocks on a mobile phone. Any user can download the plug-in from BSE website and install it in a GPRS enabled phone. The initiative received laurels from users across the country

- F-Cast: BSE launched its low-latency feed called "F-cast". The feed provides twice the amount of ticks as compared to its existing feed

- Direct Market Access (DMA): The Exchange initiated DMA for its international clients. The platform provides BSEs low latency integrated feeds and allows international participants to place orders directly to the exchange via a brokers server

- Co-Location: BSE announced co-location facilities in the financial year. Co-location reduces latency of feed to trading members who are not in the BSE LAN by allowing them to co-locate their order management server next to the exchange data-feed server. BSE even announced the same for data-feed vendors

- Automated Trade: BSE allowed algorithmic trading in the current financial year. Software can be developed in-house by the member or can be obtained from any software vendor. It is not necessary for automated trading software vendors to be empanelled with BSE. Members can design/ execute algorithms involving more than one exchange -e.g. Smart Order Routing.

7 Training Initiatives

During the year in review, BSE Training Institute (BTI) conducted 249 programmes. 8109 participants attended these programmes, including two international programmes namely: International Programme on Securities Market Operations and International Programme on Surveillance, Risk Management and Securities Settlement for international audience only, which received a overwhelming response from regions like Bangladesh, Botswana, Ghana, Indonesia, Kingdom Of Bahrain, Mauritius, Morocco (Casablanca), Nairobi, Nigeria, Sri Lanka, Sultanate Of Oman, Syria (Damascus) and Taiwan; and one International Programme on Financial Markets for Indian nationals, which covered study visits to four leading centres in Asia: Shanghai, Singapore, Malaysia and Hong Kong; senior officers from banks, financial institutes and corporates attended the same.

Through tie-up with National Institute of Financial Management, Faridabad, BTI launched One Year Executive Programme in Capital Markets and MDP programmes, with SIES College of Management Studies and Research launched One Year Post Graduate Programme in Capital Markets and MDP programmes. Initiated programmes outside Mumbai through organizations like PERF India - Ahmedabad, ICICI Securities Ltd. and Sarvajanik Education Society, Surat.

BTI also launched Six new programmes, namely Understanding Structured Investment Products, Implementing IFRS - Successes & Challenges, How to Read Mutual Fund Fact Sheet, ASBA, Banking Workshop on ASBA Phase II and Portfolio Risk Analysis.

On the certification front, BTI launched online exam modules on Corporate Governance and Listing. As a test administrator for National Institute of Securities Market - Established by SEBI, BTI launched three new modules of NISM, namely NISM-Series -1 Currency Derivatives Certification Examination, NISM-Series - II - A: Registrars and Transfer Agents (Corporate) Certification examination and NISM-Series - II - B: Registrars and Transfer Agents (Mutual Fund) Certification examination. In addition, Association of Mutual Funds in India (AMFI), appointed BSE Training Institute as test administrator for their Mutual Fund Basic & Advisors Module. During the year under review BTI conducted 33,992 certification examinations.

8 Investors Service

8.1 BSE redresses investors complaints against Trading Members through mediation and counseling by appointing Investors Grievances Redressal Committees, for the purpose. BSE provides these services as well as Arbitration at its Regional Arbitration Centers at Mumbai, Chennai, Delhi and Kolkata for redressal of disputes, expeditiously and in most cost-effective manner. Additionally, it has Investors Services Centers at Ahmedabad, Kochi and Rajkot.

BSE is the only Exchange in the country, where 14 Registrars and Transfer Agents (RTAs) regularly visit its Registered Office, for redressal of investors complaints against Companies listed on BSE.

8.2 BSE took following initiatives in the interest of investors

- Exempted all constituents from payment of arbitration fees and charges in Arbitration References for a claim upto an amount of Rs. 10 Lacs, filed with BSE on or after 6th February, 2010.

- Raised maximum amount of compensation payable from BSEs Investors Protection Fund, from Rs. 10 lacs to Rs. 15 Lacs to the clients of Trading Members declared as defaulters on or after 5th December, 2009.

- As a part of its continuous endeavor to bring in additional value to the services provided to investors and as an investor friendly gesture, BSE has commenced a facility of sending trade details to investors. This facility provides details of trades executed by a Member on behalf of his clients who have been selected on a random basis.

- Posts on www.bseindia.com, statistics of investors complaints against Companies listed on BSE and against BSEs Trading Members with their updates on weekly basis, besides Arbitration Awards and Regulatory Orders given by BSE from 1stApril, 2007 along with other data useful to investors.

8.3 During the Financial Year under review, BSE redressed 2722 and 3395 complaints against the Trading Members and Companies respectively, besides deciding 634 Arbitration References filed with it. The corresponding numbers during previous Financial Year were 2123, 5111 and 253 respectively.

8.4 BSE through its Investor Protection Fund regularly conducts Investor Awareness Programmes throughout the length and breadth of the country and has conducted 197 programmes during the Financial Year under review. It also sponsors workshops arranged for investors by the Investors Associations recognised by the Securities and Exchange Board of India (SEBI). In addition, it periodically brings out advertisements on Dos and Donts for investors in print media in order to enable them to safeguard their interests.

9 Human Resources

This year the HR initiatives were guided by the need to culminate the collective bargaining process which commenced in the previous year. A major milestone was reached when we inked a five year settlement with the Union (April 1, 2008 -March 31, 2013) and thus ushered in an environment of Industrial peace and harmony. BSE also enhanced the compensation packages of Officers and Management Staff and successfully settled all other related issues as well. Besides the same, several HR Polices were revisited and revised to make it more contemporary.

BSE HR initiatives also got a fillip when we were recognized at the highly competitive 4* Employer Branding Awards instituted by the Employer Branding Institute of India where BSE was given an award for HR initiatives in the category "Managing Health at Work". Commendably, HR received this award for the third consecutive year.

Our participation in the Standard Chartered Mumbai Marathon and in Corporate Relay Category was a significant employer engagement initiative. The enthusiastic response, participation across levels and display of team spirit and camaraderie was one of the most commendable employee bonding exercises in BSE. Our other significant employee engagement initiatives included Indoor Tournaments, Interdepartmental Cricket Tournaments, employee get-togethers, some of which included family members of employees as well.

Exchange also ensured due recognition and appreciation to 50 employees who completed 15 years of service in BSE. They were duly rewarded with a Gold Coin, Citation and a bouquet by Managing Director & CEO.

Training initiatives continued throughout the year and addressed both functional and behavioral needs of employees.

In compliance with the requirements of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, a statement containing details of employees is annexed.

10 Risk Factors, Risk Management

Some of the major risk factors that could adversely affect the Exchanges business and operations are as under:

Factors affecting the Exchanges Operating & Financial Performance

The Exchanges 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 new/further issues, number of active traders in the market etc. Adverse macro-economic climate and political uncertainty may dampen the sentiments of the capital markets. Post liberalization, Foreign Institutional Investors have played a dominant role in generating volumes in the Capital Markets. However, the downturn and related problems in many developed economies may have a negative influence on FN investments in the country which in turn would adversely affect the trading volumes of the Exchange.

The Exchange generates substantial revenue from listing fees and Book Building Services provided to corporates during their new/further issues. Factors like the macro economic environment, industry specific conditions, overall capital market sentiments, political stability and regulatory requirements would influence the corporates decision to tap the capital markets. The extent of such influences may impact the Exchanges revenues. Indian capital markets, post liberalization, are at par with most of the developed capital markets in risk management. However, failure on the part of the Exchange to adapt itself to dynamic changes in business, regulatory and technological environment will adversely affect its operations and financial results.

Competition

The competitive landscape for the securities transactions business continues to be challenging. Ability to meet the competition head on will be a major factor in ensuring sustained growth and profitability.

11 Report on Subsidiary Companies

As at the end of the Financial Year 2009-2010, the Exchange has two subsidiaries i.e., Indian Clearing Corporation Limited (ICCL) and Marketplace Technologies Private Limited (MPT). While ICCL has been incorporated as a wholly-owned subsidiary of the Exchange to carry out the functions of clearing, settlement, collateral and risk management for both cash and derivatives segments, MPT a leading provider of cutting edge IT solutions with focus on Equity, Stock, Commodities, Banking and Financial Services markets in India was acquired by the Exchange during the Financial year as wholly owned subsidiary in order to have a Technology Partner which can support IT infrastructure and Technology Platform of the Exchange and can cut short dependence on outside agencies.

Presently, ICCL is managing the settlement of Currency Derivatives Segment and remaining operations will be brought under the fold of ICCL in a phased manner. MPT is providing support to IT infrastructure and Technology Platform of the Exchange.

There has been no material change in the nature of business of the subsidiaries. A statement pursuant to Section 212 of the Companies Act, 1956 (the Act) relating to both the subsidiaries is attached to the Accounts. Further, Annual Accounts for the Financial Year ended 31st March, 2010, along with Directors Report and Auditors Report thereon of both the subsidiaries are made available in this Annual Report.

12 Fixed Deposits

The Exchange has not accepted any fixed deposits and as such, no amount of principal or interest was outstanding as of the Balance Sheet date.

13 Issue of Equity Shares during the Financial Year

The Exchange is required to allot in terms of the Scheme, 10,000 equity shares against each of the membership rights held by Trading Members of erstwhile BSE; however, allotment of such equity shares may be kept in abeyance, on account of suspension on the said membership rights. Accordingly, at the beginning of the financial year, the allotment of 2,50,000 equity shares of Re. 1/- each against 25 membership rights held by 25 Trading Members of erstwhile BSE (out of 73,50,000 equity shares against 735 membership rights of erstwhile BSE) was kept in abeyance, for specific reasons, viz., Trading Member being a notified person, attachment of membership right by the Income Tax Department, legal dispute for the ownership of the membership rights etc. During the financial year, 60,000 equity shares of Re. 1 /- each against 6 membership rights held by 6 Trading Members of the erstwhile BSE were allotted pursuant to the Scheme, upon revocation of suspension on such membership rights. These 6 Trading Members were also given the Corporate Benefits i.e., prior year dividends and 7,20,000 bonus equity shares emanating from the allotment of 60,000 equity shares. The Exchange had also allotted 1,20,000 equity shares to a Corporate Trading Member whose allotment was kept in abeyance due to non compliance of Arbitration Award. The allotment of equity shares pursuant to the Scheme against 19 membership rights held by 19 Trading Members of erstwhile BSE continue to remain in abeyance as at the end of the financial year.

14 Conservation of Energy, Technology Absorption and Foreign Exchange Earning and Outgo.

Since, the Exchange does not own any manufacturing facility, Directors have nothing to report with regard to Conservation of Energy and Technology Absorption in terms of Section 2l7(l)(e) of the Act read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

The particulars with regard to foreign exchange earnings and outgo appear at Note No. 13 of Schedule N of the Audited Accounts.

15 Corporate Social Responsibility

Corporate Social Responsibility (CSR) in BSE is aligned with its tradition of creating wealth in the community with a three pronged focus on Education, Health and Environment.

With a purpose to help people achieve self-sufficiency in natural resource management, livelihood support and the building of health and education infrastructure, BSE has adopted a Village - Newli in Thane District. It has helped villagers of Newli in sustaining their economic development covering about 600 beneficiaries. BSE has installed four bore wells to facilitate irrigation thereby boosting agricultural growth.

BSE has joined hands with HelpAge India for Adopt-a-Gran programme. We adopted 45 elderly destitute. Under this programme, HelpAge provides companionship, emotional support, food, medicines, clothing, and shelter to older persons all across India for the financial year. All the beneficiaries visited BSE on the occasion of National Grandparents Day on 17th September, 2009.

Like 2009, BSE once again participated in the Standard Chartered Mumbai Marathon 2010 in Corporate Sporting Challenge. BSE directed its participation funds to Deeds, an NGO that provides aural education to the education to the hearing impaired children and help them become self reliant.

BSE also supported a special initiative - the launch of a Report titled "Because I am a Girl 2009" by Plan India on the occasion of the International Day for the Girl Child (September 22, 09). The report aims to promote Rights of the Girl Child and improve the quality of life of vulnerable children.

As a part of our initiative on Rainwater Harvesting, BSE continues to save a lot of water through Rooftop Rain Water Harvesting. The rain water is captured from the roof catchments and stored in the tanks in the basement. This has helped save tanker water consumption of BSE during the monsoon months.

16 Corporate Governance

Being an unlisted entity, the Exchange is not bound to comply with the provisions of Clause 49 of the Listing Agreement. However, as a measure of good corporate governance, the Exchange voluntarily adopts most of the corporate governance practices as provided in Clause 49. In keeping with the best practices, a report on Corporate Governance as at 31st March, 2010 forms a part of the Annual Report. A Certificate from M/s. Rathi & Associates, Company Secretaries, Mumbai regarding status of compliances of the conditions under Clause 49 of the Listing Agreement is annexed to this Report.

A Certificate on Secretarial Compliance for the year ended 31st March, 2010 issued by M/s. Rathi & Associates, Company Secretaries, Mumbai in terms of the provisions of Section 383A of the Act is attached with this Report.

The Exchange has a comprehensive Code of Ethics for Directors and its functionaries (select employees), supervised by an independent Ethics Committee. The Exchange has also formulated a Whistle Blower Policy.

17 Directors Responsibility Statement

Pursuant to the requirement under Section 217 (2AA) of the Act, with respect to Directors Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the accounts for the financial year ended 31st March, 2010, the applicable accounting standards have been followed and there was no material departure from such standards;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Exchange as at the end of the financial year on 31 st March, 2010 and of the profit of the Exchange for the said financial year;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Exchange and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the accounts for the financial year ended 31st March, 2010 on a going concern basis.

18 Directors

18.1 Public Interest Directors

Mr. Jagdish Capoor, Public Interest Director resigned from the Board and consequently, as the Chairman on 2nd March, 2010, due to his indifferent health condition. The Board places on record its appreciation for the valuable contributions made by Mr. Capoor as Public Interest Director during deliberations in the Board, various committees and also as the Chairman of the Board.

Mr. S. Ramadorai, Vice Chairman of Tata Consultancy Services Limited, was appointed by the Board as a Public Interest Director of the Exchange with effect from 8th March, 2010 in casual vacancy created due to the resignation of Mr. Capoor, under Section 262 of the Act read with Article 13.27 of the Articles of Association (AOA). Mr. Ramadorai holds office up to the date of forthcoming Annual General Meeting and being eligible, has offered himself for appointment. In terms of Article I3.I6B.2 of AOA, Board will consider his appointment in the Board meeting to be held on the date of the forthcoming Annual General Meeting.

