Chilli Teja Product Note

CHAPTER 1 - TRADING PARAMETERS ..................................................................................... 3

Authority ....................................................................................................................................... 3
Unit of Trading.............................................................................................................................. 3
Months Traded In ......................................................................................................................... 3
Tick Size ........................................................................................................................................ 3
Basis Price .................................................................................................................................... 3
Unit for Price Quotation .............................................................................................................. 3
Hours of Trading .......................................................................................................................... 3
Last Day of Trading...................................................................................................................... 3
Mark to Market .............................................................................................................................. 3
Position limits............................................................................................................................... 3
Margin Requirements .................................................................................................................. 4
Additional/Special Margin ........................................................................................................... 4
Pre-Expiry Margin ........................................................................................................................ 4
Delivery Margin ............................................................................................................................ 4
Penalty for default ........................................................................................................................ 4
Arbitration ..................................................................................................................................... 5
Compliance of Laws .................................................................................................................... 5
CHAPTER 2 - DELIVERY PROCEDURES ................................................................................... 6
Unit of Delivery ............................................................................................................................. 6
Delivery Size ................................................................................................................................. 6
Delivery Requests ........................................................................................................................ 6
Delivery Allocation ....................................................................................................................... 6
Actual Delivery ............................................................................................................................. 6
Approved Warehouse .................................................................................................................. 7
Description of Commodity .......................................................................................................... 7
Quality Standards ........................................................................................................................ 7
Packaging ..................................................................................................................................... 7
Standard Allowances ................................................................................................................... 7
Weight ........................................................................................................................................... 7
Good / Bad delivery Norms ......................................................................................................... 7
Chilli Teja Sampling ..................................................................................................................... 7
Empanelled Assayer .................................................................................................................... 8
Quality Testing Report ................................................................................................................ 8
Testing Procedure........................................................................................................................ 8
Assayer Certificate....................................................................................................................... 8
Validity Period .............................................................................................................................. 9
Electronic transfer ....................................................................................................................... 9
Charges ......................................................................................................................................... 9
Duties & levies............................................................................................................................ 10
Stamp Duty ................................................................................................................................. 10
Taxes ........................................................................................................................................... 10
Premium / Discount ................................................................................................................... 10
CHAPTER 3 - CLEARING AND SETTLEMENT ......................................................................... 11
Daily Settlement ......................................................................................................................... 11
Daily Settlement Prices ............................................................................................................. 11
Final Settlement Prices ............................................................................................................. 11
Spot Prices ................................................................................................................................. 11
Dissemination of Spot Prices ................................................................................................... 11
Pay in and Pay out for Daily Settlement .................................................................................. 11
Pay in and Pay out for final physical settlement .................................................................... 12
Tender Date -T ............................................................................................................................ 12
Expiry Date ................................................................................................................................. 12
Early Pay-in of Commodities .................................................................................................... 12
Supplementary Settlement for Taxes....................................................................................... 13

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The contents of this product note are subject to Rules, Byelaws and Regulations of NCDEX as in
force from time to time and be read therewith.
 Chilli Teja Product Note

Completion of Settlement on Exchange Platform .................................................................. 13

Exhibit 1 CONTRACT SPECIFICATIONS OF CHILLI TEJA FUTURES CONTRACT .......... 14
Exhibit 2 - Warehouse & Assayer Address Details ................................................................ 20
Exhibit 3 - Good / Bad delivery norms ..................................................................................... 21
Exhibit 4 Specimen of Chilli Testing Report ........................................................................ 22

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The contents of this product note are subject to Rules, Byelaws and Regulations of NCDEX as in
force from time to time and be read therewith.
 Chilli Teja Product Note

CHAPTER 1 - TRADING PARAMETERS

Authority
Trading of Chilli Teja futures may be conducted under such terms and conditions as specified in
the Rules, Byelaws & Regulations of the Exchange. A specimen of Chilli Teja futures contract is
indicated in Exhibit 1.

Unit of Trading
The unit of trading for Chilli Teja shall be 5 Metric Tonnes (MT). Bids and offers may be
accepted in lots of 5 MT or multiples thereof.

Months Traded In
Trading in Chilli Teja futures may be conducted in the months as specified by the Exchange from
time to time.

Tick Size
The tick size of the price of Chilli Teja shall be Rs. 2/-.

Basis Price
The basis price of Chilli teja shall be Chilli Teja Guntur, exclusive of Sales Tax/VAT.

Unit for Price Quotation

The unit of Price quotation for Chilli Teja shall be in Rupees per quintal, basis Chilli traded as
Teja delivery to the NCDEX approved warehouse Guntur, exclusive of Sales Tax/VAT. Quotes
shall not be made on any other price basis.

Hours of Trading
The hours of trading for futures in Chilli shall be as follows:

Mondays through Fridays - 10:00 AM to 5.00 PM

or as determined by the Exchange from time to time.

Last Day of Trading

20th day of the delivery month. If 20th happens to be a holiday, a Saturday or a Sunday then the
due date shall be the immediately preceding trading day of the Exchange, which is other than a
Saturday.

