Renuka Sugars to fully exit NCDEX

Motilal Oswal appointed advisor; company looks to make Rs 62 cr

Mumbai-based Shree Renuka Sugars (SRSL) plans to fully exit from the National Commodity & Derivatives Exchange (NCDEX), as part of a strategy to sell all its non-core assets. It has put its remaining five per cent stake for sale, with Motilal Oswal appointed as advisor for the deal.

SRSL had entered the exchange in 2009, with a five per cent stake buy from Goldman Sachs Asset Management India for $7.5 million. It had increased this to 12.5 per cent, by acquiring additional stake from rating agency CRISIL in 2010. Then, it had divested 7.5 per cent stake in May 2014 for Rs 66.54 crore ($11 mn). This was to comply with regulatory changes directed by the Forward Markets Commission (FMC).

In May 2014, the overall enterprise value of NCDEX was estimated at Rs 887 crore; its then daily average turnover was around Rs 3,000 crore. With the current daily average turnover of around Rs 4,500 crore, SRSL is looking at a similar increase in deal value. If the expectation is met, the five per cent stake would come to Rs 62.5 crore, at an enterprise value of Rs 1,250 crore.

With commodity futures coming under a stronger regulator, the Securities and Exchange Board of India, hopes of improvements in the prospects of commodity derivatives markets are bright. Until September 28, the FMC is regulating these; after that, it will be subsumed in Sebi.

“So, there will no difficulty in finding a buyer,” said an SRSL official.

National Stock Exchange has 15 per cent in NCDEX. Among the others, Life Insurance Corporation has 11.1 per cent and so does the National Bank for Agriculture and Rural Development.