Ahmedabad Exchange plans revived

Board meets next week to decide on land sale to raise net worth, tie-up with the National Stock Exchange

Gujarat's defunct equity bourse, the Ahmedabad Stock Exchange (ASE), is making another attempt at revival. The exchange plans to raise Rs 50-60 crore to meet the net worth criterion set by the markets regulator and to have a tie-up with the National Stock Exchange (NSE).

The Securities and Exchange Board of India (Sebi) has given regional stock exchanges (RSEs) time till 2014 to revive directly or tie-up with pan-India exchanges. Else, they would have to close.

The ASE board is to meet on June 5, to decide on raising money and the alliance. Tie-up talks between NSE and ASE have been on for two years. These plans got delayed as Sebi had set up a committee under former Reserve Bank of India governor Bimal Jalan to study the working of stock exch-anges. The latest norms say all stock exchanges should have a net worth of at least Rs 100 crore.

“We plan to sell off extra land that we hold in Ahmedabad city. We will tie-up with NSE once our net worth is Rs 100 crore. Both these decisions will be finalised in the board meeting,” said Hemantsingh Jhala, chairman of ASE.

According to sources from other exchanges, Sebi has already asked ASE for their financial and other details and are examining these.

ASE holds a 6,000 sq yd land lot near the Town Hall at the prime location of Ashram Road in Ahmedabad, which they plan to sell. This is worth Rs 50-60 crore, said Jhala. ASE also holds a little over Rs 40 crore in fixed deposits and other instruments and has equity capital of Rs 7.4 crore.

Infrastructure Leasing and Financial Services and leading Gujarati newspaper Sandesh hold a five per cent stake each in ASE. The other 90 per cent is held by 560 small shareholders.

The face value of its share is Rs 1 and according to market players, these were sold at a premium of Rs 11 during demutualisation. The intrinsic value of ASE after demutualisation was Rs 60 crore, of which nearly half came from its land holdings.

ASE is the country’s second oldest stock exchange, established in 1894, with a little over 300 stock brokers as members. It has around 2,800 listed companies, which have not been traded actively since 2004. ASE’s tie-up will be somewhat similar to Madras Stock Exchange’s with NSE.

There are 16 Sebi-recognised RSEs in India, including the Bangalore Stock Exchange, Pune Stock Exchange, Calcutta Stock Exchange (CSE) and Delhi Stock Exchange, Also effectively defunct are the Inter-connected Stock Exchange and OTC Exchange of India. The Madhya Pradesh Stock Exchange and CSE have tied-up with both the Bombay Stock Exchange and NSE.