Mark to Market
The outstanding positions in futures contract in Chilli would be marked to market daily based on
the Daily Settlement Price (DSP) as determined by the Exchange.

Position limits
Member-wise: 25,000 MT or 15% of market wide open interest in the commodity, whichever is
higher
Client-wise: 2,500 MT.

Bona fide hedger clients may seek exemption as per approved Hedge Policy of the Exchange
notified vide Circular No. NCDEX/CLEARING-018/2014/228 dated July 22, 2014

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The contents of this product note are subject to Rules, Byelaws and Regulations of NCDEX as in
force from time to time and be read therewith.
 Chilli Teja Product Note

For near month contracts

The following limits would be applicable from 1st of every month in which the contract is due to
expire. If 1st happens to be a non-trading day, the near month limits would start from the next
trading day.

Member-wise: 6,250 MT or One-fourth of the members overall position limit in that commodity,
whichever is higher.

Client-wise: 625 MT.

Margin Requirements
NCDEX will use Value at Risk (VaR) based margin calculated at 99% confidence interval for one
day time horizon. NCDEX reserves the right to change, reduce or levy any additional margins
including any markup margins.

Additional/Special Margin
In case of unidirectional price movement/ increased volatility, an additional/ special margin at
such other percentage, as deemed fit by the Regulator/ Exchange, may be imposed on the buy
and the sell side or on either of the buy or sell sides in respect of all outstanding positions.
Reduction/ removal of such additional/ special margins shall be at the discretion of the
Regulator/ Exchange.

Pre-Expiry Margin
There will be an additional margin imposed for the last 5 trading days, including the expiry day of
the Chilli contract. The additional margin will be added to the normal extreme loss margin and
will be increased by 3% every day for the last 5 trading days including expiry day of the contract.

Delivery Margin
In case of positions materializing into physical delivery, delivery margins will be charged for each
commodity to mitigate the risks arising thereof. The delivery margins charged would be
computed as look ahead period (N days) VaR margins or a fixed percentage delivery margin,
whichever is higher.

For further details, participants can refer to circular no. NCDEX/RISK-004/2013/073 dated March
12, 2013.

Penalty for default

The penalty structure for failure to meet delivery obligations by the sellers is as follows:

Total amount of penalty = 3.0 % + the difference between the Final Settlement Price (FSP) and
the average of three highest of the last spot prices of 5 (five) succeeding days after the expiry of
contract (E+ 1 to E +5 days), if the average spot price so determined is higher than FSP; else
this component will be zero.

The 3.0 % penalty collected as mentioned above shall be used as follows:

a) 1.75 % component of the penalty shall be deposited in the Settlement Guarantee Fund of the
Exchange

b) 1 % component of the penalty shall go to the Buyer who was entitled to receive delivery; and

c) Balance 0.25 % component of penalty shall be retained by the Exchange towards

administrative expenses.

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The contents of this product note are subject to Rules, Byelaws and Regulations of NCDEX as in
force from time to time and be read therewith.
 Chilli Teja Product Note

Buyers defaults are not permitted. The amount due from the buyers shall be recovered from the
buyer as Pay in shortage together with prescribed charges. Exchange shall have right to sell the
goods on account of such Buyer to recover the dues and if the sale proceeds are insufficient, the
Buyer would be liable to pay the balance.

A seller who has got requisite stocks in the Exchange Approved warehouses is not allowed to
default and any such delivery default by seller would be viewed seriously and the Exchange
shall take suitable penal / disciplinary action against such members over and above the
prescribed penalty as enumerated above.

Further, the difference between the FSP and the average spot price (as given above) shall also
go to the buyers. Please refer circular no. NCDEX/TRADING-086/2008/216 dated September
16, 2008 and NCDEX/CLEARING-021/2014/271 dated September 09, 2014.

Arbitration
Disputes between the members of the Exchange inter-se and between members and
constituents, arising out of or pertaining to trades done on NCDEX shall be settled through
arbitration. The arbitration proceedings and appointment of arbitrators shall be as governed by
the Bye-laws and Regulations of the Exchange.

Compliance of Laws
It is clarified that it is the sole obligation and responsibility of the Members and market
participants to ensure that apart from the approved quality standards stipulated by the
Exchange, the commodity deposited / traded / delivered through the approved warehouses of
Exchange is in due compliance with the applicable regulations laid down by authorities like Food
Safety Standard Authority of India, AGMARK, BIS, etc. as also other State/Central laws and
authorities issuing such regulations in this behalf from time to time, including but not limited to
compliance of provisions and rates relating to Sales Tax, Value Added Tax, APMC Tax, Mandi
Tax, LBT, Octroi, Excise duty, stamp duty, etc. as applicable from time to time on the underlying
commodity of any contract offered for deposit / trading / delivery and the Exchange shall not be
responsible or liable on account of any non-compliance thereof.

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The contents of this product note are subject to Rules, Byelaws and Regulations of NCDEX as in
force from time to time and be read therewith.
 Chilli Teja Product Note

CHAPTER 2 - DELIVERY PROCEDURES

Unit of Delivery
The minimum unit of delivery for Chilli Teja shall be 5 MT.

