SPECIAL MONTHLY REPORT ON

Bullions & Energy(September 2014)

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BULLIONS AND ENERGY PERFORMANCE (31st July 2014 - 29th August 2014) (% change)

BULLIONS AND ENERGY PERFORMANCE(Jan 2014 - August 2014) (% change)

0.69

-4.85

-2.93

3.87

0.52

-4.41

-2.37

6.25

-6.00 -4.00 -2.00 0.00 2.00 4.00 6.00 8.00

Gold

Silver

Crude oil

Natural Gas

COMEX/NYMEX MCXSource: Reuters & SMC

-1.37

-3.71

-4.80

-6.87

5.12

0.31

-2.75

-3.55

-8.00 -6.00 -4.00 -2.00 0.00 2.00 4.00 6.00

Gold

Silver

Crude oil

Natural Gas

0 34 5 4 5 4 5 55455

COMEX/NYMEX MCXSource: Reuters & SMC

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BULLIONS

In the month of August bullion counter moved sideways with negative bias tracking stronger greenback and decreased safe haven demand due to improved US economic data. Overall gold traded in range of 27704-29085 in MCX and $1272-1322 in COMEX. Silver traded in range of $19.35-20.63 in COMEX and 41780-44750 in MCX. Geo-political turmoil going in Iraq and Ukraine pushed gold higher due to safe haven demand. On the one hand tension in the Ukraine and Iraq tensions supported its prices while on the other hand decline in physical demand and rise in greenback capped the upside. Speculation that the U.S. central bank would cut stimulus as the economy recovered fueled a 28 percent drop in gold prices last year. According to the FOMC minutes released on Aug. 20 “Some Fed officials were increasingly uncomfortable with the guidance on keeping the benchmark rate low for a considerable time” Borrowing costs have been near zero since December 2008 to spur expansion and cut the jobless rate in the largest economy. Recently improved economic data curbed safe haven appeal of gold. Recently according to the World Gold Council report “physical gold demand remained weak in the second quarter, especially in key markets such as China and India”

In the month of September bullion counter can trade on volatile path as improving US economic data and news that US policy makers may hike interest rates earlier than expected is pressurizing the prices while global geopolitical tensions in Iraq and Ukraine may cap the downside. On domestic bourses the movements of local currency rupee will be key factor to watch out which can move in range of 60-61.30 in the month of September. Gold can trade in range of Rs 27200-28800 in MCX and $1250-1360 in COMEX. Silver can trade in range of 41500-45000 in MCX and $19-20.60 in COMEX. The gold/silver ratio increased from nearly 62 to above 66 recently. This ratio can hover in range of 63-68 in the month of September. The threat of war between Ukraine and Russia, U.S. involvement in the Iraqi conflict and the continued standoff between Israel and Hamas in Gaza have periodically driven demand for safe haven investments, including gold, which tends to benefit from periods of economic or political instability.

Iraq and Ukraine tensions

Ukraine

Gold was also supported by safe-haven bids from geopolitical tensions. Recently leading American senators have called for the US to send weapons to help Ukraine fight what they say is "a Russian B

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invasion". Recently first direct talks between Mr Putin and Ukrainian President Petro Poroshenko in Minsk did not lead to any major breakthrough. The conflict in eastern Ukraine erupted in April following Russia's annexation of Ukraine's southern Crimea peninsula a month before. Some 2,600 people have died since April. The pro-Russian separatists have been gaining ground on Ukrainian forces in recent days, in both the Luhansk and Donetsk regions, and further south around the port of Mariupol. Ukraine and the West blame Russian military support for the recent rebel gains, saying armoured columns have crossed the border. Russia denies military involvement.

Iraq

The militants from the Islamic State in Iraq and Syria were able to storm into Iraq in recent months in part because Sunnis felt so disenfranchised by the Shiite-led government of former Prime Minister Nuri Kamal al-Maliki. If the United States is seen to be strengthening the hand of militias that terrorized Sunnis during the sectarian war of 2006 and 2007, the minority Sunnis might balk at participating in America's long-term goal of a unity government.

Indian gold premiums to stay low in 2014 due to weak demand – refiner

Indian gold premiums will average $3-$4 an ounce over London prices this year, roughly half what they were last year, because of continuing restrictions on imports that will soften demand. Struggling with a high trade deficit, India raised its gold import duty to a record 10 percent last year and made it mandatory to export a fifth of all bullion imports. Gold is India's second-biggest expense on the import bill after oil. The restrictions crimped supply, pushing premiums at one point to about $160 an ounce. Premiums - the difference between local prices and the global benchmark - are a good measure of supply and demand in the market.