Mr. Jitesh Khosla, Public Interest Director resigned from the Board on 31st March, 2010. The Board places on record its appreciation for the valuable contributions made by Mr. Khosla as Public Interest Director during deliberations in the Board and various committees.

18.2 Shareholder Directors

Mr. Andreas Preuss, Deputy Chief Executive Officer of Deutsche Boerse AG, was appointed by the Board as a Shareholder Director of the Exchange with effect from 30th March, 2010 under Section 260 of the Act read with Article 13.28 of AOA. Mr. Preuss holds office upto the date of forthcoming Annual General Meeting and being eligible, has offered himself for appointment at the said Meeting.

Mr. Wai Kwong Seek, Shareholder Director resigned from the Exchanges Board on 3 I st March, 2010, due to increased responsibilities in his role as Chief Financial Officer of the Singapore Exchange Limited. Consequently Ms. Sharmita Natarajan, an Alternate Director to Mr. Wai Kwong Seek also vacated office of Director pursuant to the provisions of Section 313 of the Companies Act, 1956. The Board places on record its appreciation for the valuable contributions made by Mr. Wai Kwong Seek as Shareholder Director and Ms. Sharmita Natarajan as an Alternate Director during deliberations in the Board.

Mr. Ishaat Hussain, Shareholder Director, being longest in office, retires by rotation at the forthcoming Annual General Meeting and not seeking reelection. The Board places on record its appreciation for the valuable contributions made by Mr. 1shaat Hussain as Shareholder Director.

18.3 Trading Member Directors

Ms. Deena A. Mehta, Managing Director of Asit C Mehta Investment Intermediates Limited (Corporate Trading Member of the Exchange) was elected as a Trading Member Director of the Exchange, at the Fourth Annual General Meeting held on 7th August, 2009 in place of Mr. Siddharth Shah, who retired from the office at the same Meeting due to completion of his second term in terms of Article 13.18A of AOA of the Exchange.

Mr. Prakash Kacholia will be retiring by rotation and will be completing two consecutive terms as a Trading Member Director at the forthcoming Annual General Meeting. In accordance with Article 13.18A of AOA, Mr. Kacholia will not be eligible for re-appointment. The Board places on record its appreciation for the valuable contributions made by Mr. Kacholia as Trading Member Director during deliberations in the Board and various committees.

Nomination for filling the vacancy in the Trading Member Director category has been invited from Trading Members by issue of an appropriate Notice. Till the date of this Report, the Exchange has received a notice under Section 257 of the Act from Mr. Uttam Bagri, the Designated Director of BCB Brokerage Pvt. Ltd., a Corporate Trading Member, for being considered for appointment as Trading Member Director on the Board of the Exchange at the forthcoming Annual General Meeting.

18.4 Governing Council & Clearing Council of Derivatives Segment

During the year under review, Mr.R.V.Iyer - Banker, Ms.Dharmistha N. Raval -Advocate Mr.Dilip Nachane -Academician and Mr. P.P. Vora- Chartered Accountant continued as Public Representatives on the Council while Mr. N.Subramanium and Mr. Vineet Bhatnagar continued as Members in the Trading Member category on the Council. However, Mr. Jagdish Capoor and Dr. Manoj Vaish resigned as Public Representatives from the Council. Mr. Madhu Kannan on being appointed as the Managing Director & CEO of the Exchange has consequently become an Ex-officio Member on both the Councils.

The appointment of Mr. Ashishkumar Chauhan, Dy. CEO as a Member on both the Councils, was approved by SEBI vide letter dated 9th February, 2010. The aforesaid appointment was made in place of Mr. M. L Soneji who relinquished the office during the year.

The Council places on record its appreciation for the services rendered by Mr. Capoor, Dr. Vaish and Mr. Soneji.

18.5 Governing Council & Clearing Council of Currency Derivatives Segment

During the year under review, Ms.Ashima Goyal - Academician, Ms.Dharmistha N. Raval-Advocate, Mr.K.V.Hegde - Banker and Mr. P.P. Vora- Chartered Accountant continued as Public Representatives on the Council while Mr. P.V. Rao-Banker continued as a Member in the Trading Member category on the Council. However, Mr. Jagdish Capoor and Dr. Manoj Vaish resigned as Public Representatives from the Council. Mr. Madhu Kannan on being appointed as the Managing Director & CEO of the Exchange has consequently become an Ex-officio Member on both Councils.

The appointment of Mr. Ashishkumar Chauhan, Dy. CEO as a Member on both the Councils, was approved by SEBI vide letter dated 9th February, 2010. The aforesaid appointment was made in place of Mr. M. L Soneji who relinquished the office during the year.

The Council places on record its appreciation for the services rendered by Mr. Capoor, Dr. Vaish and Mr. Soneji.

19 Auditors

The Auditors, M/s Deloitte Haskins & Sells, Chartered Accountants, Mumbai, hold office until the conclusion of the forthcoming Annual General Meeting and are recommended by the Board for re-appointment to hold the office from the conclusion of the forthcoming Annual General Meeting until the conclusion of the next Annual General Meeting. The Audit6rs have confirmed that, their re-appointment, if made, would be within the limits prescribed under Section 224(IB) of the Act and that they are not disqualified in terms of Section 226 of the Act.

20 Auditors Report

The Auditors Report dated 20th April, 2010 on the financial statements of the Exchange for the financial year ended 31 st March 2010 does not have reservation, qualification or adverse remarks.

21 Acknowledgements

The Board thanks the Government of India, Securities and Exchange Board of India, Reserve Bank of India, the Government of Maharashtra and other State Governments and various government agencies as also the depositories for their continued support, cooperation and advice.

The Board is grateful to the members of various standing, SEBI mandated and other advisory committees constituted during the year. The Board also acknowledges the splendid support extended by the trading members, issuers, investors of the capital market, market intermediaries and the various associates. The Board expresses sincere thanks to all the business associates, consultants, bankers, auditors, solicitors and lawyers for their continued patronage, partnership and confidence reposed in the Exchange.

The Board wishes to thank all the employees working at different levels for the exemplary dedication and excellence displayed in discharge of duties for the Exchange.

Finally, the Board expresses its gratitude to you as a shareholder for the confidence reposed in the management of the Exchange.

For and on behalf of the Board

Place: Mumbai S. Ramadorai

Date: 20th April, 2010 Chairman

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Mar 31, 2009

The Directors have pleasure in presenting the Fourth Annual Report of Bombay Stock Exchange Limited along with the audited financial statements for the year ended 31st March, 2009.

I Audited Financial Results

Though the financial year 2008-09 was a challenging year, the Exchange maintained its top line.The reduction in revenues from trading activities and services to corporates were compensated by higher income from investments & deposits and other services, including from data dissemination. During the financial year 2008-09, the Exchange recorded its ever highest total income of Rs. 4210.94 million, profit before tax of Rs. 2660.22 million as well as profit after tax of Rs. 2121.80 millions. The financial performance is summarised in the following table:

(Rs. in million)

Particulars 2008-09 2007-08

I.Total Income 4210.94 4204.49

2.Total Expenditure 1550.72 2236.61

3. Exceptional Item - Income - 32.57 (Net) 4. Profit Before Tax 2660.22 2000.45

5. Provision for Tax 538.43 210.57

6. Profit After Tax 2121.80 1789.88

7. Balance brought forward 1800.88 997.94 from Previous Year

8. Available for 3922.67 2787.83 Appropriation

Appropriations to:

- General Reserve 1000.00 500.00

- Trade Guarantee Fund 137.96 143.30 (Cash & Derivatives)

- Trade Guarantee Fund 6.39 4.24 (G-Sec)

- Trade Guarantee Fund 3.23 -- (CDX)

- Brokers Contingency - 53.90 Fund

- Proposed Dividend 422.99 244.03

- Corporate Tax on 71.89 41.47 Dividend

- Balance carried to 2280.21 1800.88 Reserves & Surplus

Income - Rs.4210.94 million

With the Capital Markets having a negative bias during the financial year, the Average Daily Turnover (ADT) in cash segment fell to Rs.45270 million from Rs.62902 million in the previous year.This was reflected as reduced Transaction Charges of Rs.766 million as against Rs. 1099 million in the previous year. Further, the primary market conditions were also subdued, which did not encourage the Corporates to tap the market for IPO/FPO during the financial year. This resulted in the earnings of only Rs.24 million in the financial year from Book Building Software Charges as against Rs. 167 million in the previous year.

Duringthe financial year.the Exchange availed the opportunity of investing in Certificates of Deposit, Commercial Papers, Bonds and Debentures, at comparatively higher yields.The exposure to the units of the Mutual Funds was reduced and large deposits were placed with commercial banks. As a result, the pre and post tax yield from investments and deposits were improved. These initiatives resulted in the Exchange earning an income of Rs. 2218 million from investments and deposits during the year, an increase of about 27% over the previous years income of Rs. 1752 million from investments and deposits.

On account of initiatives taken for introducing new products and to reposition the ex1sting products, income from Data Dissemination contributed Rs. 181 million during the year, an increase of about 59% over the previous years income of Rs. 114 million.The above increase was also due to the increase in the number of customers for the products. BSE Training Institute continued to cater to the various needs of the investors in the Capital Market and also commenced new training programmes to educate investors on newly launched Currency Derivatives Segment. Income from Training and Certification activities grew marginally in the financial year to Rs. 71 million from Rs. 65 million in the previous year.

Expenditure-Rs. 1550.72 million

During the financial year, the Exchange took the required initiatives for cost control, resulting in lower expenditure in all major heads. The reduction of Rs. 643 million in Admin1stration & Other Expense was mainly due to reduction in expenses for market development activities. The Exchange contributed Rs.10 million to Prime Min1sters National Relief Fund, for providing aid to the victims of the natural calamities that occurred in Bihar. The Employee Cost during the financial year was Rs.295 million, lower than previous years amount of Rs.329 million, partly due to reversal of certain excess provisions made in the previous year.

The provision for taxes for the financial year increased to Rs.538.43 million as against Rs.210.57 million in the previous year, due to higher Profit before Tax and lower tax free income (mainly from units of Mutual Funds) during the financial year.

Financial Position as on 31st March, 2009

The networth of the Exchange grew to Rs. 17282 million, an increase of 11% over Rs. 15591 million as on 31st March, 2008, mainly due to retained earnings.

During the financial year, adjustments were made in gross and net block for fully depreciated Hardware & Networking equipments of original cost of about Rs.570 million, resulting in gross block being reduced from Rs.4086 million as at the end of previous year, to Rs. 3646 million as on 31st March, 2009.

The Exchange retained its strategic investments in Indian Clearing Corporation Ltd., Central Depository Services (India) Ltd., BOI Shareholding Ltd., and Calcutta Stock Exchange Association Ltd. Investments were also made in Certificates of Deposit of Scheduled Banks, Commercial Papers, Bonds & Debentures and units of dividend/ growth oriented Debt Schemes of Mutual Funds, full details of which are provided, vide Note No. 13 of Schedule O of Annual Accounts for the financial year.The increase in bank balances is mainly due to deposits placed during the year with Scheduled Banks.

Dividend

Your Directors have recommended the Dividend on equity shares for the year ended 31st March, 2009 at Rs.4/- per equity share of face value of Re. 1/-, subject to the approval of the shareholders at the Fourth Annual General Meeting. The dividend declared and paid for the financial year ended 31 st March 2008 was Rs.30/- per equity share (pre bonus). The bonus shares issued in March 2009 would also be eligible for full dividend for the year ended 31st March 2009.

Under Clause 5.3 of The BSE (Corporatisation and Demutualisation) Scheme, 2005, the allotment of equity shares to 25 Members of the erstwhile BSE has been kept in abeyance for various reasons. Meanwhile, all corporate benefits including dividend as may be declared by the Exchange from time to time are being provided for and would be payable on the allotment of these shares.

XII Fixed Deposits

The Exchange has not accepted any fixed deposits and as such, no amount of principal or interest was outstanding as of the Balance Sheet date. However, members attention is invited to note no. I 5 of Schedule O of the Audited Accounts.

XIII Conservation of Energy,Technology Absorption and

Foreign Exchange Earning and Outgo

Since, the Exchange does not own any manufacturing facility, Directors have nothing to report with regard to Conservation of Energy and Technology Absorption in terms of Section 217(1 )(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

The particulars with regard to foreign exchange earnings and outgo appear at Note No. 14 of Schedule O of the Audited Accounts.

XIV Corporate Social Responsibility

Corporate Social Responsibility (CSR) agenda of a Corporate is reflective of its social conscience and commitment to the community and society at large within which it operates.

Improving the quality of life and fostering sustainable and integrated development in society, is central to the Exchanges corporate philosophy. This objective of social responsibility is equally well-entrenched in the minds of our employees.As a result of which some employees have come together and formed a trust for charitable purposes under the name ofPay-back-to-Society Foundation.

The Exchange aims to help people achieve self-sufficiency in natural resource management, livelihood support and the building of health and education infrastructure through its various CSR initiatives.

Some of the CSR projects undertaken by various Trusts of the Exchange are as follows:

ISKON Midday Meal - Through ISKON Food Relief Foundation, the Exchange provides balanced food to the under-fed school students in Mumbai, Mira Bhyandar Municipal area, Palghar, Silvasa and Nigdi (Pune).

- Model Village, Newli - The Exchange supports the modest infrastructure for the villagers of Newli in sustaining their economic development.The Exchange installed four bore wells to facilitate regular water supply to accelerate agricultural growth.

High school for tribal girls in Valsad - Kaivalya Trust actively works in the tribal belts since 2003.The Trust aspires to provide conducive environment that would benefit the Adivasis of Dharampur Taluka (D1st. Valsad,South Gujarat).The Exchange helps in providing relevant formal education to the Tribal girls along with vocational training which can prepare them to work and live in their own villages.

HelpAge India Adopt-a-Gran - HelpAge India through its Adopt-a-Gran programme provides companionship, emotional support, food, medicines, clothing and shelter to over 16000 older persons all across India. BSE adopted 45 elderly destitutes through HelpAge India.

Cataract operations for the underprivileged - The Exchange supported about 500 cataract surgeries in a year through HelpAge India.

- Narayan Sewa Sansthan (Trust) is an NGO that serves the cause of Humanity. It treats children suffering from Polio & Cerebral Palsy disabilities through corrective surgeries and ensures their total rehabilitation. The Exchange supported about 500 polio operations through Narayan Sewa Sansthan (Trust), Udaipur.

Mumbai Marathon for Deeds - Deeds is an NGO that provides aural education to the Hearing Impaired children to become independent, participating, contributing citizens in mainstream society. The Exchange sponsored the education of these children through participation in Mumbai Marathon.