Delivery Size
Delivery is to be offered and accepted in lots of 5 MT net or multiples thereof. Currently, a
quantity variation of +/- 2% is permitted as per contract specification.

Delivery Requests
The procedure for Chilli Teja delivery is based on the contract specifications as per Exhibit I.

All the open positions shall have to be compulsorily delivered either by giving delivery or taking
delivery as the case may be. That is, upon expiry of the contracts, any seller with open
position shall give delivery of the commodity. The corresponding buyer with open
position as matched by the process put in place by the Exchange shall be bound to settle
by taking physical delivery. In the event of default by seller to give delivery, such
defaulting seller will be liable to penalty as may be prescribed by the Exchange from time
to time.

The penalty structure for failure to meet delivery obligations will be as per circular no.
NCDEX/TRADING-086/2008/216 dated September 16, 2008 and NCDEX/CLEARING-
021/2014/271 dated September 09, 2014.

The delivery request for Chilli Teja contracts will be on staggered basis where tender period
would start on the 11th of every month in which the contract is due to expire. In case 11th
happens to be a Saturday, a Sunday or a holiday at the Exchange, the tender period would start
from the next working day. During the Tender period, if any delivery is tendered by seller, the
corresponding buyer having open position and matched as per process put in place by the
Exchange, shall be bound to settle by taking delivery from the delivery center where the seller
has delivered same.

The Buyers and the Sellers need to give their location preference through the NCFE. If the
Sellers fail to give the location preference then the allocation to the extent of his open position
will be allocated to the base location.

Delivery Allocation
The Exchange would compile delivery requests received from members during the Tender
period as specified in Exhibit 1. The buyers / sellers who have to receive / give delivery would be
notified on the same day after the close of trading hours. Delivery of Chilli Teja is to be accepted
by buyer at the NCDEX Approved warehouse where the seller effects delivery in accordance
with the contract specifications. On expiry all outstanding position would be settled by giving /
taking physical delivery.

Actual Delivery
Where Chilli Teja is sold for delivery in a specified month, the seller must have requisite
electronic credit of such Chilli Teja holding in his Clearing Members Pool Account before the
scheduled date of pay in. On settlement the buyers Clearing Members Pool Account would be
credited with the said delivery quantity on pay out. The Clearing Member is expected to transfer
the same to the buyers COMTRACK account. However, the buyer must take actual physical
delivery of Chilli Teja before expiry of the validity date as indicated in the quality test
report/Assayers Certificate of the Assayer.

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The contents of this product note are subject to Rules, Byelaws and Regulations of NCDEX as in
force from time to time and be read therewith.
 Chilli Teja Product Note

Approved Warehouse
NCDEX has approved warehouses for receipt and delivery of chilli Teja. Chilli Teja will only be
received at and delivered from the NCDEX Approved warehouse. The details of the NCDEX
Approved warehouses are as per Exhibit 2.

The Chilli Teja received at the NCDEX Approved warehouse will be tested and certified by
NCDEX empanelled Assayer as appointed by the warehouse service provider before
acceptance as good delivery in the warehouse. Likewise, Chilli Teja delivered to buyers will be
from the NCDEX Approved warehouse only.

Description of Commodity
Chilli whole means the dried ripe fruits or pods of the Capsicum annum L & Capsicum frutescens
L. The product shall be free from extraneous colouring matter, coating of mineral oil and other
harmful substances.

Quality Standards
The contract grade for delivery of Chilli Teja futures contracts made under NCDEX regulations
shall be Chilli Teja conforming to the quality specification indicated in contract specifications at
Exhibit 1. No lower grade shall be accepted in satisfaction of contracts for futures contract
delivery. Delivery of higher grade would be accepted.

Packaging
Chilli Teja delivered shall be packed in new, unmended jute bags in merchantable condition. The
packaging will be on 40 Kgs/ 35 Kgs net basis. Weight of the bag ideally should be 1 Kg for 40
kg and 800 gms for 35 Kg bag.

Standard Allowances
Standard allowance deducted per validation of quality on account of sampling, spillage, etc. will
be 0.5%.

Weight
The quantity of Chilli Teja received and / or delivered at the NCDEX approved warehouse would
be determined / calculated by the weighbridge / weigh scale at the premises of the designated
warehouse and the quantity so determined would be binding on all parties. The weight of the
bag will be 40/35 Kg Net.

Good / Bad delivery Norms

Chilli Teja delivery in NCDEX approved warehouse would constitute good delivery or bad
delivery based on the good / bad delivery norms as per Exhibit 3. The list contained in Exhibit 3
is only illustrative and not exhaustive. NCDEX would from time to time review and update the
good / bad delivery norms retaining the trade / industry practices.