Australia's Newcrest sees gold output flat at best in FY2015

Australia's Newcrest Mining Ltd posted an expected A$2.6 billion ($2.4 billion) net loss after writing down the value of its gold mines, and forecast flat gold production at best this year as it strives to improve productivity.

World gold council –Second quarter review

WGC ---Investment demand analysis

The re-balancing of gold investment that occurred in Q1 carried through into the second quarter as flows

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continued to pull back from the extremes witnessed last year. Bar and coin demand was well below Q2 2013's record high and likewise ETF outflows moderated significantly compared to the unprecedented outflows of last year. The net change in year-to-date investment demand was minimal: 1% higher than the first half of 2013. The huge purchases of bars and coins made in the first half (and particularly the second quarter) of last year continued to overhang the market, creating a general reluctance among investors to add further to these holdings so far in 2014.

ETF outflows in the second quarter were far below year earlier levels, at just under 40tonnes. Total investment demand in the second quarter amounted to 341.1tonnes.

China and India together accounted for over half of the 56% year-on-year decline in bar and coin demand, a fact that highlights both the sheer size of these two markets and the unusual nature of last year's demand.

European bar and coin demand witnessed a major slowdown in the second quarter, to the bottom end of the post-financial crisis range.

Central bank demand

Central bank net purchases in the second quarter totalled 117.8t, the 14th consecutive quarter of net buying from this consistent category of demand. This marks a 28% increase over the same period in 2013, and brings H1 total net purchases to 242.1tonnes. Economic and geopolitical events throughout the world are sources of ongoing instability and uncertainty. Such events reinforce

the requirement for appropriate risk management by central banks through holding gold reserves for asset diversification.

Emerging market central banks remain the dominant reported purchasers, with Russia (54tonnes), Kazakhstan (7tonnes) and Tajikistan (3tonnes) being the most significant within the last quarter.

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Jewellery demand

Jewellery demand historically has accounted for over half of global gold demand and Q2 was no different at 53%. Almost without exception, Asian and Middle-Eastern countries experienced double digit declines in demand. On the other hand, western markets made year-on-year gains with the exception of Italy, where – although local demand is down – the fabrication sector is benefitting from improved US demand and re-stocking in other key markets. China was the market most affected by the

comparison with Q2 2013, which was the highest quarter ever for jewellery demand in that market due to the intensity with which consumers responded to the price decline. The impact was mirrored in Hong Kong, where mainland consumers account for much of demand. Demand in India unsurprisingly fell short of Q2 2013's surge, but remains robust in a historical context, exceeding its five-year quarterly average.

Gold supply

Mine production

Mine production increased by 4% for a second consecutive quarter, although 2014 is likely to be the peak. Producers have, over recent quarters, implemented a range of operational measures to manage costs and improve efficiency. This trend continued through Q2, but we expect this impact to tail off throughout the remainder of 2014 as the scope for producers to implement further measures recedes.

Net producer hedging

Net producer hedging of 50t in Q2 compared with

negative hedging of -15.1t in the same period of 2013. Hedging activity over the year-to-date has contributed 58.6t of gold to total mine supply and is likely to be net positive for the year as a whole.

Recycled gold

Recycling in the first half of 2014 was the lowest since H1 2007 and close to average pre-crisis levels, a time when the gold price was some 50-60% lower. Gold supplied by the recycling of above-ground holdings was more or less flat year-on-year as the steady gold price environment removed an incentive for consumers to sell their holdings.

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Range

Gold MCX 27200-28800 Rs per 10 gms

COMEX $1250-1360 per troy ounce

Gold Hedge NCDEX Rs 24700-26500per 10 gms

Silver MCX Rs 41500-45000 per kg

COMEX $$19-20.60 per ounce

Silver Hedge NCDEX Rs 3500-4500 per 100 gms

Gold Silver ratio

Source: Reuters

Analysis: The gold/silver ratio has improved from 62.5 to above 66.5 recently. This ratio can hover in range of

62-69 in the month of September 2014.

In the month of September 2014 bullion

counter will remain on volatile path.

Ukraine and Iraq tensions and movement of

greenback will give further direction to the

prices. Moreover condition of global

economy and movement of local currency

rupee coupled with Physical, ETF demand

will also influence its prices.