XV Corporate Governance

Being an unl1sted entity, the Exchange is not bound to comply with the provisions of Clause 49 of the L1sting Agreement. However, as a measure of good corporate governance, the Exchange voluntarily adopts most of the corporate governance practices as provided in Clause 49. In keeping with the best practices, a report on Corporate Governance as at 3 1st March, 2009 forms a part of the Annual Report. A Certificate from a firm of Practicing Company Secretaries regarding status of compliances of the conditions under Clause 49 of the L1sting Agreement is annexed to this Report.

The Exchange has a comprehensive Code of Ethics for Directors and its functionaries (select employees), supervised by an independent Ethics Committee. The Exchange has also formulated a Wh1stle Blower Policy. A Certificate on Secretarial Compliance for the year ended 31st March, 2009 issued by a firm of Practicing Company Secretaries in terms of the provisions of Section 383A of the Companies Act, 1956 is attached with this Report.

XVI Directors Responsibility Statement

Pursuant to the requirement under Section 217 (2AA) of the Act, with respect to Directors Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the accounts for the financial year ended 31st March, 2009, the applicable accounting standards have been followed and there was no material departure from such standards;

(ii) that the Directors have selected such accounting policies and applied them cons1stently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Exchange as at the end of the financial year on 31st March, 2009 and of the profit of the Exchange for the said financial year;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Exchange and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the accounts for the financial year ended 31st March, 2009 on a going concern basis.

XVII Directors

Securities and Exchange Board of India (SEBI) while prescribing governance structure of the Exchange vide its letter no. MRD/4851 1/05 dated 31st August, 2005, has provided for various categories of Directors viz. Public Interest Directors, Shareholder Directors and Trading Member Directors with the extent of their representation on the Board.

As per the said governance structure, it is implied that one-third of the Directors from each category would retire by rotation and if eligible, may offer themselves for re-appointment. Further, in terms of Article I3.I8A of the Articles of Association, no Director shall hold office for more than two consecutive terms.

Public Interest Director

SEBI vide its letter dated 6th November, 2008 has modified certain clauses of its letter dated 3 1st August, 2005 regarding the appointment of Public Interest Director and stipulated that the Public Interest Directors shall be selected by the Board of Directors and will not be subject to appointment by Shareholders. However the retirement of a Public Interest Director by rotation and the reckoning of the period of term shall be decided by the Board in the same manner as if the Public Interest Director has been appointed by the Shareholders in General Meeting.

In view of the above, Mr. S. N. Menon, a Public Interest Director has volunteered to retire at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. Accordingly, he will complete one term as Public Interest Director at the ensuing Annual General Meeting. The Board will consider his appointment in the Board meeting, effective from the date of the ensuingAnnual General Meeting.

Shareholder Director

Mr. Sudipto Sarkar, Shareholder Director being longest in office, retires by rotation and being eligible offers himself for re-appointment. He will complete one term as Shareholder Director at the ensuingAnnual General Meeting.

Mr. Wai Kwong Seek, Chief Financial Officer and Senior Executive Vice President, Singapore Exchange Limited, was appointed as an Additional Director of the Exchange under Section 260 of the Companies Act, 1956, read with Article 13.28 of the Articles of Association, with effect from 8th November, 2008 in the Shareholder Director Category. Mr. Seek holds office upto the date of forthcoming Annual General Meeting and being eligible, has offered himself for re-appointment.

Ms. Sharmita Natarajan, Sr. Vice President & Head Corporate Development, Singapore Exchange Limited, was appointed as an Alternate Director to Mr.Wai Kwong Seek, Shareholder Director, under the provision of Section 313 of the Companies Act, 1956 read with Article 13.26 of the Articles of Association on 9th May, 2009.

Trading Member Director

Mr. Siddharth J. Shah will be retiring by rotation and will be completing two consecutive terms as Trading Member Director at the ensuing Annual General Meeting. In terms of the Article 13.18A of Articles of Association, Mr. Siddharth J. Shah will not be eligible for re-appointment.The Board places on record its appreciation for the valuable contribution made by Mr.Shah as Trading Member Director during deliberations in Board and various committees.

Nomination for filling the vacancy in the Trading Member Director category will be invited from Trading Members by issue of an appropriate Notice.

Managing Director & CEO

Mr. Madhu Kannan has been appointed by the Board of Directors as Managing Director & CEO of the Exchange at the meeting held on 28[h April, 2009. SEBI has given its no objection for appointment of Mr. Kannan as Managing Director & CEO for the period of three years. Mr. Kannan would be joining the Exchange as an Additional Director and consequently as Managing Director & CEO with effect from I Ith May, 2009.

Formation of Governing Council & Clearing Council of Currency Derivatives Segment

During the year under review, Governing Council and Clearing Council of Currency Derivatives Segment were formed.

Mr.Jagdish Capoor-Banker, Ms. Ashima Goyal -Academician, Mr. K.V. Hegde - Banker, Ms. Dharm1stha N. Raval-Advocate, Dr. Manoj Vaish - Professional and Mr. P. P. Vora - Chartered Accountant.joined the aforesaid newly constituted Councils as Public Representatives and Mr. P. V. Rao - Banker as Trading Member Representative.

Governing Council & Clearing Council of Derivatives Segment

During the year under review, Governing Council and Clearing Council of the Derivatives Segment were reconstituted.

Mr. R .V. Iyer - Banker, Mr.Dilip Nachane - Academician, Ms. Dharm1stha N. Raval -Advocate and Dr. Manoj Vaish- Professional, joined the aforesaid councils as Public Representatives.

XVIII Auditors

The Auditors, M/s Deloitte Haskins & Sells, Chartered Accountants, Mumbai, hold office until the conclusion of the forthcoming Annual General Meeting and are recommended by the Board for re-appointment to hold the office from the conclusion of the forthcoming Annual General Meeting until the conclusion of the next Annual General Meeting. The Auditors have confirmed that, their re-appointment, if made, would be within the limits prescribed under Section 224(IB) of the Companies Act, 1956 and that they are not disqualified in terms of Section 226 of the Companies Act, 1956.

XIX Auditors Report

The Auditors Report dated 9th May, 2009 on the financial statements of the Exchange for the financial year ended 3 1st March, 2009 does not have reservation, qualification or adverse remarks.

XX Acknowledgement

The Board thanks the Government of India, Securities and Exchange Board of India, Reserve Bank of India, the Government of Maharashtra and other State Governments and various government agencies as also the Depositories for their continued support, cooperation and advice.

The Board is grateful to the members of various standing, SEBI mandated and other advisory committees constituted during the year.The Board also acknowledges the splendid support extended by the trading members, issuers, investors of the capital market, market intermediaries and the various associates. The Board expresses sincere thanks to all the business associates, consultants, bankers, auditors, solicitors and lawyers for their continued patronage, partnership and confidence reposed in the Exchange to achieve commendable results.

The Board wishes to thank all the employees working at different levels for the exemplary dedication and excellence displayed in discharge of duties for the Exchange.

Finally, the Board expresses its gratitude to you as a shareholder for the confidence reposed in the management of the Exchange.

For and on behalf of the Board

Place : Mumbai Jagdish Capoor

Date : 9th May, 2009 Chairman

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Mar 31, 2008

The Directors have pleasure in presenting the Third Annual Report of Bombay Stock Exchange Limited along with the audited financial statements for the year ended 31st March 2008.

The Economic Environment

The Indian economy maintained its high growth trajectory in 2007-08, finishing the year with a 9% growth in GDP compared to 9.4% growth reported in 2005-06 and 9.6% in 2006-07. The robust growth for the third year in a row propelled the Indian economy into the exclusive club of trillion dollar economies. Growth in 2007-08 was driven by a significant improvement in the agricultural and allied sectors, which reported a 4.5% growth compared to 3.8% growth in the previous year. However, growth in the manufacturing sector has moderated to 8.8% from the previous years 12.3%. Inflation, based on the wholesale price index, rose to 7.75% as at the end of 2007- 08 as compared to 5.9% a year-ago. On an average basis, however, inflation at 4.7% during 2007-08 was lower than 5.4% in the pervious year. The prices of primary articles (food and non-food articles like cotton and oilseeds) registered an increase of 9.68% as of March-end 2008 as against 10.7% a year ago.The prices of manufactured products, especially edible oils, oil cakes, basic metals, alloys and metal products and basic heavy inorganic chemicals, rose by 7.34% as compared to 6.1 % a year ago. The average price of the Indian basket of international crude registered an upswing of 27.6% to USD 79.7 per barrel in 2007-08 as against USD 62.4 per barrel in 2006-07.

Foreign investment into India surged by a whopping 187% in 2007-08 to USD 44.8 billion as against USD 15.6 billion in 2006- 07.A break up of the foreign investment inflows shows that India received Foreign Direct Investment (FDI) worth USD 15.5 billion in 2007-08 as against USD 8.5 billion in 2006-07 and foreign institutional investment inflow was a robust USD 29.3 billion in 2007-08 as against USD 7.1 billion in 2006-07.

While the performance of the economy during 2007-08 was indeed impressive, the economic data published in the first quarter of 2008-09 suggest the emergence of dark clouds on the economic horizon. Most forecasts for 2008-09 speak of moderation of GDP growth largely on account of decline in rates of growth of Industry and Services. In its first quarter review of the Monetary policy, the Reserve Bank of India has forecast a GDP growth of 8% for the current fiscal year. Not surprisingly, the Index of Industrial Production for May 2008 increased by just 3.8% over its May 2007 level.

Other than trading members and their associates. These shares were allotted to the new shareholders partly by way of issue of fresh shares and partly out of offer for sale by the trading member shareholders. The non-trading member shareholders now hold more than 51 % equity shares of the Exchange.

2. Performance and profitability

The Exchange recorded highest ever earnings of Rs.4,204.49 million, largely on account of rise in Average Daily Turnover (ADT) and higher income from investments and deposits. While ADT increased by 62.35% from Rs.38.65 billion in 2006-07 to Rs.62.75 billion in 2007-08, the buoyancy in income from investments and deposits emanated from additional capital and margins deposited by the trading members. Enhanced income from other revenue items like corporate services, data dissemination and training institute also contributed to the impressive rise in earnings.

IV Audited Financial results

(Rs. in Millions) Particulars 2007-08 2006-07

1 .Total Income 4.204.49 2,480.09

2.Total Expenditure 2.236 61 1,478.49

3. Exceptional Item- 32.57 - Income (Net)

4. Profit Before Tax 2,000.45 1,001.60

5. Provision for Tax 210.57 93.18

6. Profit After Tax 1,789.88 908.42

7. Balance brought forward 997.94 416.09 from Previous Year

8. Available for 2.787 82 1,324.51

Appropriation

Appropriation to:

General Reserve 500.00 90.84

Brokers Contingency Fund 53.90 31.51

Trade Guarantee Fund 143.30 77.40 (Cash & Derivatives)

Trade Guarantee Fund 4.24 3.17

(G-Sec)

Proposed Dividend 244.03 101.53

Short Dividend Provision - 4.26

Corporate Tax on 41.47 17.86

Dividend

Balance carried to 1,800.88 997.94

Reserves & Surplus

V Dividend

Your Directors have recommended a Dividend on equity shares for the year ended 31st March, 2008 at the rate of 3000 % (Rs. 30/- per equity share) in view of the excellent performance, subject to the approval of the Members at the Third Annual General Meeting. Under Clause 5.3 of The BSE (Corporatisation and Demutualisation) Scheme, 2005, the allotment of equity shares to some of the trading members of the Exchange has been kept in abeyance for various reasons. Our endeavour will be to ensure that these shares are issued as early as possible. Meanwhile, all corporate benefits including dividend as may be declared by the Exchange from time to time are being provided for and would be paid on the allotment of these shares. Further, as all the equity shares issued/ to be issued by the Exchange are pari passu in all respects, full dividend for the year ended 31st March 2008 will be paid to those Members whose names appear on the Register of Members as on, 8th September, 2008 and on the basis of beneficial ownership as per the details furnished by the Depositories as on that date.

VI Analysis of results

The year 2007-08 has been an exceptional year for the Exchange. The Exchange recorded about 70 per cent increase in its top line, largely due to growth in trading volumes and investments. The profit before tax was higher by about 100%.

An item wise analysis of the financial results is given below.

1. Income - Rs.4,204.49 million

Driven by the increase in the turnover in the cash segment, the Exchange earned Rs. 1,099 million transaction charges for the year. The Exchange earned Rs. 167 million from corporates, who tapped the primary market for IPOs/ FPOs, by using book building / reverse book building system. Income from treasury operations continued to be a major source of revenue and contributed Rs. 1,752 million to the top line. Additional funds were made available for deployment on account of infusion of fresh capital by strategic partners, viz. Deutsche Boerse AG and Singapore Exchange Limited. Further, the portion of cash placed by trading members as a part of the additional capital / margin with the Exchange increased during the year. Income from data dissemination continued to grow at a healthy pace on account of introduction of additional products and widening of client base. An amount of Rs.114 million was earned during the year from data dissemination. Our training institute conducted capital market programs to cater to various needs of corporates and individual investors. Further, the training institute entered into collaboration with leading educational institutions viz. Indian Institute of Foreign Trade, Delhi, Birla Institute of Management Technology, Greater Noida, SIES College of Management, Navi Mumbai, Institute of Finance and International Management, Bangalore to facilitate specialized training in capital markets. Income from training grew to Rs.65 million.

2. Expenditure - Rs. 2,236.61 million

Technology continues to be the major differentiator in our endeavor to provide seamless service to the trading member and to the ultimate investor. The Exchange incurred an expenditure of Rs.518 million which was technology related. Further, the Exchange incurred an expenditure of Rs.329 million towards employee cost.

VII Financial situation as on 31st March 2008

The networth of the Exchange increased to Rs.15,591 million, an increase of 55% over Rs. 10,057 million as on 31st March 2007, mainly on account of receipt of Rs.4,106 million from our strategic partners, viz. Deutsche Boerse AG and Singapore Exchange Limited towards fresh capital. The Exchange retained its strategic investments in Central Depository Services (India) Ltd. and BOI Shareholding Ltd. During the year, a 5% stake at Rs.62 million was acquired in Calcutta Stock Exchange Association Ltd.

VIII New Initiatives on Business Developments

1. Exchange Traded Fund

License was granted to an Asset Management Company for the launch of Exchange Traded Fund (ETF) on SENSEX. The ETF was listed at the Exchange on June 16, 2008. This is the second ETF on SENSEX that is listed and traded on the Exchange. Earlier, in 2003, SPICE ETF was launched based on BSE SENSEX.

2. Launching of products based on BSE indices in overseas market

In October 2007, the Exchange entered into an agreement with one of its strategic partners Deutsche Boerse AG, appointing them as exclusive sales agent for launching of BSE indices in Europe and North America. The objective of the agreement is to gain visibility overseas for BSE indices and to generate revenue.

