NCDEX open to divesting stake in NSPOT

The National Commodity & Derivatives Exchange (NCDEX) may divest part of its equity in the NCDEX Spot Exchange (NSPOT), a wholly owned subsidiary, to fund the spot arm’s ambitious mandi modernisation project (MMP).

“At present, there is no plan to disinvest. But, if the company needs fresh working capital, we will certainly divest a part of our holding to strategic buyers,” said R Ramaseshan, managing director of NCDEX.

However, neither NSPOT nor NCDEX is in talks for selling the stake as the MMP, which entails an initial investment of Rs 100 crore, is in infancy stage. Without hinting at disinvestment, Rajesh Sinha, head of NSPOT, had hinted that funding would not be an issue if the project was approved by the state government. Under the Agricultural Products Market Committee (APMC) Act, any plan to set up or modernise any market yard (mandi) has to be cleared by the state government.

NSPOT has identified one pilot project and 10 state mandis for modernisation. Under the plan, modern technology for payment and risk management will be introduced in the mandis. Assaying, grading and certification, however, would be done by NSPOT’s warehousing arm, National Collateral Management Services Ltd (NCMSL). Sinha did not divulge the state in which the company would implement the project. However, the company has got approval for procuring agricultural commodities directly from farmers in Karnataka and Maharashtra. Gujarat, Haryana and Punjab are considering such a proposal.

“We want the government to commit to another revolution in which the entire value chain of agricultural commodities is integrated,” said Sinha. Picking up one pilot project and developing 10 mandis would not change the market appreciably, but set a trend for transformation, he said. The MMP is a 10-year programme that requires over Rs 1,000 crore. The company is proposing a public private partnership model for the project.

NSPOT facilitates trade in sugar, pepper, chana, gold and silver and proposes to launch guarseed, bajra, safflower, sunflower seed and oil in the near future.