ENERGYENERGYCRUDE OIL & NATURAL GASCRUDE OIL & NATURAL GAS

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ENERGY COMPLEX

Crude Oil

In the month of August crude oil prices continued to

tumble lower on global oversupply concerns and

stronger greenback. On domestic bourses strong

local currency rupee has kept the prices upside

capped. Overall crude oil moved in range of $91.96-

97.75 in NYMEX and 5652-6065 in MCX.

Meanwhile tensions in Israel, Iraq and Ukraine have

supported the prices. The U.S. Energy Information

Administration stated in its weekly report that U.S.

crude oil inventories declined by 4.5 million barrels

in the week ended Aug. 15, far surpassing

expectations for a decline of 1.2 million barrels. In

Libya, production is projected to increase amid

gains from the Sharara, Sarir, Waha and Harouge oil

fields, said Mohamed Elharari, a spokesman for

National Oil Corp. Output from the Organization of

Petroleum Exporting Countries Libya was at

630,000 barrels a day.

September 2014

Crude oil futures can move sideways with some short

covering can be seen in the month of September 2014.

Economic data from US, Europe and China along with

geopolitical tensions in Iraq and Ukraine will give

direction to the crude oil prices. Movement of stockpiles

in Cushing will also give direction to the prices. The

tensions in Ukraine and Iraq may also give further

direction to the crude oil prices in near term. According

to the Energy Information Administration “Crude

stockpiles declined by 2.07 million barrels to 360.5

million last week” While total U.S. crude stockpiles

declined, supplies rose at Cushing, Oklahoma, the

delivery point for WTI contracts and the biggest U.S. oil-

storage hub. Inventories increased by 508,000 barrels

to 20.7 million during the week ended Aug. 22. Crude

oil can move in range of 5600-6250 in the month

of September.

Brent WTI Spread

Source: Reuters

Analysis: Brent WTI spread narrowed from nearly above 9 to below 7.5 recently. This spread can hover in range

of $5-8.5 in September 2014. The spread dipped lower as Brent dropped more than WTI .Brent crude oil also was

pressured as Libya is starting to export oil again after almost a year of delays because of Libyan rebels. The

tankers filled with light Libyan crude putting further pressure on the spread.

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Some key points from EIA estimates

Liquid Fuels Consumption

Total U.S. liquid fuels consumption rose by 400,000 bbl/d (2.1%) in 2013. Consumption of hydrocarbon gas liquids (HGL) registered the largest gain in 2013, increasing by 150,000 bbl/d (6.4%). Total consumption is expected to be flat in 2014, with declines in the consumption of hydrocarbon gas liquids, residual fuel oil, and unfinished oils offsetting increases in distillate fuel, gasoline, and jet fuel. Total consumption grows by 90,000 bbl/d in 2015, with HGL consumption increasing by 100,000 bbl/d. Motor gasoline consumption grew by 90,000 bbl/d (1.1%) in 2013, the largest annual increase since 2006. Motor gasoline consumption grows by 40,000 bbl/d in 2014 and then falls by 10,000 bbl/d in 2015 as improving fuel economy in new vehicles increasingly offsets highway travel growth. Distillate fuel consumption increased by 90,000 bbl/d (2.5%) last year, reflecting colder weather and economic growth. Consumption of that fuel rises by 140,000 bbl/d and 70,000 bbl/d in 2014 and 2015, respectively.

Liquid Fuels Supply

The forecast for total U.S. crude oil production increases from an estimated 7.5 million bbl/d in 2013 to 8.5 million bbl/d in 2014 and 9.3 million bbl/d in 2015. The highest previous annual average U.S. production level was 9.6 million bbl/d in 1970. Oil production from the Gulf of Mexico is expected to increase from 1.25 million bbl/d in 2013 to 1.44 million bbl/d in 2014, with 11 projects starting this year. Six projects began production in the first half of 2014: Na Kika Phase 3, Mars B, Dalmatian, Entrada, Atlantis Phase 2, and Tubular Bells. Additional wells are expected to come online in the fourth quarter of 2014 from the Cardamom Deep, South Deimos/West Boreas, Hadrian South, Jack/St. Malo, and Lucius projects.

Non‐OPEC Supply

EIA estimates that non-OPEC liquids production grew by 1.3 million bbl/d in 2013, averaging 54.0 million bbl/d for the year. EIA expects non-OPEC liquids production to grow by 1.8 million bbl/d in 2014 and 1.1 million bbl/d in 2015. EIA forecasts production from the United States and Canada to grow by a combined annual average of 1.6 million bbl/d in 2014 and 1.1 million bbl/d in 2015. EIA

estimates that Eurasia's production will rise by an annual average of 0.05 million bbl/d in 2014, led by Russia. However, production in the region declines by 0.09 million bbl/d in 2015. This forecast assumes the current economic sanctions on Russia do not affect Russian oil production in the short term. Unplanned supply disruptions among non-OPEC producers averaged 0.6 million bbl/d in July, slightly higher than the estimated June level. South Sudan, Syria, and Yemen accounted for 79%of total non-OPEC supply disruptions. EIA does not assume a disruption to oil supply or demand as a result of ongoing events in Ukraine.