During 2007-2008, the Exchange entered into an agreement with United States Futures Exchange (USFE), Chicago, enabling the trading of a US Dollar denominated futures contract based on the Sensex. Trading in the US Dollar denominated contract commenced on April 4, 2008. USFEs Dollar Sensex contract allows overseas investors to take exposure to Indian equity market. The contract trades 23 hours per day, Monday to Friday and settles monthly to the corresponding value of BSE SENSEX.

3. iShare BSE SENESX India Tracker - Exchange Traded Fund

listed on Hong Kong Stock Exchange:

iShare BSE SENSEX India Tracker, an ETF launched by Barclays in November 2006 is listed on the Hong Kong Stock Exchange and continues to attract considerable investor interest. The Asset under Management in this ETF ranges between US$ 210 to 240 million.

4. Tying up with the Calcutta Stock Exchange Association Limited

During the year under review, the Exchange acquired a strategic stake in the Calcutta Stock Exchange Association Limited (CSE).The Exchange was allotted 30,850 shares, representing 5% of the enlarged equity of CSE. The total investment outlay worked out to Rs.62 million. Apart from the Exchange, the other investors in the CSE are West Bengal Industrial Development Financial Corporation, B. K. Birla Group (Kesoram) and K.K. Birla Group (Texmaco).

On November 14th 2007, CSE had 867 members, out of which currently 76 have registered for trading through our Exchange.

The monthly additional volume from CSE has gradually increased from Rs.91 million in November 2007 to Rs. 1,065 million till June, 2008. 11 scrips of CSE have been listed on the Exchange and total volume in these scrips was Rs. 685 million.

5. Stock Lending and Borrowing

In order to provide a mechanism for borrowing of securities to enable settlement of securities sold short, a full-fledged securities lending and borrowing (SLB) scheme was implemented by the Exchange w.e.f. April 21,2008, through its Clearing House (BOI Shareholding Ltd.) as an approved Intermediary for the same. The said SLB Scheme was implemented as per the broad framework specified by SEBI.At present, this Scheme is reviewed by SEBI.

6. Debt Segment

The BSE Debt segment, which commenced operations on June 15, 2001, provides a range of products and services to investors and participants in the Indian Fixed Income markets. The Exchange has seen a growth in number of members in the Debt segment in the year 2007-08; Number of members increased from 83 to 95.

(i) Wholesale Debt Market (WDM)

A major development was the introduction of the browser based ICDM (Indian Corporate Debt Market) platform. Since May 2, 2008, deals in Government Securities, Treasury Bills and State Government loans are being reported on this platform, thus making ICDM a common front end for trading members for reporting deals in Government securites as well as corporate bonds.

Turnover for the year 2007-08 in this segment was Rs. 19,323 million.

(ii) Retail Debt Market (RDM)

The Retail trading in G-Secs commenced on January 16, 2003. However, there has been no trade in this segment for the last year.

(iii) Corporate Debt Segment

- F Group: The trading in Corporate Debt Securities in the F-Group are traded on the BOLT. Turnover for the year 2007-2008 in this segment was Rs. 2,346 million.

- Specific Bargain: The members can apply to the Exchange for permission for trading in a particular unlisted debt security.Such requests are considered by the Exchange on merits. Turnover for 2007-2008 in this segment was Rs. 1,87,144 million.

(iv) BSE Inter Bank offer and Bid rates

The Exchange has been disseminating the BIBID BIBOR (BSE Inter bank Bid and Offer rate) to the market from January 2005, which is an accurate reference rate for the call money market.

(v) Latest Developments

ICDM

Pursuant to the recommendations of the Internal Committee of SEBI headed by Dr.T.C.Nair, SEBI issued a circular on December 12, 2006, entrusting to the Bombay Stock Exchange the sole responsibility of rolling out a Unified Reporting platform for all corporate bonds traded in India with an aggressive target date of January 1, 2007. Subsequently NSE and FIMMDA were also allowed to set up the platform.

Bombay Stock Exchange Limited successfully launched this significant developmental initiative on January 2, 2007 - the first trading day of the year and the initiative was termed as ICDM - Indian Corporate Debt Market.

Further, vide SEBI Circular dated 13th April, 2007, the Exchange w.e.f. 2nd July, 2007 provided a platform to the market participants, which facilitates:

- Negotiated dealing in corporate bonds

Chat facility for negotiating deals

Dynamic market watch

Extensive search facility from database of bonds

Turnover for the year 2007-2008 in this segment was Rs.4,11,867 million.

The Exchange will shortly foray into a fully automated online trading system for corporate bonds, on further directions from SEBI.

7. Direct Market Access

Direct Market Access (DMA) is a facility which allows brokers to offer clients direct access to the exchange trading system through the brokers infrastructure without manual intervention by the broker. Some of the advantages offered by DMA are direct control of clients over orders, secrecy of price over orders, eliminating room for front running, faster execution of client orders, reduced risk of errors associated with manual order entry, greater transparency, increased liquidity, lower impact costs for large orders, better audit trails and better use of hedging and arbitrage opportunities through the use of decision support tools / algorithms for trading. Lot of trading members have displayed interest in availing of this facility and the Exchange will extend its full support to facilitate the same.

8. Futures and Option Segments

During 2007-08, steps were taken to revive F&O trading on the Exchange. Consequently, the Exchange was able to register its presence in this vital segment. Our presence in the F&O Segment, enabled us to procure a higher valuation at the time of demutualisation.

9. Other initiatives

Business Development & Marketing (BDM) Department has been set up at BSE with a clear focus and objective for undertaking promotional activities to broaden the basket of products and services being offered by the Exchange, like new membership (Deposit-based membership), expanding membership in BSE F&O segment, Webex, Securities Lending and Borrowing, Direct Market Access, Debt segment, etc. With a view to create requisite awareness among various participants in the market about various products and services being offered by the Exchange, product brochures, leaflets, booklets, etc are prepared providing useful material and distributed among market participants. Also, training programmes are arranged for members for any new product and service launched by BSE.

To serve members efficiently, effectively and for developing close rapport with them, the Exchange has put in place Relationship Managers (RMs).Their specific role is to provide single point contact to members for services emanating from different departments of the Exchange. This facilitates members in sorting out day to day business issues with the Exchange besides developing closer bond and business relationship with them. The Exchange conducts Welcome and Induction programme for the new members to formally welcome them to the BSE family and familiarize their staff members with the various processes, products and services of BSE and also with the regulatory compliance requirements. During the financial year FY07-08, 69 new members have been registered by the Exchange. The Exchange also facilitates and helps members in setting up their trading systems and terminals. All the marketing initiatives undertaken by the Exchange have contributed to growth in membership and helped in consolidating a service oriented image in the minds of the members giving BSE a pan-India reach thereby enhancing the shareholder value.

Further, the Exchange also endeavours to keep the members abreast of various important developments by bringing out a bi-monthly newsletter membership@bse for private circulation among the members. The newsletter provides information on developments that happen at BSE, carry press articles related to the Indian economy and the capital markets, important notices issued by the Exchange, IPO listings, commencement of business by new members, a brief on the international delegates visiting BSE, etc.

IX Risk Factors, Risk Management

Some of the major risk factors that could adversely affect the Exchanges business and operations are as under:

I. Factors affecting the Exchanges Operating & Financial Performance:

The Exchanges performance is dependent upon the volume and value of trades executed on its trading platform, the number of new / further listing and the amount of capital raised during these new /further issues, the number of active traders in the market etc. Adverse macro-economic climate and political uncertainty may dampen the sentiments of the Capital Markets. Post liberalization, Foreign Institutional Investors have played a dominant role in generating volumes in the Capital Markets. However the downturn and related problems in many developed economies may have a negative influence on Fll investments in the country which in turn would adversely affect the trading volumes of the Exchange.

The Exchange generates substantial revenue from listing fees and Book Building Services provided to corporates during their new and / or further issues. Factors like the macro economic environment, industry specific conditions, overall capital market sentiments, political stability and regulatory requirements would influence the corpoates decision to tap the capital markets. The extent of such influences may affect the Exchanges revenues.

Indian Capital Markets, post liberalization, are at par with most of the developed Capital Markets in risk management. However, failure on the part of the Exchange to adapt itself to dynamic changes in business, regulatory and technological environment will adversely affect its operations and financial results.

2. Competition

The competitive landscape for the securities transactions business continues to be challenging. Ability to meet the competition head on will be a major factor in ensuring sustained growth and profitability.

X Training initiatives

Training initiatives of the Exchange continued to make impressive progress during the year under review. Revenues from training increased to Rs.65 million as compared to Rs.36 million in the previous financial year, an increase of 80%. During the year, 175 training programmes were conducted. These were attended by approximately 7500 participants. The three international programmes conduted during the year received very good response with participants coming from South East Asia, Africa, South Asia and the Middle East.

With a view to acquire a national footprint, BSE training has entered into collaboration agreement with educational institutions as well as professional organizations. Joint programmes under such collaboration agreements were conducted at Delhi and Bangalore.

The certification activity was significantly upscaled with over 40000 candidates appearing for BSE certification examinations during 2007-08 as against 10,200 in the previous year.

XI Investor Services

The Exchange besides its registered office at Mumbai serves the investors through six Investor Service Centers at Ahmedabad, Chennai, Kolkata, Kochi, New Delhi and Rajkot.

The Exchange resolved 104 Arbitration references and 1,070 investor complaints against the trading members and /or their sub-brokers. It also resolved 6053 complaints against the companies listed on the Exchange.

The Exchange regularly conducts Investor Awareness Programmes throughout the length and breadth of the country and has conducted III programmes in the year under review. In addition, it periodically brings out advertisement on "Dos and Donts" for investors in the print media in order to enable them to safeguard their interests.

XII Report on subsidiaries

As envisaged in the BSE (Corporatisation and Demutualisation) Scheme,2005,Indian Clearing Corporation Ltd (ICCL) was incorporated on 26th April 2007. ICCL is a wholly-owned subsidiary of the Exchange and shall carry out the functions of clearing, settlement, collateral and risk management for both cash and derivative segments.These functions are presently being performed by the Clearing House.

ICCL received its Certificate for Commencement of Business from the Registrar of Companies, Maharashtra, Mumbai on 13th December 2007. The Rules, Bye-laws & Regulations along with Memorandum of Association and Articles of Association of ICCL were forwarded to the Securities and Exchange Board of India (SEBI) for its approval in July, 2007.The Rules were further amended to incorporate the guidelines given by the Ministry of Finance and submitted to SEBI in December, 2007.

ICCL intends starting its operational activity with commencement of membership of the Exchange Traded Currency Futures. The existing operational activities encompassing cash and derivatives segment will be taken over by ICCL in a phased manner from BOI Shareholding Limited,to ensure a smooth transition. ICCL is in the process of obtaining necessary regulatory approvals. A statement related to ICCL under section 212 of the Companies Act, 1956 (The Act), forms part of this Annual Report.

XIII Fixed Deposits

The Exchange has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as of the Balance Sheet date. However, Members attention is invited to note no. 15 of Schedule O of the Audited Accounts.

XIV Corporate Governance

Being an unlisted entity, the Exchange is not bound to comply with the provisions of Clause 49 of the listing agreement. However, as a measure of good corporate governance, the Exchange voluntarily adopts most of the corporate governance practices provided in Clause 49. In keeping with the best practices, a report on Corporate Governance as at 31st March, 2008 forms part of the Annual Report. A Certificate from a firm of Practicing Company Secretaries regarding status of compliances of the conditions under Clause 49 of the Listing Agreement is annexed to this Report. The Exchange has a comprehensive Code of Ethics for Directors and its functionaries (select employees), supervised by an independent Ethics Committee. A Certificate on Secretarial Compliances for the year ended 31st March, 2008, issued by a firm of Practicing Company Secretaries, in terms of the provisions of Section 383A of the Companies Act, 1956 (the Act) is attached with this Report.

XV Conservation of energy, technology absorption and foreign exchange earning and outgo

As the Exchange does not own any manufacturing facility, the Directors have nothing to report as per the requirement of disclosures with regard to Conservation of Energy and Technology Absorption in terms of Section 217(1 )(e) of the Act read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

The particulars with regard to foreign exchange earnings and outgo appear at note no. 14 of Schedule O of the Audited Accounts.

XVI Human Resources

The Exchange continues to invest in its Human Capital by way of Training & Development Programmes and various HR Initiatives. All employees from Deputy Manager to Deputy General Manager level have been covered under behavioural and functional training programmes. BSEs HR Initiatives were recognized at the Asia Pacific HRM Congress held at Mumbai and fetched 3 Employer Branding Awards in the categories of:

1. Talent Management

2. Managing Health at Work

3. Excellence in HR through Technology

The industrial relations environment continued to be cordial

Particulars of Employees

In compliance with the requirements of Section 217 (2A) of the Act read with the Companies (Particulars of Employees) Rules, 1975, a statement containing details of employees is annexed and forms part of this Report.

XVII Corporate Social Responsibility (CSR)

CSR activities for the Exchange are its commitment to contribute to development and help to improve quality of life. The Exchange strongly believes that a corporate belongs only if it can empathies, emote with and feel for the society it exists.

The Exchange is a pioneer in the Capital markets and an integral part of the financial service sector. CSR in the Exchange is not a part of the core business but a critical part of its DNA. CSR has been imbued into the existence of each human being working in the organization.As a result some employees have come together and formed a trust for charitable purposes under the name of "Pay-back-to- Society Foundation"

Some of on-going CSR projects are as follows:

1. Adopt - A - Gran: Exchange adopts around 85 elderly destitute through HelpAge India (an NGO which fights isolation, poverty and neglect for the elderly).

2. Cataract operations for the underprivileged: Exchange supports 500 - 1000 cataract surgeries in a year through HelpAge India.

3. Model Village, Newli: Exchange supports the modest infrastructure for the villagers of Newli in sustaining their economic development.

4. Vesvi Panchkosi Education Society: Exchange provides assistance for the construction of School at Vesvi.

XVIII Technology

During 2007-08, Indian Stock market witnessed significant volatility, resulting in sharp increase in terms of both the number of transactions as well as value thereof. This challenge was effectively met by enhancing the order handling capacity of our main trading systems manifolds.This was accomplished through major hardware upgrade for our core equity Trading System which was further augmented by fine tuning of back-end processes and applications. As a consequence of these proactive measures, latency was cut down across the entire technology chain. Additionally, the same measures also helped us enhancing the capacity to handle peak loads arising out of new listing.

Indian stock market is going through a major transformation in the form of Direct Market Access or DMA. We have changed our systems and processes to cater to the same.As a result of DMA, algorithmic trading will be used more and more by the trading community.This will warrant extremely high computing capacity. We have taken initiatives to meet the challenge.