Chilli Teja Sampling

Out of each lot, 50% of the bags at random would be sampled by cutting open the
gunnies at various places on the bags without adhering to any fixed pattern.
10% of the remaining 50% bags would be cut open completely to get a clear view of the
quality of the pods. If any bag among these randomly picked 10% of the bags contains
unusually high amount of seeds, only stalks, fungal infected pods, live infestation or any
pattern that indicates poor quality of stocks, the entire lot would be rejected outright.
If no such pattern is observed and the contents are found fit for lab testing, samples
would be collected from these 10% of the bags Sample portions so drawn will be
packed in clean dry container or plastic sachets. The samples shall be marked specially

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The contents of this product note are subject to Rules, Byelaws and Regulations of NCDEX as in
force from time to time and be read therewith.
 Chilli Teja Product Note

so as to recognize NCDEX member identity, quantity, date, etc. Composite sample be

would be taken from samples collected from 50% of bags which were opened.
Composite sample will be divided into four parts and distributed as under. Size of each
sample for distribution would be approximately 1kg

- One sample to depositor

- One sample to Warehouse

-One sample to Analysis at Assayer Lab

-One sample for record with Assayer

TESTING:

1. For all fresh deposits sampling shall be carried out from 50% of the bags i.e. a composite
sample shall be prepared out of samples taken from approximately 72 bags in case of 35
kgs packing and 63 bags in case of 40 kg packing.
2. Pods if Damaged & Discolored shall only be considered under the quality parameter
unripe & marked Pods.
3. Bright red sound pods (with or without stalks) if broken shall be considered under
the quality parameter Broken Chillies.
4. Only seeds outside pods shall be considered under the quality parameter Loose
Seeds.
5. 'Foreign Matter shall include all extraneous matters including calyx pieces and loose
stalks; where ever applicable, borderline cases should be considered in a very
conservative way.

Empanelled Assayer
NCDEX has empanelled the Assayer for quality testing and certification of Chilli Teja. The quality
testing and certification of Chilli Teja will be undertaken only by the empanelled Assayer. The
assayer details are given in the Exhibit 2.

Quality Testing Report

The test report issued by the Chilli Teja testing laboratory on the samples drawn shall be
acceptable and binding on all parties.

Testing Procedure
Testing for Chilli Teja shall be carried out under BIS standard IS 2322 (1998) for quality
parameters as per contract specifications, i.e, colour, size, broken Chillies, loose seeds, unripe
& marked fruits, insect damaged matter and foreign matter.

Moisture testing shall be done chemically in the laboratory by toluene distillation method.

Pungency testing shall be done in the laboratory by ASTA method 21.3.

Assayer Certificate
Testing and quality certificate issued by NCDEX empanelled Assayer for Chilli Teja delivered at
NCDEX approved warehouses in Guntur shall be acceptable and binding on all parties.

8 / 22
The contents of this product note are subject to Rules, Byelaws and Regulations of NCDEX as in
force from time to time and be read therewith.
 Chilli Teja Product Note

Validity Period
The validity period of the Assayers Certificate for Chilli Teja will be as mentioned below:

Months of Deposit Expiry period Validity period How many times

/ Date of entry & from the date of at the time of revalidations
completion of assaying by Fresh Deposit fresh deposit allowed
warehouse in system (no. of months) (no of months)
(Jan -Dec)*

Jan 0 0 0
Feb 4 4 0
March 4 4 0
April 4 4 0
May 4 4 0
June 4 4 0
July 4 4 0
August 4 4 0
September 4 4 0
October 3 3 0
November 2 2 0
December 1 1 0

*20th of previous month to 19th of the current month as mentioned in the table above

The stock of Chilli Teja deposited in the Exchange Approved warehouses shall necessarily be
removed after the Validity Period as indicated above and continuation of the storage beyond
Validity Period shall be entirely a private arrangement between the Warehouse and the
depositor/beneficiary holder. The Exchange shall not be responsible in any manner whatsoever
for those stocks which have not been received by any Buyer through an immediate preceding
settlement on the Exchange platform and for those stocks which have crossed the Validity
Period.

Electronic transfer
Any buyer or seller receiving and or effecting Chilli Teja would have to open a COMTRACK
account with an NCDEX empanelled COMTRACK Participant (CP) to hold the Chilli Teja in
electronic form. On settlement, the buyers account with the CP would be credited with the
quantity of Chilli Teja received and the corresponding sellers account would be debited. The
Buyer wanting to take physical delivery of the Chilli Teja holding has to make a request in
prescribed form to his CP with whom COMTRACK account has been opened. The CP would
route the request to the warehouse for issue of the physical commodity i.e. Chilli Teja to the
buyer and debit his account, thus reducing the electronic balance to the extent of Chilli Teja so
withdrawn.

Charges
All charges and costs payable at the Approved warehouse towards delivery of Chilli Teja
including sampling, grading, weighing, handling charges, storage etc. from the date of receipt
into Approved warehouse up to date of pay in & settlement shall be paid by the seller.

No refund for warehouse charges paid by the seller for full validity period shall be given to the
seller or buyer for delivery earlier than the validity period.