OPEC Supply

EIA estimates that OPEC crude oil production averaged 29.9 million bbl/d in 2013, a decline of 1.0 million bbl/d from the previous year, primarily reflecting increased outages in Libya, Nigeria, and Iraq, along with strong non-OPEC supply growth. EIA expects OPEC crude oil production to fall by 0.3 million bbl/d in 2014 and by less than 0.1 million bbl/d in 2015 to accommodate growing production in non-OPEC countries. Unplanned crude oil supply disruptions among OPEC producers averaged 2.6 million bbl/d in July 2014, slightly lower than the previous month because of decreased outages in Libya. Libya continues to experience swings in its production, contributing to changes in the OPEC disruption estimate.

EIA expects OPEC surplus crude oil production capacity, which is concentrated in Saudi Arabia, to average 2.1 million bbl/d in 2014 and 2.7 million bbl/d in 2015. These estimates do not include additional capacity that may be available in Iran but is offline because of the effects of U.S. and European Union sanctions on Iran's ability to sell its oil.

Crude oil may witness some short covering in the month of September on geopolitical tensions. Ukraine and Iraq tensions can give support to the prices while increase in stockpiles can cap the upside. Global macroeconomic numbers along with weekly inventory data in US will also affect the overall sentiments.

Range

Crude Oil

MCX Rs 5600-6250 per barrel

NYMEX $92-103 per barrel

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Natural Gas EIA expects total natural gas consumption will

average 72.6 Bcf/d in 2014, an increase of 1.7% from Natural gas prices moved on upside path in August

2013, led by the industrial sector. In 2015, total amid warmer US weather conditions. Low demand

natural gas consumption increases by 0.4 Bcf/d as and rising stockpiles pressurized the prices while

continued industrial sector growth offsets lower warmer temperature increased the demand for air

residential and commercial consumption. Higher conditioning. Overall it traded in range of $3.72-

natural gas prices this year contribute to a 2.2% 4.10 in NYMEX and 231.60-250 in MCX.

decline in natural gas consumption in the power Natural gas can move on volatile path in sector to 21.8 Bcf/d in 2014. EIA expects natural gas range of 220-265 in the month of September consumption in the power sector to increase to 22.7 as weather concerns and position of stockpiles will Bcf/d in 2015 with lower natural gas prices and the give further direction to the prices. Hotter than retirement of some coal plants.usual weather may blanket parts of the eastern and

central U.S. through Sept. 3, said MDA Weather U.S. Natural Gas Production and Trade Services in Gaithersburg, Maryland. According to

EIA “U.S. gas consumption may climb 1.7 percent EIA expects natural gas marketed production to this year to 72.6 billion cubic feet a day, led by grow by an annual rate of 5.3% in 2014 and 2.1% in industrial users” 2015. As of May 2014, the most recent month for

which EIA data are available, marketed production

was more than 4 Bcf/d greater than it was in May US weather outlook

2013.NatGasWeather.com projected easing temps over

Natural gas prices will depend upon the southern and central US in the coming days, as

weather conditions and power generation the cool Canadian system that tracks through the

demand coupled with its consumption Midwest and Northeast. The system will be off the

pattern and inventory position in the mainland by next week, allowing for high pressure

month of September 2014. to again build up and bump readings up a notch.

Overall cooling demand will be moderate-to-high in

the first half, easing to moderate later on.

EIA Natural gas estimates

U.S. Natural Gas Consumption

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Range

Natural gas

NYMEX $3.30- $4.50 per mmBtu

MCX Rs 220-265 per mmBtu

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SMC Global Securities Limited is proposing, subject to receipt of requisite approvals, market conditions and other considerations, a further public issue of its equity shares and has filed a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). The DRHP is available on the website of the SEBI at www.sebi.gov.in and the website of the Book Running Lead Managers i.e. Tata Securities Limited at www.tatacapital.com and IL&FS Capital Advisors Limited at www.ilfscapital.com. Investors should note that investment in equity shares involves a high degree of risk. For details please refer to the DRHP and particularly the section titled Risk Factors in the Draft Red Herring Prospectus.

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September 2014