The Exchange has also successfully implemented applications for the two new segments namely "Debt Market" and "Stock Lending & Borrowing".

The popularity of the Exchange portal bseindia.com continues to rise. To cater to the usage load, the back end capacity has been increased substantially following distributed architecture principle which meets our business continuity requirements also.

To provide future proof platform for all trading and settlement applications and enable business to grow and differentiate, the Exchange entered into an agreement with NASDAQ OMX to implement an integrated high performance trading system. This will ensure quick time to market and enable creation of a multi-asset trading solution that can handle high volumes. The derivative trading and settlement system will be developed first,followed by integrated multi-segment trading and settlement platform.

BSEs network is spread across the country. The network is on TCP/IP protocol and largely depends on VSAT technology for outstation connectivity. Given the huge bandwidth requirement at a very low latency in the near future, and to take advantage of Telecom boom in the country, the Exchange decided to implement Multi Protocol Label Switching (MPLS) technology in WAN network.This technology is very new and supports very large networks. It is extremely fault tolerant and very flexible to roll out. Extended pilot runs were carried out and based on the results, it has been decided to migrate regional hubs to this technology. Roll out has already been started and a few outstation members have been successfully migrated.

As a business continuity planning initiative, it has been decided to move existing disaster recovery systems to a different electrical grid and seismic zone. For this purpose, land has been procured near Hyderabad. Construction of state-of-the art center will commence soon.

XIX Directors Responsibility Statement

Pursuant to the requirement under Section 217 (2AA) of the Act, with respect to Directors Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the accounts for the financial year ended 31st March, 2008, the applicable accounting standards have been followed and there was no material departure from such standards;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Exchange at the end of the financial year on 31st March, 2008 and of the profit of the Exchange for the said financial year;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Exchange and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the accounts for the financial year ended 31st March, 2008 on a going concern basis.

XX Directors

Shri Shekhar Datta and Shri Jamshyd N. Godrej, Shareholder Directors, resigned from the Board with effect from 16th June, 2008.The Board places on record its appreciation for the valuable contribution made by them during deliberation in Board and various committees.

Securities and Exchange Board of India (SEBI) while prescribing governance structure of the Exchange, has provided for various categories of Directors viz. Public Interest Directors, Shareholder Directors and Trading Member Directors with the extent of their representation on the Board.

As per the said governance structure, it is implied that one- third of the Directors from each category would retire by rotation and if eligible, may offer themselves for re- appointment. Further, in terms of Article 13.18A of Articles of Association, no director shall hold office for more than two consecutive terms.

In view of above, Shri Jitesh Khosla, Public Interest Director, ShriVivek Kulkarni, Shareholder Director and Shri Balkishan Mohta, Trading Member Director being longest in office from amongst their respective categories, retire by rotation and, being eligible, offer themselves for re-appointment.

Brief resume of the Directors proposed to be re-appointed, nature of their expertise in specific functional areas and names of companies in which they hold directorship and memberships/chairmanships of Board/Committees are provided in the Annexure to the Notice of AGM.

XXI Auditors

The Auditors, M/s Deloitte Haskins & Sells, Chartered Accountants, Mumbai, hold office until the conclusion of the forthcoming Annual General Meeting and are recommended by the Board for re-appointment to hold the office from the conclusion of the forthcoming Annual General Meeting until the conclusion of the next Annual General Meeting on such remuneration as may be decided by the Board. The Auditors have confirmed that, their re-appointment, if made, would be within the limits prescribed under section 224(IB) of the Act and that they are not disqualified in terms of Section 226 of the Act.

XXII Auditors Report

The Auditors Report dated May 10, 2008 on the financial statements of the Exchange for the financial year ended 31st march 2008 does not have reservation, qualification or adverse remark.

XXIII Acknowledgement

The Board thanks the Government of India, Securities and Exchange Board of India, Reserve Bank of India, the Government of Maharashtra and other state governments and various government agencies as also the depositories for their continued support, co-operation and advice.

The Board is grateful to the eminent professionals who joined various committees at the invitation of the Board and added value to the deliberations. The Board is also grateful to the trading members, issuers and investors of the capital market and also acknowledges the splendid support provided by the market intermediaries and the various associates. The Board expresses sincere thanks to all the business associates, consultants, bankers, auditors, solicitors and lawyers for their continued patronage, partnership and confidence reposed in the Exchange to achieve commendable results.

The Board wishes to thank all the employees working at different levels for their dedicated service to the Exchange and excellence displayed in achieving demutualization and conducting operations of the Exchange.

Finally, the Board expresses its gratitude to its shareholders for the confidence reposed in the management of the Exchange.

For and on behalf of the Board

Place : Mumbai Jagdish Capoor Date : 12th July , 2008 Chairman

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Mar 31, 2007

The Directors have pleasure in presenting the Second Annual Report of the Exchange alongwith the Audited Financial Statements for the year ended 31st March, 2007.

I. The Economic Environment

The Indian economy continued to maintain the high growth trajectory with rate of growth of GDP registering a healthy 9.4 per cent in 2006-07. While the rate of growth of manufacturing was a robust 12.3 per cent, Services recorded an impressive rate of growth of I 1.2 per cent during the year under review. Performance of the agriculture sector, however, remains a cause for concern, registering a rate of growth of 3.8 per cent. Macroeconomic parameters like rate of savings, rate of investment, foreign exchange reserves, international trade, etc. continue to improve. Not surprisingly, Indias ranking in world competitiveness increased from 39 in 2005 to 29 in 2006. Sovereign rating for local currency debt was revised upwards by both S&P as well as Fitch during 2006-07.

Inflation during the year spiked to a high of 6.67 per cent (as measured by the Wholesale Price Index) but has since cooled off to 4.03 per cent during the week ended 16 thJune, 2007.

Monetary policy had a decidedly restrictive stance during the year with the RBI raising key interest rates. Reverse repo rate was raised twice during the year from 5.5% to 5.75% on 9th June, 2006 and from 5.75% to 6% on 25th July, 2006. Similarly, the repo rate was raised four times during the year, causing it to increase from 6.50% in April 2006 to 7.75% in March 2007. The Cash Reserve Ratio was raised from 5.00 per cent to 6.25 per cent. Consequently, there was a hardening of interest rates in the economy though it did not have a significant impact on capital market volumes.

India continued to be an attractive destination for foreign investments, particularly in respect of FDI. Although the number of Flls registered with SEBI has increased to 1,049, there was a decline in net Fll inflow from $ 9.33 billion in 2005-06 to $ 6.71 billion.

There was a sharp rise in FDI, which increased threefold from $ 5.54 billion received during the previous year to $ 15.73 billion in 2006-07.

At a GDP size of almost a trillion dollars, India is now the fourth largest economy in Purchasing Power Parity terms, behind US, China and Japan.

II. The Capital Markets

The strong economic performance was the key driver in significant growth of the capital markets. Market capitalisation rose to touch a trillion dollars i.e., 100 per cent of Indias GDP. Sensex crossed the I 5,000 level on 6th July, 2007.

While buoyancy in the stock market continues unabated, other segments of the capital market need to be developed. The corporate bond market is conspicuous by its absence in India and despite efforts by SEBI and the Government, the corporate bond market continues to remain in the doldrums. New policy initiatives like simplifying the requirements for public issue of bonds, mandating a certain portion of non - SLR portfolio of banks to be in the form of corporate bonds need to be considered if we are to have a vibrant corporate bond market, so essential for mobilizing long term funds for infrastructure requirements of the economy. Trading in corporate bonds and secuntised debt will start soon on both the exchanges in India but in the absence of requisite policy initiatives, the volumes may not be very impressive.

Long dated options is another capital market product that is yet to gain popularity in India. Internationally, options trading generates huge volumes and is widely used as a hedging mechanism. Policy initiatives (particularly in the area of taxation) are needed to infuse life into this segment of capital market.

Another area where new developments are expected pertains to lending and borrowing of securities. Once norms relating to this activity are in place, the trading volumes are expected to increase and the Exchange would benefit from it.

The year ahead could see introduction of new indices pertaining to infrastructure and volatility. There would be interest in ETFs designed to enable Flls to invest in companies where the Fll ceiling has been reached. We could also see exchange based trading in regard to other asset classes which are only traded on OTC at the moment. These could include interest rate products and foreign exchange contracts.

The extent of integrating of the local capital markets with the global markets is too well known to require elaboration. In this context, the excessive global liquidity and the resultant global imbalances that it has given rise to become a cause for concern. As the global imbalances work themselves out (particularly the unwinding of Yen carry trades) our markets could see enhanced volatility and a potential flight of capital.

III. Significant Developments and Analysis

1. Demutualisation

By far the most significant development in recent times was successful completion of demutualisation. As mandated by SEBI in the Scheme for Corporatisation and Demutualisation, the shareholding of trading members was brought down to below forty nine per cent. This was accomplished partly by inducting strategic investors like Deutsche Boerse AG and Singapore Exchange Limited through issue of additional capital and partly by offering the tendered shares of trading members to foreign and domestic institutional and other high networth individual investors.

2. Strategic Partnerships

The mandatory requirement of demutualisation was converted into a unique opportunity to bring on board as strategic partners, Deutsche Boerse AG and Singapore Exchange Limited (SGX). Each of these entities bought a five per cent stake in the Exchange, the maximum permitted under current regulation.

Deutsche Boerse, a German blue chip company, and the largest exchange organization worldwide, is a leading service provider to the global securities industry with products and services for issuers, investors, intermediaries and data vendors. The group straddles the entire securities process chain from trading, clearing, all the way to settlement and custody. Deutsche Boerse is also a provider of IT solutions and an insourcing partner for the global securities industry as well as a leading provider of market data and analytics.

SGX is Asia Pacifics first demutualised and integrated securities and derivatives exchange and has positioned itself strongly as the Asian gateway for capital raising and risk management. One third of its market capitalisation is on account of foreign companies from across Asia and other continents. SGX lists and clears a wide range of Asian equity and interest rate derivative products. It has also launched a commodity derivatives trading and clearing platform, and rolled out an OTC clearing facility.

With global market leadership positions across cash equities, derivatives, debt, market data and technology, both the exchanges will create opportunities for additional revenue generation.

3. Performance and profitability

Buoyed by a booming economy and underpinned by robust corporate performances, the capital markets continued to grow substantially in 2006-07. Consequently, revenues increased by 12.93 per cent from Rs. 2196.4 million in 2005-06 to Rs. 2480.09 million in 2006-07. EBIT, however, fell 13,22 per cent to Rs. 1001.60 million. The decline in EBIT is on account of development efforts to revive the Futures and Options (F&O) segment.

The high level of profitability shown by most companies has encouraged investors who have demonstrated a growing appetite for equity over the past four years. This is also reflected in the large number of Initial Public Offerings during the year. There were I 16 Initial Public Offerings and Follow on Public Offerings which raised capital aggregating Rs. 615.05 billion from the markets. It is heartening to note that all the 78 companies that came out with an Initial Public Offer during the year have listed on the Exchange.

Cash trading levels also followed this positive trend, with the average daily turnover rising I 8.89 per cent during the year.

Steps were taken to revive the F&O segment. As a result, volumes in the segment have picked up and we are hopeful that in due course the Exchange shall be able to garner a significant market share in F&O trading. The Exchange recognizes the critical importance of reviving the F&O segment and remains committed to achieving a substantially higher market share.

IV. Financial Results (Rs. in million) Particulars 2006-07 2005-06 Audited Combined & Restated*

Total Income 2,480.09 2,196.40 Total Expenditure 1,478.49 1,042.21 Profit Before Tax 1,001.60 1, 154.19 Provision for Tax 93.18 222.86 Profit After Tax 908.42 931.33 Balance Brought Forward 416.09 from Previous Year Available for Appropriation 1,324.51 931.33 General Reserve 90.84 59.33 Brokers Contingency Fund 31.51 32.23 Trade Guarantee Fund 77.40 72.81 (Cash & Derivatives) Trade Guarantee Fund 3.17 2.99 (G-Sec) Proposed Dividend 101.53 49.55 Short Dividend Provision 4.25 Corporate Tax on Dividend 17.86 6.95 Balance Carried to Reserves 997.95 707.47

* The figures of erstwhile BSE from 1st April, 2005 till 19th August, 2005 have been combined with the figures of Bombay Stock Exchange Limited from 8th August, 2005 to 31st March, 2006 and restated so as to make them comparable with the figures of 2006-07.

V. Dividend

Your Directors have recommended a Dividend on equity shares for the year ended 31st March, 2007 at the rate of 1250 per cent (Rs. 12.50 per equity share) in view of the excellent performance, subject to the approval of the Members at the Second Annual General Meeting. Under Clause 5.3 of The BSE (Corporatisation and Demutualisation) Scheme, 2005, the allotment of equity shares to some of the Members of the Exchange has been kept in abeyance for various reasons. Our endeavour will be to ensure that these shares are issued as early as possible. Meanwhile, all corporate benefits including dividend as may be declared by the Exchange from time to time are being provided for and would be paid on the allotment of these shares. Further, as all the equity shares issued/to be issued by the Exchange are pan passu in all respects, full dividend for the year ended 31 st March, 2007 will be paid to those Members whose names appear on the Register of Members as on Saturday, 1 st September, 2007 and on the basis of beneficial ownership as per the details furnished by the Depositories as on that date.

VI. Analysis of Results

The year 2006-07 has been the first full year for the Exchange as a corporate entity. The previous years figures have been combined and restated to make them comparable.

The Exchange recorded a 12.93 per cent increase in its Total Income, largely due to growth in trading volumes. The Net Profit Before Tax was however lower by I 3.22 per cent largely because of development expenses incurred in connection with F&O business.

An item wise analysis of the financial results is given below.

I. Income - Rs. 2,480.09 million

a. Trading Members - Rs. 1,1 13.79 million

The revenue from trading members has increased by 9.76 per cent as compared to previous years figure of Rs. 1014,74 million. This is largely because of the growth in trading volumes. The Exchange continues to remain one of the leading exchanges of the world in terms of number of trades.

