Commodity price risk is a financial risk impacting an entity's profitability, due to volatility in commodity prices that are driven by external market forces. Hedging plays a crucial role in the industry today to protect margins and shareholder value by incorporating proper risk management mechanisms. Companies are assessed by shareholders and investors on the basis of how strong their hedging strategy is. Derivative instruments such as forwards, futures, swaps and options are examples of some of the instruments used by companies to mitigate the risk and hedge the physical positions/asset. Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 has mandated listed entities to make disclosures regarding commodity price risk and hedging activities in the Corporate Governance Report section of the Annual Report of a listed entity. SEBI has also prescribed a detailed format for the same making such disclosure an integral part of corporate governance disclosures for easy understanding and appreciation by the shareholders.
Against this backdrop, CII along with National Foundation for Corporate Governance (NFCG – Ministry of Corporate Affairs led initiative) is organising the Series on Commodity Risk Management - a series of 4 sessions on commodity risk and hedging. The series will discuss:
- Corporate Governance and Commodity Risk Management
- Key Board Considerations in Commodity and Hedging Strategy
- Enhanced opportunities for better financial inclusion
- Hedging and Price Risk Management - Introduction of concept, its significance- A Global and Domestic Perspective
- Hedging uncertain time-Managing Price Volatility
- Decoding the Myths on Hedging
- Tax structure and regulatory stipulations for managing commodity price risk
- Hedging- Commodity price risk management solution for Corporates
The 1st Session of the series is scheduled on 18 September 2020 from 1630 to 1800 hrs. The theme for the 1st session would be Hedging and Price Risk management - Concept and it's significance (Global & Domestic Perspective)
Confirmed Guest Speakers as on date sharing their perspective during the 1st Session are as under:
Mr Vijay Kumar V, Managing Director and Chief Executive Officer, National Commodity and Derivatives Exchange(NCDEX)
Mr Rajib Saha, Head Commodity Risk and trade, ITC
Mr Prashant Reddy, Head trading and risk Management, Archer Daniels Midland Company