Update on commodity hedging

Mar’20

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Overview of commodity hedging - YTD FY 19-20 &
FY20-21
• TCL Commodity Risk Management Policy (“RMP”) allows to hedge quarterly exposures of Green Bean export sales as follows:-

‒ Up to 30% when terminal is below the budget

‒ Up to 60% when terminal is above budget

• For FY 19-20, Hedge volumes as on March 09th 2020 stands at 822 MT which is 10% of budgeted sales.

‒ Robusta : 485 MT and Arabica : 337 MT

• For FY 19-20, terminals were mostly soft with an exception of Q3 where prices went up substantially due to draw down of

certified stocks and quality concerns in brazil.

• For FY 20-21, hedge volumes for Q1 – FY21 have been around 654MT which is 8.80 % of budgeted sales.

• ICD hedge operational formalities are in progress and limits are set with the SCB to initiate trades as and when the account is

opened. This process is expected to complete by the end of Q1 FY21.

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 Summary of Green Bean exports hedge for FY 19 -20
Period FY 19/20 Q1 Shipment Q2 Shipment Q3 Shipment Q4 Shipment Total
Summary Of exposure Robusta Arabica Total Robusta Arabica Total Robusta Arabica Total Robusta Arabica Total Robusta Arabica Grand Total
Budgeted Sales(MT) 1552 379 1775 1652 127 1779 1702 162 1864 1469 1133 2602 6375 1800 8175
Percentage of Crop Hedged 10.06%
Allocation

Quantity Assigned Physicals (MT) 126.6 0 126.6 261.6 0 261.6 38.4 0 38.4 59 269 328 485.6 337 822.6

Derivatives Volume 110.00 0 110 260.00 260 40.00 40 50.00 170.00 220 460 170 630

Realized hedge Rate $ 1,491.56 $1,394.56 $ 1,487.77 $ 1,427.27 $ 111.68

Ralized Physical rate $ 1,460.45 $1,382.75 $ 1,317.00 $ 1,364.67 $ 112.51

Summary for FY 19/20 Robusta Hedging

Realized Futures & Options $ 9,286.37 • Q1 Realisation Rate improvement by $31/MT on 126MT,
Realized Physicals $ (8,414.14) • Q2 Realisation Rate improvement by $10/MT on 262MT,
Finance charges $ (466.24) • Q3 Realisation Rate improvement by $170/MT on 38MT
Net hedge P/L $ 405.99 • Q4 Realization rate improvement by $63/MT on 59 MT

Arabica Hedging
• Q4 Realisation Rate decreased by 0.83 cents/LBS on 269 MT,

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 Summary of Green Bean exports hedge for FY 20-21
Period FY 20/21 Q1 Shipment Q2 Shipment Q3 Shipment Q4 Shipment Total

Summary Of exposure Robusta Arabica Total Robusta Arabica Total Robusta Arabica Total Robusta Arabica Total Robusta Arabica Grand Total
Budgeted Sales(MT) 1,379 208 1,587 1,270 105 1,375 1,451 395 1,846 1,400 1,092 2,492 5,500 1,800 7,300
Percentage of Crop Hedged 8.95%
Allocation

Quantity Assigned Physicals

(MT) 380 54 434 380 54 654
Open quantity 80 140 220
Derivatives Volume 370.00 51.00 370 51 421

Realized hedge Rate 1,355 113

Ralized Physical rate 1,310 101

Summary for FY 20/21

Realized Futures & Options $ 30,129.22

Realized Physicals $ (31,462.73) Robusta Hedging

Net Hedge P/L $ (1,333.51) • Q1 Realisation Rate improvement by $45 on 380 MT

Arabica Hedging
Open MTM Summary $ 47,661.34 • Q1 Realisation Rate improvement by 12 cents/LBS on 54 MT
Net futures account bal $ 86,620.69

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Thank you