With 346.2 million trades, a 31.14 per cent increase over the previous year, the Exchange confirmed its position as among the leading exchanges of the world in terms of number of trades. The average daily number of trades at 1.39 million represents a 32.41 per cent increase over the previous year. The average trading volume increased by 18.89 per cent during the year rising from Rs. 32.51 billion in 2005-06 to Rs, 38.65 billion in 2006-07.

b. Investments and deposits - Rs. 805.74 million

The income from investments and deposits during the year has increased marginally by 4.55 per cent as compared to the figure of Rs. 770.65 million in 2005-06. Post corporatisation, investments are mainly made in dividend schemes of mutual funds to avail tax arbitrage.

c. Services to Corporates - Rs. 302.37 million

Revenues under this head registered a 14.60 per cent increase during the year under review. This is because 2006-07 was a busy year both in terms of number and value of IPOs. There were I 16 IPOs and FPOs during the year, raising an aggregate of Rs. 615.05 billion. Listing fees and more importantly, book building revenue contributed substantially to the rise under this income stream.

d. Income from Training Institute - Rs. 36.26 million

There was a 13.70 per cent increase in the revenue from the training institute as compared to the previous years figure of Rs. 3 1.89 million.

e. Other services - Rs. 221.93 million

There has been substantial growth in this segment comprising mainly data dissemination services and leasing out of premises. With the increased interest in the capital market, we have been able to increase the customer base and launch new products pertaining to data dissemination.

2. Expenditure- Rs. 1,478.49 million

a. Computer technology related expenses - Rs. 402.30 million

As technology is the backbone of our business and the key differentiator, the Exchange has been continuously upgrading the systems to meet various business and regulatory requirement. To comply with the requirements of Indian Accounting Standards, standard software package are charged off in the year of purchase,

b. Staff Costs - Rs. 328.71 million

The number of employees increased from 442 as on 31st March. 2006 to 496 on 31st March, 2007. Additional provision was made for Gratuity and Leave Encashment in accordance with Indian Accounting Standards.

c. Administration and other expenses - Rs. 490.28 million

Fresh initiatives were taken to revive the dormant F&O segment. The effort focused on encouraging trading members to participate in Sensex futures. The cost of these development initiatives amounted to Rs. 197 million.

d. Clearing House expenses - Rs. 13.66 million

There has been no significant change under this head.

e. Contribution to SEBI - Rs. 14.81 million

As per current regulations, the exchanges are required to contribute 5 per cent of the Listing Fee to SEBI. Further, additional regulatory fee was levied by SEBI with effect from January 2007 on all exchanges. Consequently, expense under this head more than doubled from previous years level of Rs. 7 million.

f. Depreciation - Rs. 230.14 million

The Exchange has invested substantial amount in the upgradation of hardware and software, causing a 35 per cent increase under this expense head vis-a-vis previous years figure of Rs. 170.47 million.

VII. Financial Situation as at 31st March, 2007

1. Cash Flows

Overall, the Exchanges recurring free cash flows mproved 27,58 per cent from Rs. 929.56 million in 2005-06 to Rs. I I 85.9 I million in 2006-07. During the year under review, capital expenditure amounted to Rs, 235.46 million.

2. Investments - Rs. 16,663 million

The Exchanges strategic holding in the Central Depository Services (India) Limited, one of the two depositories in the country, remains at 37 per cent. Further, we continue to have a 49 per cent stake in BOI Shareholding Limited, the clearing house for our cash segment.

Overall yield on fixed component of the portfolio for the year 2006-07 was 7.07 per cent, which was higher compared to 6.53 per cent for the year 2005-06. This was due to placement of deposits at higher rates. In respect of Mutual Fund investments the yield for 2006-07 was 7.37 per cent whereas it was 5.05 per cent for 2005-06.

3. Capital & Reserves, Assets and Liabilities

The Exchange shows a very robust financial position at the end of fiscal 2007 with capital and reserves amounting to Rs. 10,057.46 million and total net fixed assets aggregating Rs. 651.57 million, slightly higher than previous years figure of Rs. 644.68 million. These assets include the landmark P. j. Towers, which has been shown at the Written Down Value in accordance with Indian Accounting Standards.

On the liabilities side, deposits from trading members increased from Rs. 1,155 million in 2005-06 to 1,678.25 million, due to increase in deposit based memberships.

4. Taxation

During the year, the (Exchange received favourable decisions from the Honourable Income Tax Apellate Tribunal. Accordingly, the contingent liability towards Income Tax of Rs. 4,034.07 million may not devolve.

Optimum tax planning by investing in dividend schemes of mutual funds has reduced the effective tax rate from 18.78 per cent to 9.3 I per cent.

VIII. Report on Subsidiary

The Exchange has set up a subsidiary "Indian Clearing Corporation Limited" to carry out the activities of clearing and settlement functions. The Company is yet to commence operations.

IX. Fixed Deposits

The Exchange has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as of the Balance Sheet date. However, Members attention is invited to note no. 15 of Schedule N of the Audited Accounts.

X. Corporate Governance

Being an unlisted entity, the Exchange is not bound to comply with the provisions of clause 49 of the listing agreement. However, as a measure of good corporate governance, the Exchange voluntarily adopts most of the corporate governance practices as provided in clause 49. In keeping with the best practices, a report on Corporate Governance as at 31" March, 2007 forms a part of the Annual Report. A Certificate from a firm of Practising Company Secretaries regarding status of compliances of the conditions under clause 49 of the Listing Agreement is annexed to this Report. A Certificate of Managing Director & CEO on the financial statements and internal control relating to financial reporting is also annexed. The Exchange has a comprehensive Code of Ethics for Directors and its functionaries (select employees), supervised by an independent Ethics Committee. The Exchange has also formulated a Whistle Blower Policy. A Report on Management Discussion and Analysis as required under clause 49 of the Listing Agreement is also annexed to this Report. A Certificate on Secretarial Compliance for the year ended on 31st March, 2007, issued by a firm of Practising Company Secretaries, in terms of the provisions of Section 383A of the Companies Act, 1956 (the Act) is attached with this Report.

XI. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo Since, the Exchange does not own any manufacturing facility, the requirement of disclosures with regard to Conservation of Energy and Technology Absorption in terms of Section 217(1 )(e) of the Act read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is not applicable.

The particulars with regard to foreign exchange earnings and outgo appear at note no. 14 of Schedule N of the Audited Accounts.

XII. Particulars of Employees

In compliance with the requirements of Section 217 (2A) of the Act read with the Companies (Particulars of Employees) Rules, 1975, a statement containing details of employees is annexed. The Exchange has a total number of 496 employees, including contractual as on 31st March, 2007.

XIII. Directors Responsibility Statement

Pursuant to the requirement under Section 217 (2AA) of the Act, with respect to Directors Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the accounts for the financial year ended 31st March, 2007, the applicable accounting standards have been followed and there was no material departure from such standards;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Exchange at the end of the financial year on 3lst March, 2007 and of the profit of the Exchange for the said financial year;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Exchange and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the accounts for the financial year ended 31st March, 2007 on a going concern basis.

XIV. Technology

Technology is central to the securities transactions business and the ability of the trading platform to process large order flows quickly is critical to the performance and profitability of the Exchange. As such, the Exchange remains committed to achieving the highest possible standards in speed of trade execution, functionality, ease of use and performance of the trading system.

To ensure security of IT environment, the Exchange has migrated its BS7799 certification to ISO-27001 for its flag ship product viz. BOLT.

With a view to improve service levels, the Exchange has invested about Rs. 70 million on various systems. In addition, the Exchange has incurred the expenses of about Rs. 280 million towards maintenance of crucial systems. With a view to meet the demands of the investors in the regional centers, the Exchange has successfully launched Gujarati and Hindi versions of its website viz. bsemdia.com

XV. Directors

Shri C M. Vasudev, Shri Jamshyd N. Godrej and Shri Vivek Kulkarni were appointed as the Public Interest Directors on the Board, at the First Annual General Meeting of the Exchange held on 26th September, 2006 in place of Shri P. K. Banerji, Shri P. P. Vora and Shri S. Jambunathan, who relinquished their office at the said Annual General Meeting. The Board places on record its sincere appreciation and gratitude for the services rendered and contributions made by Shri Banerji, Shri Vora and Shri Jambunathan during their tenure.

Shri Vijay Mukhi and Shri Pradip Shah, Public Interest Directors, resigned from the Board with effect from 19th October, 2006 and 30th October, 2006 respectively. The Board places on record its sincere appreciation and gratitude for services rendered and contribution made by Shri Mukhi and Shri Shah during their tenure. These vacancies were filled by the appointment of Shri Ishaat Hussain, an expert in the field of Financial Management and Shri Sudipto Sarkar, an eminent lawyer in the field of Commercial Law, as Public Interest Directors on the Board.

SEBIvide its letter No. MRD/DSA/100362/2007 dated 2nd August, 2007 advised that Shri S. N. Menon, IAS (Retd.), former Secretary of Commerce, Government of India may be considered for being appointed as Public Interest Director in place of Shri C. M. Vasudev.

Shri Vasudev has submitted his resignation vide letter dated 7th August, 2007. The Board places on record its sincere appreciation and gratitude for the services rendered by Shri Vasudev during his tenure.

The appointment of Shri Menon as Public Interest Director on the Board of Exchange will take place after receipt of requisite consents/approvals.

Currently, the Board comprises one Managing Director, three Trading Member Directors and Seven Public Interest Directors.

SEBI vide, Gazette of India notification No. 138 dated 29 thJune, 2007 has notified 16th May, 2007 as the Appointed Date for the Exchange.

In view of the notification of the Appointed Date and in terms of Article 13.13 C of the Articles of Association, on and form the date of the forthcoming Annual General Meeting, the composition of the Board would need to be re-structured, keeping in view the restriction on maximum number of Public Interest Directors (PIDs) on the Board and the requirement of Shareholder Directors (SDs).

Shri Jagdish Capoor and Shri Jitesh Khosla continue as PIDs. Shri Shekhar Datta, Shri Godrej and Shri Kulkarni who were appointed as PIDs by the shareholders at the first Annual General Meeting held on 26th September, 2006, will hold office as PIDs only till the forthcoming Annual General Meeting due to restriction on the maximum number of PIDs on the Board.

Shri Ishaat Hussain and Shri Sudipto Sarkar, were appointed as PIDs by the Board at its meeting held on 9th November, 2006. They hold office till the date of the forthcoming Annual General Meeting and would have, ordinarily been appointed as PIDs by the shareholders at the said Meeting. However, due to restriction on the maximum number of PIDs on the Board both of them will vacate their office as PIDs. Article 13.16A of the Articles of Association contains provisions pertaining to the appointment of SDs on the Board. The Exchange has received five separate notices under Section 257 of the Act, from a shareholder proposing the candidature of Shri Datta, Shri Godrej, Shri Kulkarni, Shri Hussain and Shri Sarkar for being appointed as SDs on the Board at the forthcoming Annual General Meeting and all of them have given their consent to act as SDs, if appointed.

Shri Jagdish Capoor, PID retires by rotation and being eligible offers himself for re-appointment. Shri Prakash Kacholia, Trading Member Director retires by rotation and being eligible offers himself for re-appointment.

XVI. Auditors The Auditors, M/s Deloitte Haskins & Sells, Chartered Accountants, Mumbai, hold office until the conclusion of the forthcoming Annual General Meeting and are recommended by the Board for re-appointment to hold the office from the conclusion of the forthcoming Annual General Meeting until the conclusion of the next Annual General Meeting on such remuneration as may be decided by the Board. The Auditors have confirmed that, their re-appointment, if made, would be within the limits prescribed under section 224(1 B) of the Act and that they are not disqualified in terms of section 226 of the Act.

XVII. Auditors Report

The Auditors Report dated 9th July, 2007 on the financial statements of the Exchange for the financial year ended 31st March, 2007 does not have any reservation, qualification or adverse remark.

XVIII. Acknowledgement

The Board wishes to place on record its sincere appreciation of the faith reposed in the Exchange by the Indian/foreign investors and others who have invested in share capital of the Exchange to achieve its objective of demutualisation.

The Board thanks the Government of India, Ministry of Finance, Foreign Investment Promotion Board, Reserve Bank of India, Securities and Exchange Board of India, the Government of Maharashtra and other State Governments and various Government Agencies as also the Depositories for their continued support, co-operation and advice.

The Board is also grateful to the trading members, issuers and investors of the capital markets and also acknowledges the splendid support provided by the market intermediaries and various associates. The Board expresses sincere thanks to all the business associates, consultants, bankers, auditors, solicitors and lawyers for their continued patronage, partnership and confidence reposed in the Exchange to achieve commendable results.

The Board wishes to thank all the employees working at different levels for the exemplary dedication and excellence displayed in achieving demutualisation and conducting the operation of the Exchange.

Finally, the Board expresses its gratitude to you as a shareholder for the confidence reposed in the Management of the Exchange.

For and on behalf of the Board Place: Mumbai Jagdish Capoor Date: 8th August, 2007 Chairman

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Mar 31, 2005

The Governing Board has pleasure in presenting the Annual Report and the Audited statement of accounts of BSE for the year ended March 31, 2005.

Financial Performance

The total income for the year increased marginally to Rs.1508 million as against Rs.1495 million during 2003- 2004. This is noteworthy as the Exchange had reduced its transaction charges by 12.5% from Rs.4 per Rs. I 00,000 of gross turnover to Rs.3.5 with effect from October I, 2003. The impact of this reduction was to a great extent off-set by a healthy increase in the average daily turnover of Rs.20,500 million (Rs. 19,800 million). The increased average trading volumes on the Exchange enabled the Exchange to post a modest increase in the total income in spite of a marginal decline from transaction charges. Income from transaction charges, which forms a significant portion of the Exchanges total income, was Rs.361 million (Rs.369 million). Income from investments and deposits showed a decline from Rs.566 million to Rs.534 million essentially on account of decreased returns on units of mutual funds and decline in bank fixed deposit rates as compared to coupon rates at which deposits were locked in earlier. Listing income posted a healthy growth of 17% to aggregate Rs. I 18 million as compared to Rs.101 million on account of new listings. Introduction of listing fees on debt segment listings also contributed to the extent of Rs.6.2 million. Income from data dissemination activities increased from Rs.36 million to Rs.42 million and holds much promise as an emerging revenue stream for the Exchange. Rental and maintenance income also posted an increase of Rs.5.9 million and stood at Rs.44.1 I million. Income from training activities, which is part of the other income, also posted a healthy increase of more than 67% from Rs. I 5 million to Rs.25 million. Income earned from Book Building Software also posted an increase of 38% from Rs.40 million to Rs.50.5 million.

Excluding the VRS amortization amount of Rs.62 million in the earlier years staff cost figure of Rs.242 million, the current years cost increased by 14% to aggregate Rs.204 million. Depreciation charge was significantly lower at Rs. 160 million (Rs.217 million during 2003-2004). The aggregate expenditure for the year stood at Rs.912 million (Rs.983 million).