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The contents of this product note are subject to Rules, Byelaws and Regulations of NCDEX as in
force from time to time and be read therewith.
 Chilli Teja Product Note

All charges and costs associated & including storage, handling etc. after the payout shall be
borne by the buyer. Warehouse storage charges will be charged to the member/ client by the
respective COMTRACK Participant.

The Assayer charges for testing and quality certification should be paid to the Assayer directly at
the delivery location either by cash/ cheque/ demand draft.

Duties & levies

All duties, levies etc. up to the point of sale will have to be fully borne by the seller and shall be
paid to the concerned authority. All related documentation should be completed before delivery
of Chilli Teja into approved Warehouses.

Stamp Duty
Stamp duty is payable on all contract notes issued as may be applicable in the State from where
the contract note is issued or State in which such contract note is received by the client.

Taxes
Service Tax
Service tax will be payable by the members of Commodity Exchanges on the gross amount
charged by them from their clients on account of dealing in commodities.

Sales Tax / VAT

Local taxes/ VAT wherever applicable is to be paid by the seller to the sales tax/VAT authorities
on all contracts resulting in delivery. Accordingly the buyer will have to pay the taxes/VAT to the
seller at the time of settlement. Members and / or their constituents requiring to receive or deliver
Chilli Teja should register with the relevant tax/VAT authorities of the place where the delivery is
proposed to be received / given. In the event of sales tax exemption, such exemption certificate
should be submitted before settlement of the obligation. There will be no exemptions on account
of resale or second sale in VAT regime.

Premium / Discount
Quality Premium/Discount

There is no quality premium & discount applicable for Chilli Teja.

Location Premium/Discount

Location Premium/ Discount will be notified by the Exchange from time to time.

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The contents of this product note are subject to Rules, Byelaws and Regulations of NCDEX as in
force from time to time and be read therewith.
 Chilli Teja Product Note

CHAPTER 3 - CLEARING AND SETTLEMENT

Daily Settlement
All open positions of a futures contract would be settled daily based on the Daily Settlement
Price (DSP).

Daily Settlement Prices

The Daily Settlement Price (DSP) will be as disseminated by the Exchange at the end of every
trading day. The DSP will be reckoned for marking to market all open positions.

Final Settlement Prices

The Final Settlement Price (FSP) will be determined by the Exchange upon maturity of the
contract. All open positions on the expiry day of the contract would result in compulsory delivery.

The Final Settlement Price (FSP) shall be arrived at by taking the simple average of the last
polled spot prices of the last three trading days viz., E0 (expiry day), E-1 and E-2. In the event of
the spot prices for any one of the E-1 and E-2 is not available; the spot price of E-3 would be
used for arriving at the average. In case the spot prices are not available for both E-1 and E-2,
then the average of E0 and E-3 (two days) would be taken. If all the three days prices viz., E-1,
E-2 and E-3 are not available, then only one days price viz., E0 will be taken as the FSP.

The Settlement Price for any delivery allocation during staggered period (i.e. up to one day prior
to expiry) would be the last available spot price displayed by the Exchange for the respective
contract.

Spot Prices
NCDEX will announce / disseminate spot prices for Chilli Teja relating to the designated delivery
center and specified grade/ quality parameters determined through the process of polling a set
of market participants representing different segments of the value chain.

The polled prices shall be input to a normalizing algorithm (like bootstrapping technique) to
arrive at a representative, unbiased and clean benchmark spot price for Chilli Teja. The security
of data and randomness of polling process will ensure transparency and correctness of prices.
The Exchange has absolute right to modify the process of determination of spot prices at any
time without notice.

Dissemination of Spot Prices

Spot prices for Chilli Teja will be disseminated on daily basis.

Pay in and Pay out for Daily Settlement

The table below illustrates timings for pay in and pay out in case of daily settlement. The buyer
clients would have to deposit requisite funds with their respective Clearing Member before pay
in.

All fund debits and credits for the Member would be done in the Members Settlement Account
with the Clearing bank.

Time (T+1) Activity

On or before 9.30 hrs PAYIN - Debit paying member a/c for funds
After 13.00 hrs PAYOUT Credit receiving member a/c for funds

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The contents of this product note are subject to Rules, Byelaws and Regulations of NCDEX as in
force from time to time and be read therewith.
 Chilli Teja Product Note

Pay in and Pay out for final physical settlement

The table below illustrates timings for pay in and pay out in case of positions marked for physical
settlement. The buyers / sellers would have to deposit requisite funds/ Chilli with their respective
Clearing member before pay in.

Pay in and Pay out for Final Settlement in case of physical deliveries
Time (T/E+2) Activity
On or before 12.00 hrs PAYIN
- Debit Buyer Member Settlement a/c for funds
- Debit Seller Members CM Pool Account for Chilli
After 14.30 hrs PAYOUT
- Credit Seller Member Settlement a/c for funds
- Credit Buyer Members CM Pool Account for Chilli

Tender Date -T
Tender period:

The tender period would start on the 11th of every month in which the contract is due to expire. In
case 11th happens to be a Saturday, a Sunday or a holiday at the Exchange, the tender period
would start from the next working day.

