R-Money woos mandi bodies to hold stake in agri spot exchange

Reliance Money is planning to rope in apex bodies of mandis in various states as shareholders for the proposed agriculture spot exchange it has announced with National Multi-Commodity Exchange (NMCE).

“We have held discussions with Gujarat Niyantrit Bazaar Sangh, the apex body of more than 200 mandis in the state, and its counterpart in Tamil Nadu, and we may rope them in as shareholders,” Reliance Money CEO Sudip Bandyopadhyay said.

In August, Reliance Money and NMCE had announced the setting up of National Agriculture Produce Marketing Company of India (National APMC) that aims to provide the required infrastructure for electronic trading in agricultural products.

Bandyopadhyay said that a separate spot exchange for non-agricultural products would also be set up once National APMCL started functioning hopefully by June next year. The company had earlier indicated that National APMC would commence operations by December.

On shareholding details, the Reliance Money CEO said that those were being finalised.

While National APMC has approached more than a dozen states for permission to ensure that it is able to deliver the farm products traded electronically, so far it has received permission only from Gujarat and Rajasthan.

Analysts said that by tying up with state-level agencies for mandis, Reliance Money was also reducing chances of political opposition to electronic spot trading as these bodies were controlled by local politicians.

Commodities trading has been a politically sensitive issue and the government in the past has imposed ban on futures trading in commodities. The ban followed uproar by politicians, who said futures trading was speculative and blamed it for the increase in prices.

Presence in the commodity exchange business has emerged as a major focus area for Reliance Money, which is part of the Anil Dhirubhai Ambani Group (ADAG). It has sought permission to acquire 26 per cent stake in NMCE, the national commodity futures exchange, but has so far received the go ahead to buy 10 per cent. In addition, it had bought a 15 per cent stake in Hong Kong Mercantile Exchange to become the second largest shareholder in the commodity bourse. Hong Kong Mercantile Exchange plans to start trading in the first quarter of 2009 by offering dollar-denominated oil contract.