The net surplus for the year was Rs.683 million as compared to Rs.5 12 million during the previous year, an increase of more than 33%. Cash surplus generated amounted Rs.865 million as against Rs.808 million during the previous year. Net worth increased by 11.74% from Rs.7417 million to Rs.8287 million. The Trade Guarantee and the Brokers Contingency Fund which forms part of the net worth figures also posted significant growth during the year. The cash component of the Trade Guarantee Fund stood at Rs. I 5 I 6 million (Rs. 1487 million in the earlier year). The corresponding figures for the Brokers Contingency Fund are Rs.427 million (Rs.392 million), an increase of 8.85%.

Overview

Indian stock markets continued the good run in the year 2004-05 after registering an eventful performance in 2003- 04, when the Sensex, Indias equity benchmark index, rose by 88 percent. Following this robust rise, in the year ended March 2005, the Sensex rose by 13 percent, which is once again quite sizeable and significant as compared to other indices of major stock markets in the world. In the first few months of the financial year 2005-06, Sensex almost gained more than 1000 points. Several indicators are gaining significance that show the rise of the Sensex to be strong in the medium term. These include, growing international interest in the Indian markets, continued robust performance of the corporates in India, favourable economic conditions and return of the retail investor. The strong run of the Sensex in all likelihood will be the major feature of the stock market performance in the financial year 2005-06.

BSE, has been successful in providing the markets with a number of initiatives in the index development. These include; launch of the mid and small cap index in April 2005. These indices, which are constructed using the international procedures are aimed at bringing into focus the performance of the small and medium enterprises and also provide information and insights on possible opportunities for investment in small and medium sized companies. Prior to that, BSE launched three sectoral indices namely BSE Metal, BSE Oil and Gas and BSE Auto reflecting the growing influence of these sectors in the Indian economy. With this the family of sectoral indices developed by BSE rose to 9 and total index products including ETF to 20.

Sensex and Other Indices

Index Opening Closing Average 2004 2005 2000-01

SEN SEX 5740.85 6492.82 4269.69 Nifty 1819.65 2035.65 1334.76 Nasdaq 2015.01 1999.23 3269.21 Dow Jones 10373.33 10503.76 10665.59 S&P 500 1132.17 1180.59 1391.02 FTSE 100 4410.70 4894.40 6272.93 Nikkei 11683.42 11668.95 15616.39 Hang Seng 12676.25 13516.88 15597.66 Kospi 882.75 965.68 648.21 MSCI-lndia 236.38 267.73 186.18 Singapore (STI)1870.70 2141.43 1992.13

Average Average Average Average Variation 2001-02 2002-03 2003-04 2004-05 in 2004-05

3331.95 3206.29 4492.19 5740.99 13.0 1077.03 1037.23 1427.50 1805.26 11.87 1917.05 1413.03 1812.86 1990.25 0.78 10110.61 8741.90 9571.96 10356.11 1.26 1159.07 929.03 1030.82 1145.05 418 5352.45 4217.94 4239.38 4637.83 10.97 11468.26 9611.46 9939.28 11321.03 0.12 11599.35 10042.68 11283.20 13029.04 6.63 625.42 707.02 747.35 854.11 9.39 141.55 139.76 188.99 238.78 13.26 1610.76 1476.49 1626.80 1967.75 14.47

In line with switching to free float indexing, which has already been accomplished with the Sensex, the BSE 100 and other sectoral indices, preparations are being made to shift BSE 200 and BSE 500 to the free float mode. With this, the entire family of the BSE indices are constructed and maintained on the basis of the international best practice of free float indexing. Future plans in indexing include expanding the range of services to the fund managers and investors and also to explore possibilities for international collaborations to popularize the use of Indian indices in the international markets.

Markets 1

BSE offers trading in equities, wholesale debt, retail debt and equity derivatives. The year under review witnessed impressive growth in several aspects of these market segments. Average

Daily Turnover rose from Rs.19.70 billion in 2003-04 to Rs.20.50 billion in 2004-05. Average daily volumes registered a rise in the first few months of the financial year 2005-06.

Volume of shares trading witnessed a sharp jump of 23 percent from 38870 million in 2003-04 to 47700 million in 2004-05.

The number of trades too showed a significant jump of 17 percent. The delivery ratio has been consistently growing from about 20 percent in 2002-03 to 26 percent in 2003-04 to 33 percent in 2004-05. Market capitalization moved up from US$ 120 billion in 2002-03 to US$266 billion in 2003-04 to US$ 389 billion in 2004-05. The capital listed in the Exchange registered sharp rise during the year from Rs.212 billion in 2003-04 to Rs. 589 billion in 2004-05. The number of Foreign Institutional Investors registered moved up from 540 in 2003-04 to 685 in 2004-05.

Corporatisation and Demutualisation

The Exchange is on the threshold of a major structural change. Considerable progress has been made in implementing the corporatisation and demutualisation scheme as envisaged in the BSE (Corporatisation and Demutualisation) Scheme, 2005 of the Securities and Exchange Board of India (SEBI) and all the regulatory formalities are to be completed by August 19, 2005. The Scheme envisages incorporation of a company under the provisions of the Companies Act, 1956, in the name and style of Bombay Stock Exchange Limited to succeed BSE and carry on its existing functions and establishment of a clearing corporation in due course of time. The company has already been incorporated with an initial authorized capital of Rs.500 million divided into 500 million equity shares of Re. I/- each. Eligible trading members of the Exchange will be subscribing to 10,000 equity shares of the company of Re. I/- each by making payment in cash.

As a company incorporated under the provisions of the Companies Act, 1956, the Exchange will be required to comply with the provisions of the Act. If listed, the additional disclosure and other requirements applicable to listed companies will apply to the Exchange as well, resulting in enhanced transparency, renewed faith of institutional investors and stronger corporate governance. The company would be debt-free, enabling it to leverage its strong financials to mobilize resources efficiently for funding its expansion and diversification programmes. As a for profit company, the Exchanges plans and activities will be guided by sharper commercial orientation and accountability.

Demutualisation envisages segregation of ownership and management of trading rights of members. This is an important component of the Scheme and would enable the Exchange to adopt higher levels of corporate governance and effectively address perception issues as to the Exchanges day-to-day management and operations. Moreover, segregation of ownership and management would instill greater confidence among the regulators and the investors and flexibility in decision-making would bring about speedy response to emerging business opportunities.

The present members of the Exchange having inseparable trading and membership rights will acquire shares representing the ownership of the Exchange and a distinct and separate trading right for the purpose of carrying on their business of trading on the Exchange. Initially, as promoters of Bombay Stock Exchange Limited, the members would be holding 100 per cent of the equity shares on day one of corporatisation, which would be divested to the extent of 51% within a period of 12 months or such extended period as may be allowed by SEBI as per the regulations framed in this regard. The process of divestment may include offering of new shares by way of initial public offering (IPO) or offer for sale by the existing shareholders to public at large or in favour of a few strategic partners/ investors who may like to hold a stake in the Exchange.

World over, the markets are dynamic and ever changing, churning unanticipated events every day. To stay ahead in the race, there is a need for the institution to reinvent itself. For BSE, this means, the Exchange which was hitherto member- owned, self regulatory, not for-profit organization will now be a corporate entity working with the objective of making profits and keeping shareholders value and investors interest uppermost.

Technology

The Exchange implemented several technology enhancement initiatives during the year. BSE On-Line Trading (BOLT) system on Tandem was upgraded to the latest state-of-the-art Non Stop Fault Tolerant platform, capable of handling up to eight million trades per day. BOLT system has been certified by DNV Norske Veritas for conforming to BS7799 security standards. With this, BSE has become only the second Stock Exchange in the world to be accredited under BS7799 Standards. This international certification has helped us validate our best security processes. Another major exercise successfully completed during the year was a consolidation of servers yielding significant financial savings and operational efficiencies. The Exchanges Electronic Contract Notes (ECN) and Straight Through Processing (STP) products are cutting-edge offerings that attracted increased levels of usage during the year.

During the year, the Exchanges reach and presence was significantly enhanced. The Exchange has more than 10,000 trading terminals spread across 416 cities and towns of India. The challenge of maintenance of this large network was well met with uptime of over 99.8%. Initial public offerings and repeat public offerings met with strong investor response and the bids made through BSEs Book Building System (BBS) represented a significant portion of market share, reflective of the Exchanges reach and strong retail participation.

The disaster recovery system was extended to all BSE service segments reconfirming the Exchanges preparedness and readiness to meet unexpected eventualities. Additionally, the Exchange has initiated a project for comprehensive Business Continuity Plan for the critical functions of the Exchange.

During the year, regional technology hubs were commissioned at Bangalore, Chennai, Jaipur and Rajkot to provide cost- effective and reliable connectivity solutions to trading members. Plans are on the anvil to commission more regional hubs during the current year.

Another major effort related to the implementation of a new system for upfront margin collection based on VaR, as per SEBI directives, for the equity segment. During the year, an integrated back-office system for various functions of the Exchange was successfully made operational.

The Exchanges website (www.bseindia.com) is one of the most popular web sites attracting huge traffic. The site experienced a record hit tally exceeding 24 million hits on the budget day. It is intended to make the website more user- friendly and information-rich. Plans have also been drawn up for enhancements to the Exchanges internet trading platform viz. BSEWebx.

Listing

The primary market for equity witnessed buoyant conditions with quality issues meeting enthusiastic response from the investing public. Expectations of handsome premium on listing attracted high levels of retail participation with some issues getting heavily oversubscribed. During the year, securities of 54 new issuers were listed on the Exchange, out of which 39 pertained to equity segment and 15 related to debt segment. The year also witnessed large and numerous preferential issues. Data indicates that 275 preferential issues were added to the listings on the Exchange. Thirty-four of the corporates listed on the Exchange tapped the international markets through GDRs/ADRs/FCCBs indicating a strong appetite for Indian equity abroad. The capital raised during the year (both equity and debt offerings) aggregated to Rs.6,03,600 million, a growth of over 244% compared to the previous year figure of Rs.2,47,310 million.

However, the number of bodies corporate listed on the Exchange witnessed a decline from 5,528 as on March 31, 2004 to 4,732 as on March 31, 2005. While a small part of the reduction was on account of voluntary/procedural delisting on account of mergers & amalgamations and buyback of shares, as many as 792 companies were de-listed by the Exchange on account of non-compliance with the continuous listing requirements. It is however to be noted that stricter monitoring and enforcement of listing conditions resulted in higher levels of compliance enabling the shifting of 98 companies from the Z group to various other groups. The benefit of rigorous enforcement also resulted in higher levels of investor grievances redressal.

BSE IndoNext

On January 7, 2005, the Honble Union Finance Minister Shri. P. Chidambaram launched BSE IndoNext. BSE IndoNext is a joint initiative of the Exchange and the Federation of Indian Stock Exchanges (FISE) representing 18 Regional Stock Exchanges across the country. BSE IndoNext is a pioneering effort to provide new opportunities in the Indian capita! market for the small and medium enterprises. BSE IndoNext is designed to provide companies with exclusive regional listings to access an all India market. Some of the small and medium enterprises listed on the regional stock exchanges were at a disadvantage on account of poor trading interest and illiquidity in their scrips. The securities of such companies that meet the quality parameters formulated for the purpose have been made available for trading on BSE IndoNext with a single order book. To enlarge trading interest and give the segment focused attention, the Exchange included in BSE IndoNext 51 I securities by shifting them from the Exchanges Bl and B2 groups. Currently, 523 securities are available for trading in BSE IndoNext (S Segment).

Risk Management

The equity market though strong, witnessed volatility throughout the year presenting a challenging situation for risk management. The Exchange continued in its effort to strengthen its risk management processes. ISO 9001:2000 certification obtained in July 2004 for the clearing & settlement functions enabled strengthening the process orientation in managing risk. All the pay-in and pay-out for 254 settlements were completed on time. Though deliveries in value terms rose by 31%, the surging volumes were well managed. The system of upfront collection of margins based on VaR, introduced in May 2005, has considerably strengthened risk management measures.

On-line and off-line surveillance activities of the Exchange are designed to monitor trading activities for preventing market manipulation. The capabilities of Exchanges real time Surveillance System (BSE Online Surveillance System - BOSS) are being enhanced to make surveillance unified, integrated and effective and a totally new system called BOSS-i is due for roll out during the current year. A high level of process orientation has been incorporated in the surveillance system by enhancing processes through the certification and audit processes of ISO 9001:2000 accreditation.

Indices

BSE, the premier Stock Exchange of the country, has been pioneering major developments in the Capital Markets through launch of many innovative products from time to time. Index Cell of the Exchange has always been in the forefront in launching various trendy indices. The shift of BSE indices to "Free-Float methodology" of index computation is a major watershed in Indian capital market development. All the indices of the Exchange have been constructed on the above methodology.

BSE has launched its new "Sector (90IFF) Series" effective August 23, 2004. Promptly identifying the need of the investment community for quality sectoral benchmarks, BSE has launched the new series covering nine significant sectors in the economy. These indices consist of significant blue chip companies that are leaders in their industry group. The "Sector (90/FF) series" consists of BSE Auto, BSE Bankex, BSE Capital Goods, BSE Consumer Durables, BSE FMCG, BSE Healthcare, BSE IT, BSE Metal and BSE Oil & Gas Indices. The 90/FF sectoral indices are so called as they cover minimum 90% of the total market capitalisation of the respective sectoral universe in BSE-500 index and are computed as per the globally accepted Free-Float methodology.

One of the characteristics of the recent strong market has been the interest of investing community in companies with modest or small capitalisation popularly known as mid- and small-cap segment. Given the context, new index series BSE Mid-Cap and BSE Small-Cap were introduced in April 2005. These indices track the performance of the companies with relatively small market capitalization.

Derivatives

The performance of the derivatives segment during the year was disappointing. Thin trading volumes and poor market participation in the beginning of the year characterized the segment. Based on market feedback, Weekly Options were introduced on September 13, 2004. Weekly Options offered product differentiation compared to option products available in the market and it was expected that the market participants would actively trade in the options. It was envisaged that Weekly Options would enable participants to take a short- term view on the underlying. It was also thought that relatively lower premium (vis-a-vis monthly options) would attract large retail participation. The initial response was encouraging with the daily volumes steadily climbing to touch a peak of Rs.3220 million on December 2, 2004. However, the open interest did not keep pace with trading volumes. Trading interest waned and volumes dried up. Though the Exchange currently offers Futures and Option contracts on the Sensex, six Sectoral Indices and 83 individual scrips, there has been no trading in the segment since April 2005.