Pay-in and Pay-out: On a T+2 basis. If the tender date is T then, pay-in and pay-out would
happen on T+2 day (excluding Saturday). If such a T+2 day happens to be a Saturday, a
Sunday or a holiday at the Exchange, clearing banks or any of the service providers, Pay-in and
Pay-out would be effected on the next working day.

Additionally the supplemental settlement for Chilli Teja futures contracts for premium / discount
adjustments relating to quality of Chilli Teja delivered, actual quantity delivered and close out for
shortages, will also be conducted on the same day. Clearing Members are required to maintain
adequate fund balances in their respective accounts.

Pay in and Pay out for supplemental settlement

Time (T/E + 2) Activity
On or before 15.00 hours PAY IN - Debit Member Settlement a/c for funds
After 15.00 hours PAY OUT Credit Member Settlement a/c for funds

Expiry Date
20th day of the delivery month. If 20th happens to be a holiday, a Saturday or a Sunday then the
due date shall be the immediately preceding trading day of the Exchange.

The settlement of contract would be by a staggered delivery system of Pay-ins and Payouts
including the Last Pay-in and Pay-out which would be the final settlement of the contract.

Early Pay-in of Commodities

Members can make an early pay-in of commodities to get exemption from the applicable pre-
expiry and delivery margin and the same would be considered for the purpose of adjustment
against their settlement obligations. The member shall mark EPI using the NCFE web
application. The user guide for the same is available for download under:-

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The contents of this product note are subject to Rules, Byelaws and Regulations of NCDEX as in
force from time to time and be read therewith.
 Chilli Teja Product Note

NCFE Menu: Downloads-> Download files-> Under User Manual folder-> EPI user guide

Supplementary Settlement for Taxes

The Exchange will conduct a separate supplementary settlement, as illustrated below, three
days after normal pay-out for completion of tax transactions.

In order to facilitate issue of invoice to right parties, the buyer Clearing Members are required to
give the buyer client details to the Exchange latest by 15.00 hours on E+3 day failing which the
buying member is considered as the end buyer and accordingly invoice is issued in his/their
name.

The Seller Clearing Members are required to give the seller client details to the exchange latest
by 15.00 hours on E+4 day.

The amounts due to the above differences will be debited / credited to Members clearing bank
account similar to normal settlement.

Pay in and Pay out for Taxes

Time (T/E + 5) Activity
On or before 11.00 hours PAY IN: Debit Buyer Member Settlement a/c for funds.
After 11.00 hours PAY OUT: Credit Seller Member Settlement a/c for funds

For further clarification and detailed procedure on sales tax settlement, participants can refer to
circular number NCDEX/CLEARING-001/2008/002 issued on January 04, 2008.

Completion of Settlement on Exchange Platform

The settlement obligations on the Exchange platform shall be deemed to be completed as per
the provisions of the Rules, Bye-laws and Regulations of the Exchange and the circulars issued
by the Exchange thereunder from time to time.

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The contents of this product note are subject to Rules, Byelaws and Regulations of NCDEX as in
force from time to time and be read therewith.
 Chilli Teja Product Note

Exhibit 1 CONTRACT SPECIFICATIONS OF CHILLI TEJA FUTURES CONTRACT

(Applicable for contracts expiring in March 2016 and thereafter)
(Updated on February 19, 2016)

Type of Contract Futures Contract

Name of commodity Chilli Teja

Ticker symbol CHILLI

Trading system NCDEX Trading System

Basis Chilli Teja Guntur exclusive of Sales Tax/VAT

Unit of trading 5 MT

Delivery unit 5 MT

Maximum order size 250 MT

Quotation/Base value Rs. Per Quintal

Tick size Rs. 2

Chilli Teja

Colour Bright Red

Length

Not less than 4 cms

Chillies less than 4 cms will be allowed to a maximum

of 5% by weight

Moisture should not be more than 11%

Quality specification
Foreign matter should not be more than 1%

Broken Chillies should not be more than 3.5%*

Loose seeds should not be more than 0.9%**

Unripe and marked fruits should not be more than 1.9%**

Insect damaged matter should not be more than 1%

Capsaicin content should not be less than 60,000 SHU

The contents of this product note are subject to Rules, Byelaws and Regulations of
NCDEX as in force from time to time and be read therewith.
-14-
 Chilli Teja Product Note

*Tolerance up to 0.5% of the above limit only in the outbound deliveries

will be allowed;

**Tolerance up to 0.1% of the above limit only in the outbound deliveries

will be allowed

Quantity variation +/- 2%

Delivery center Guntur (up to the radius of 50 Kms from the municipal limits)

Khammam (up to the radius of 50 Kms from the municipal limits)

Additional delivery centre
Location Premium/ Discount as notified by the Exchange from time to
time.

As notified by the Exchange from time to time, currently:

Hours of Trading Mondays through Fridays: 10.00 A.M. to 5 P.M.

The Exchange may vary above timing with due notice.

