NCDEX to decide on raising additional equity this month

Chennai, Oct 7 (Calcutta Tube) The National Commodity and Derivatives Exchange (NCDEX) will take a final call on the mode for raising Rs.12.50 crore equity capital this month while it waits for approval to restart futures trading in sugar.

‘We are evaluating options for raising our paid up equity capital by Rs.12.50 crore to Rs.50 crore-the minimum capital for commodity exchanges. The modality of raising the capital will be decided by the end of this month,’ Managing Director and Chief Executive R. Ramaseshan told reporters here Thursday.

He declined to comment on the reported decision of NCDEX to induct Jaypee Capital as an anchor investor offering 26 percent stake.

According to him, the exchange is meeting the Rs.100 crore networth norm and the last time it raised equity capital was by an issue of rights issue at Rs.110 per share with the share premium being Rs.100.

He said the company had sought the permission of Forward Markets Commission (FMC) to restart sugar futures after the government’s May 2009 ban order expired last month.

The seven-year-old commodity exchange offers futures trading in 47 commodities in agriculture, energy, plastics, metals and carbon credits.

The exchange tied up with 775 private warehouses across the country to stock the commodities.

Asked about the bankability of the warehouse receipts, he said: ‘The banks are now favourably inclined to advance money based on the warehouse receipts issued by warehouses authorised by us.’

On the framing of rules for the Warehousing Development and Regulation Act 2007, Ramaseshan expects them to be framed in a year’s time as the Warehouse Development Authority has been recently set up.

The Act enables farmers to keep their farm produce in certified warehouses and use the receipts issued against it as a negotiable instrument and improve their cash liquidity without resorting to distress sale.

Many banks do not extend fund assistance based on warehouse receipts suspecting the quantity and quality of the farm produce mentioned on them.

He said the exchange is expecting to close this fiscal with a revenue of Rs.110 crore and an after tax profit of around Rs.20 crore.

About the trading pattern this fiscal, Chief Business Officer Vijay Kumar said the total traded value so far is more than Rs.500,000 crore (Rs.5,000 billion) up from Rs.387,000 crore (Rs.3,870 billion) done during the corresponding period the previous year.

He said the average daily turnover volume (ADTV) is over Rs.3000 crore this fiscal and in the last two months it has been close to Rs.4,000 crore.

According to Kumar, the increase in ADTV is contributed by trading in steel and crude oil contracts.

He said NCDEX delivered up to 12,000 tonnes of steel and the ADTV for crue has increased from Rs.6.57 crore in April 2010 to Rs.277 crore last month.

‘With the government slowing dismantling the administered pricing mechanism for oil hedging becomes imperative for the sector,’ Kumar added.

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