The poor performance of the derivatives segment is disconcerting particularly since trading in F&O contracts has been witnessing record volumes in the country and the secondary market has been buoyant. Only on the basis of

liquidity and broad market participation it is possible to create a vibrant derivatives market. The absence of trading activity and poor volumes will deter even the most committed from venturing to trade on the Exchange. Liquidity begets liquidity and the challenge is to attract genuine broad-based trading volumes in contracts to break the current vicious circle. The Exchange recognizes that the initial trigger could be through product offerings with unique features. Weekly Options was one such attempt that did not unfortunately yield results. It cannot however be gainsaid that Sensex as an index is widely recognized and accepted and the Exchanges future F&O strategies will need to leverage this brand equity. It is also recognized that no stand-alone measure will yield results and a well thought out and comprehensive strategy is to be formulated and pursued in a sustained manner. The problems arising out of non-availability of a common front-end for both the equity and F&O segments are being addressed. The Exchange is committed to developing its presence in. the segment in the years to come and will energetically pursue business opportunities in derivatives contracts.

Debt Segment

In the year 2004-05, the Indian Debt markets witnessed a declining trend due to rising interest rates. At the BSE Debt segment, however, there was a considerable increase in volumes especially in the Corporate Debt securities. The spot deals reporting facility launched in March 2004 received a very good response from members as well as institutions.

The debt segment has taken rigorous efforts to encourage empanelment from more institutions for BSE members. The same has resulted in some leading banks like Bank of India beginning to actively participate in the Segment.

As a further initiative to invite active participation in the segment, the Limited Trading membership for Debt Segment was launched after due SEBI approval. At present, a member has to be a member of the cash segment to be able to deal in Debt segment. However as a result of this new LTM scheme, a new member can approach the Exchange for membership rights exclusively in the Debt segment, without being a member of the Cash segment.

Since over a year now, the segment has been publishing Zero Coupon Yield Curve (ZCYC) as a benchmark rate on a daily basis. As a further initiative to launch new products the Exchange launched the BSE Inter bank bid and offer rate (BiBID BIBOR) on January 12, 2005. The objective of launching the BIBOR is to provide a benchmark or reference rate for short-term interest rates namely the rate of interest at which (acceptable credit quality) banks can borrow funds from other banks, in marketable size in the Mumbai interbank market. These rates are spot rates prevalent at the time of quoting. The rate is intended for use as a benchmark for IRS, FRAs, bonds/NCDs & term deposits.

The BIBOR is based on the offered inter-bank lending rates contributed by a predetermined panel of call market participants, that is constituted of 30 leading market practitioners active in the inter-bank money market.

Membership

The Exchange efforts to enroll deposit based membership met with considerable success during the year with 50 new trading members. Auctions of card based membership also evinced strong interest with 15 members joining the Exchange. The larger reach achieved by the new enrolment partly contributed to the increased market share achieved during the year. It is interesting to note that subsidiaries of as many as 15 regional exchanges of the country are members of the BSE, with 14 of them actively trading on the Exchange. During the year, the membership of ISE Securities and Services Limited (a subsidiary of the Interconnected Stock Exchange of India Limited) was also activated.

In keeping with the Exchanges strategy of tapping into the significant potential of the markets outside Mumbai, the Exchange has established Regional Service Centres at Delhi, Kolkata, Kochi and Chennai. For providing cost-effective terrestrial connectivity, regional hubs have also been set up at Delhi, Kolkata, Chennai, Jaipur, Ahmedabad, Kochi, Rajkot and Bangalore. Plans are afoot to establish a hub at Hyderabad as well.

A detailed induction programme is being formulated for new members. Like-wise training programmes for members and their staff on risk management systems have also been drawn up and will be rolled out during the year. Plans are also on the cards to establish an integrated Contact Centre for resolution of all issues relating to members and significant efforts have been made in this regard. membership@bse, a monthly newsletter tailor made for members has been launched. The purpose of the initiative is to update the members on a regular basis with the developments in trie capital markets in general and exchange in particular. The newsletter has been well received.

On July 9, 2005, the Exchange celebrated its I 3 1st Foundation Day. On the occasion, a get-together and a mock open outcry session was organized at the International Convention Centre, which was used as the trading ring prior to the introduction of screen-based trading. It was a nostalgic evening with members enthusiastically recreating the excitement and fervour of open out-cry trading. Doubtless, demutualisation and corporatisation will bring about fundamental structural changes in the operation of the Exchange. However, even under the new dispensation, the Exchange will continue to cherish and value its close professional relationship with the member-brokers. Access to the immense domain of the trading members will contribute to the Exchanges quest for larger market share in the days to come.

Knowledge Management - BSE Training Institute (BTI) BSE Training Institute (BTI) is a premier facility in financial and capital market training and is very popular among market participants viz. intermediaries, financial institutions, banks, corporates, etc. The infrastructure of the institute in terms of space and other facilities was significantly strengthened during the year. The programmes conducted by the Institute during the year covered a wide range of subjects including commodity trading, venture capital & private equity finance, business forecasting and valuation. During the year, 183 programmes were conducted with more than 6100 persons participating. The Institutes certification programmes evinced strong interest with more than 5,100 persons taking the examination. During the year, BTI introduced an on-line examination for a Basic Course on Stock Markets.

The Institutes International Programme on Financial Markets conducted in November - December 2004 was extremely well received. In collaboration with the Korean Asset Management Company Limited, the Institute organized an International Programme on Asset Management and Non Performing Loans in April 2005 which was rated well. To meet the specific needs of reputed corporate and leading financial institutions, BTI formulated tailor made customer-specific programmes. Feedback from the participants indicates that the programmes were educative and useful. BTI continues to collaborate with various colleges and leading management institutes for developing training programme related to capital markets.

As the premier and oldest Exchange in the country, BSE has been playing a pivotal role in imparting knowledge and training relating to capital markets through BTI. The Exchange is committed to this crucial developmental role.

Investor Services

The Exchange conducted over 185 Investor Awareness Programmes during the year as a part of the Exchanges efforts to create and enhance awareness about safe investment practices in the stock markets. So far, BSE has conducted over 460 Investors Awareness Programmes in several States. During the year the Exchange also participated in investor exhibitions organised by various Investors Associations.

The Exchange redressed more than 12,300 complaints of investors against various issuers and over 360 complaints against member brokers and sub-brokers. Disputes between members and constituents numbering more than 200 were resolved through arbitration. The monthly visits to the Exchange by the representatives of leading Registrars and Transfer Agents enabled expeditious redressal of grievances. The Exchange also enhanced the infrastructure at its Investor Service Centres (ISC) at Ahmedabad, Delhi, Kochi and Kolkata. A new centre was added at Chennai recently. There are plans to open a centre at Rajkot.

The Exchange is guided by its abiding commitment to investor protection. BSE disbursed Rs.48.5 million to various investors in respect of their claims against Defaulter Brokers, partly out of the assets of the defaulting brokers and the balance Rs. 14.5 million from the Investor Protection Fund.

International Relations

As Indias biggest bourse, in terms of listed companies and market capitalisation, the Exchange also plans to establish a strong global presence and play a leading role in the international capital markets. Currently, BSE is the worlds fifth largest exchange in terms of the number of transactions. It is also the second Stock Exchange in the world to be certified under BS7799 Standards.

Shri Rajnikant Patel, the Executive Director and CEO of the Exchange is a Member of the Working Committee of World Federation of Exchanges (WFE) and the Chairman of South Asian Federation of Exchanges (SAFE).

South Asian Federation of Exchanges (SAFE) is a forum launched by bourses in South Asia to promote the development of securities markets in the region. The inception of SAFE marks an important milestone in the march of South Asian capital markets towards regional and global integration.

The members of SAFE work towards common standards including international accounting standards and best business practices in capital markets. SAFE represents its members in related international forums, encourages cross-border listings, co-operates in human resource development, facilitates technology transfer among members and addresses other issues of common interest.

SAFE encompasses 12 exchanges from the Asian region viz Chittagong Stock Exchange, Colombo Stock Exchange, Dhaka Stock Exchange, Islamabad Stock Exchange, Karachi Stock Exchange, Lahore Stock Exchange, Mauritius Stock Exchange, National Stock Exchange of India, Nepal Stock Exchange, OTC Exchange of India, Royal Securities Exchange of Bhutan and The Stock Exchange, Mumbai.

In the year 2004 the SAFE was chaired by Mr. Syed Asim Zafar, Chairman, Lahore Stock Exchange and Dr. Manoj Vaish ED & CEO, BSE was the Vice Chairman of SAFE.

For the present year 2005, BSE again represents SAFE in a major way where Shri Rajnikant Patel, ED & CEO, BSE is the Chairman of SAFE and Mr. Abdul Waheed Jan, Chairman, Islamabad Stock Exchange is the Vice -Chairman.

The World Federation of Exchanges, formerly FIBV - International Federation of Stock Exchanges, is the trade organization for regulated securities and derivative markets, settlement institutions and related clearing houses, and their diverse services to capital.markets.

The Federation is a private international organization comprised of the operators of the worlds leading markets, which are committed to the highest levels of market quality. It provides a forum for communication, analysis and debate among members. Its purpose is to facilitate the representation, development of organized and regulated markets, and to meet the needs of evolving capital markets in the best interest of their users.

Today WFE membership encompasses 54 exchanges from all over the world. Members together account for over 97 % of world stock market capitalization and most of its exchange- traded futures, options, listed investment funds and bonds. The combined market capitalization of the markets these exchanges operate is around $35,000 billion. There are a further 23 affiliates, and 34 bourses which are correspondents.

Membership of the World Federation of Exchanges identifies an exchange as having assumed the commitment to prescribed business standards, recognized as such by members, owners, and users of exchanges, as well as by regulators and supervisory bodies. The World Federation of Exchanges is a central reference point for the securities industry and for exchanges themselves. It offers member guidance in their business strategies and in the improvement and harmonization of their management practices. The Federation also works with public authorities and helps promote informed use of markets.

The Federation regularly holds committee meetings, general assemblies, and conferences. For the first time the 45th General Assembly and Annual Meeting of World Federation of Exchanges is being jointly hosted by Bombay

Stock Exchange and National Stock Exchange of India Ltd. from Oct 31- Nov 04, 2005 in Mumbai and Jaipur.

Throughout the year, BSE was visited by a number of professionals, diplomats, members of international regulatory agencies, stock exchanges, Flls etc to obtain an overview of the Indian Capital Market and to understand the role and the workings of the Exchange.

Some of the prominent visitors during the year included Mr. Ester Saverson, Jr., Assistant Director, United States Securities & Exchange Commission, USA, Mr. Robert D. Strahota, Assistant Director, United States Securities & Exchange Commission, Mr. Steven Silberstein, M.D., Global Equities Technology, Lehman Brothers, Mr. Andy Corcoran, Executive Director, Operations, Lehman Brothers, London, Mr. M. M. Abdul Raheem, Consul General of Sri Lanka, Mr. Evan Byah, Senator, USA, Mr. Steve Howard, Secretary, Global Foundation, Australia, Mr. Jim Richmann, Principal Architect, Intel Corporation, Ms. Corinna Leung, Vice President, Morgan Stanley, Ms. Lisa Kwan, Head of Derivatives, Morgan Stanley, Mr. Tom Torgerson, U.S. Treasury, Mr. David McKinnon, Counsellor (Commercial) & Sr. Trade Commissioner, USA, Ms. Ping M Kitnikone, Consul General Canada, Mr. Hyosuke Yasui, Consul General of Japan, Prof. Eisuke Sakakibara, Keio University, Japan, Mr. Shahid Gaffar, Commissioner, Securities & Exchange Commission of Pakistan, Mr. Asim Jung, Managing Director, National Commodity Exchange Ltd., Karachi, Mr. Herman Merckz, Consul General of Belgium, Mr. Domnique Dreyer, Ambassador of Switzerland, Mr. Thomas Jackamo, ED, UBS Investment Bank, Hong Kong, Ms. Jane Hemstritch, Managing Director, Accenture Australia Ltd, Mr. David Murray, Chief Executive Officer, Commonwealth Bank of Australia, Mr. David Miles, Chairman, The Global Foundation, Australia Mr Garry Mackrell, Head of International Financial Services, Commonwealth Bank of Australia, Mr. Harrison Young, Chairman, Morgan Stanley, Australia, Mr. John McCarthy, Australian High Commissioner to India.

Human Resources Development

The Exchange is on the threshold of change with its corporate structure undergoing transformation on account of corporatisation and demutualisation. In recognition of this, considerable focus was brought to the task of formulating appropriate HR policies and processes. Training programmes for improvement in productivity and motivation were conducted covering employees across grades. Large-scale job rotations were implemented for competency development and knowledge enhancement. Re-engineering of business processes at various departments was carried out to achieve higher levels of alignment with corporate goals. An internal newsletter (expressions@bse) introduced during the year provided the employees with a ready platform for self expression and exchange of views.

Governance

During the period under review, few changes took place in the Board level positions.

Dr. Manoj Vaish, resigned from the office of Executive Director & CEO, effective 14th September 2004. Subsequently, Shri Rajnikant Patel was appointed as the Executive Director & CEO on 27th September, 2004.

Among the Public Representatives, Shri R. Gopalakrishnan resigned on 23rd March, 2005.

The Securities & Exchange Board of India has approved the continuation of Elected Members and Public Representatives on the Governing Board of the Exchange to be continued till the Due Date i.e. 19th August, 2005 fixed by the Governing Board under the BSE (Corporatisation & Demutualisation) Scheme,2005.

Among the elected members, while Shri Bhanubhai G. Fozdar resigned with effect from 5th August, 2005, all other elected members will continue to remain on the Board till the Due Date mentioned in the Corporatisation & Demutualisation Scheme i.e. August 19, 2005.

In the Governing Council of the Derivatives Segment, Dr. Manoj Vaish has been replaced by Shri Rajnikant Patel, Executive Director & CEO. Among the Public Representatives Shri P. P. Vora was appointed on the Governing Council on the I 3th April, 2004.

In the Clearing Council of the Derivatives Segment, Shri S. Jambunathan was appointed as Public Representative with effect from 13th April, 2004.

Acknowledgements

The Board places on record its sincere appreciation of the services of the outgoing members of the Governing Board, namely Shri R. Gopalakrishnan (Public Representative) and Shri Bhanubhai G. Fozdar (Elected Member), and the outgoing ED & CEO Dr. Manoj Vaish, who made significant contributions to the development of BSE during their tenure. In the dynamic capital market scenario, the guidance of the Securities and Exchange Board of India, Ministry of Finance, Government of India, Reserve Bank of India and Government of Maharashtra has been extremely valuable, which the Board gratefully acknowledges. The Board places on record its gratitude for the support the Exchange has received from the regulators and the Government in its efforts to renew itself and chart for itself a new path of growth. The Board also places on record its appreciation of the commitment of the Exchanges officers and staff and the valuable contribution by trading members over the years. The Board looks forward to a new era of growth and vibrancy for the Exchange as a corporate entity in the years to come.

S. Jambunathan Chairman Place - Mumbai Date - 11th August, 2005.