Delivery Logic Compulsory Delivery

Trading in any contract month will open on the 1st day of the month. If
Opening of contracts 1st happens to be a non-trading day, contracts would open on the next
trading day

Tender Date T

Tender Period: The tender period shall start on 11th of every month in
which the contract is due to expire. In case 11th happens to be a
Saturday, a Sunday or a holiday at the Exchange, the tender period
would start from the next working day.
Tender Period
Pay-in and Pay-out:

On a T+2 basis. If the tender date is T, then pay-in and pay-out would
happen on T+2 day (excluding Saturday). If such a T+2 day happens
to be a Saturday, a Sunday or a holiday at the Exchange, clearing
banks or any of the service providers, pay-in and pay-out would be
effected in the next working day.

Clearing and settlement of contracts will commence with the

commencement of Tender Period by compulsory delivery of each open
position tendered by the seller on T + 2 to the corresponding buyer
Closing of contract matched by the process put in place by the Exchange.

Upon the expiry of the contract all the outstanding open position shall
result in compulsory delivery.

The contents of this product note are subject to Rules, Byelaws and Regulations of
NCDEX as in force from time to time and be read therewith.
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 Chilli Teja Product Note

Expiry date of the contract:

20th day of the delivery month. If 20th happens to be a holiday, a

Saturday or a Sunday then the due date shall be the immediately
Due date / Expiry date preceding trading day of the Exchange, which is other than a Saturday.

The settlement of contract would be by a staggered system of Pay-in

and Pay-out including the Last Pay- in and Pay-out which would be the
Final Settlement of the contract.

Upon expiry of the contracts all the outstanding open positions shall
result in compulsory delivery.

During the Tender period, if any delivery is tendered by seller, the

corresponding buyer having open position and matched as per process
put in place by the Exchange, shall be bound to settle by taking
Delivery Specification delivery on T + 2 day from the delivery center where the seller has
delivered same.

The penalty structure for failure to meet delivery obligations will be as

per circular no. NCDEX/ TRADING-086/2008/216 dated September 16,
2008 and NCDEX/CLEARING-021/2014/271 dated September 09,
2014.

The Final Settlement Price (FSP) shall be arrived at by taking the

simple average of the last polled spot prices of the last three trading
days viz., E0 (expiry day), E-1 and E-2. In the event of the spot prices
for any one of the E-1 and E-2 is not available; the spot price of E-3
Final Settlement Price would be used for arriving at the average. In case the spot prices are
not available for both E-1 and E-2, then the average of E0 and E-3 (two
days) would be taken. If all the three days prices viz., E-1, E-2 and E-3
are not available, then only one days price viz., E0 will be taken as the
FSP.

No. of active contracts As per Launch calendar

Daily price limit is (+/-) 2%. Once the 2% limit is reached, then after a
period of 15 minutes this limit shall be increased further by 2%. The
trading shall be permitted during the 15 minutes period within the 2%
limit. After the DPL is enhanced, trades shall be permitted throughout
the day within the enhanced total DPL of 4%.
Daily Price Limit (DPL)
The DPL on the launch (first) day of new contract shall be as per the
circular no. NCDEX/RISK-027/2011/284 dated September 15, 2011.

The contents of this product note are subject to Rules, Byelaws and Regulations of
NCDEX as in force from time to time and be read therewith.
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 Chilli Teja Product Note

Member-wise: 25,000 MT or 15% of market wide open interest in the

commodity, whichever is higher

Client-wise: 2,500 MT.

Bona fide hedger clients may seek exemption as per approved Hedge
Policy of the Exchange notified vide Circular No. NCDEX/CLEARING-
018/2014/228 dated July 22, 2014.

Position limits For near month contracts

The following limits would be applicable from 1st of every month in which
the contract is due to expire. If 1st happens to be a non-trading day, the
near month limits would start from the next trading day.

Member-wise: 6,250 MT or one-fourth of the members overall position

limit in that commodity, whichever is higher.

Client-wise: 625 MT.

In case of unidirectional price movement/ increased volatility, an

additional/ special margin at such other percentage, as deemed fit by
the Regulator/ Exchange, may be imposed on the buy and the sell side
Special margins
or on either of the buy or sell sides in respect of all outstanding
positions. Reduction/ removal of such additional/ special margins shall
be at the discretion of the Regulator/ Exchange.

Minimum Initial margin 4%

The contents of this product note are subject to Rules, Byelaws and Regulations of
NCDEX as in force from time to time and be read therewith.
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 Chilli Teja Product Note

Tolerance limit for outbound deliveries:

Commodity Basis Acceptable quality Permissible

Specifications range as per contract Tolerance
specifications

Quality Teja - -

Colour Bright Red - -

Length - - -

Not less than 4 cms - - -

Chillies less than 4 cm 5% max weight - -

will be allowed
Moisture 11% Max - -

Foreign matter 1% Max - -

Broken Chillies 3.5% Max - +0.5%

Loose seeds 0.9% Max - +/-0.1%

Unripe and marked 1.9% - +/- 0.1%

fruits
Max Loss (for all the characteristics) +/- 0.5%

Note: Tolerance limit is applicable only for out bound deliveries. Variation in quality parameters
within the prescribed tolerance limit as above will be treated as good delivery when
members/clients lift the materials from warehouse. These permissible variations shall be based
on the parameters found as per the immediate preceding test certificate given by NCDEX
empanelled assayer.

The contents of this product note are subject to Rules, Byelaws and Regulations of
NCDEX as in force from time to time and be read therewith.
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 Chilli Teja Product Note

Contract Launch Calendar

Contract Launch Month Contract Expiry Month

September 2015 March 2016
October 2015 April 2016
November 2015 June 2016
December 2015 July 2016
January 2016 -
February 2016 -
March 2016 August 2016
April 2016 September 2016
May 2016 -
June 2016 October 2016
July 2016 November 2016
August 2016 December 2016

Members and market participants who enter into buy and sell transactions may please note that
they need to be aware of all the factors that go into the mechanism of trading and clearing, as
well as all provisions of the Exchange's Bye Laws, Rules, Regulations, Product Notes, circulars,
directives, notifications of the Exchange as well as of the Regulators, Governments and other
authorities.

It is clarified that it is the sole obligation and responsibility of the Members and market
participants to ensure that apart from the approved quality standards stipulated by the Exchange,
the commodity deposited / traded / delivered through the approved warehouses of Exchange is
in due compliance with the applicable regulations laid down by authorities like Food Safety
Standard Authority of India, AGMARK, BIS, etc. as also other State/Central laws and authorities
issuing such regulations in this behalf from time to time, including but not limited to compliance of
provisions and rates relating to Sales Tax, Value Added Tax, APMC Tax, Mandi Tax, LBT,
Octroi, Excise duty, stamp duty, etc. as applicable from time to time on the underlying commodity
of any contract offered for deposit / trading / delivery and the Exchange shall not be responsible
or liable on account of any non-compliance thereof.

The contents of this product note are subject to Rules, Byelaws and Regulations of
NCDEX as in force from time to time and be read therewith.
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 Chilli Teja Product Note

Exhibit 2 - Warehouse & Assayer Address Details

Warehouse Address Assayer Address

NCMOWNCOLDGNT
NATIONAL COLLATERAL NATIONAL COLLATERAL
MANAGEMENT SERVICES LIMITED MANAGEMENT SERVICES LIMITED

NCML OWN COLD STORAGE (TESTING & CERTIFYING DIVISION)

SURVEY NO. 504/1, Team Towers, 4th & 5th Floor, Plot No.A-
VILLAGE ANKIREDDYPALEM, 1/2/A-Industrial Park, Opposite-Modern
LALPURAM GRAMA PANCHAYATH, Bread Factory, IDA-Uppal,
NALLAPADU SUB DISTRICT, HYDERABAD- 500 039,
GUNTUR DISTRICT, GUNTUR ANDHRA PRADESH.
PIN CODE - 522005,
ANDHRA PRADESH

CONTACT PERSONS: CONTACT PERSON:

MR.KISHORE CHANDRALA MR. P. SRINIVAS
MOBILE: 08106604466 MOBILE - 093477 82508
MR. M BALA SWAMI BABU TEL:(BOARD)- 040-66374700.
MOBILE: 09393969292 (DIRECT)-040-66374703.
FAX: 022-66466852

For the updated list of Warehouse & Assayers kindly refer to the NCDEX Website
http://www.ncdex.com/ClearingServices/ClearingServicesOthers.aspx

The contents of this product note are subject to Rules, Byelaws and Regulations of
NCDEX as in force from time to time and be read therewith.
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 Chilli Teja Product Note

Exhibit 3 - Good / Bad delivery norms

No. Particulars Good / Bad delivery

1. Quality not meeting futures contract specification. Bad delivery

2. Delivery at non Approved warehouse. Bad delivery

3. Delivery completed but without sampling & testing / Bad delivery

certification / expired validity.

4. Delivery without weight certificate. Bad delivery

5. Weighed at other than recognized by Approved Bad delivery

warehouse/ weigh bridge / weigh scale

6. When sample is not drawn as per sampling norms and Bad delivery
not carried out at the time of unloading

7. Delivery not as per the packaging specification Bad delivery

8. Delivery found contaminated on visual inspection Bad delivery

The contents of this product note are subject to Rules, Byelaws and Regulations of
NCDEX as in force from time to time and be read therewith.
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 Chilli Teja Product Note

Exhibit 4 Specimen of Chilli Testing Report

CERTIFICATE OF QUALITY
Date : _________ Report no.:

NCDEX Member/client :
Commodity :
Lorry No. :
Warehouse name & address:
Lot no.:

QUALITY :

The results of analysis performed by our laboratory of the samples collected by us is stated below :

Test Items Test method Specification Test results

The material delivered by the above NCDEX member is in accordance with the specification provided
bearing grade _____________and valid up to ___________________.
The goods delivered may be accepted / rejected.

Chief Inspector / Authorized Signatory

The contents of this product note are subject to Rules, Byelaws and Regulations of
NCDEX as in force from time to time and be read therewith.
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