Gujarat comexes on an expansion drive

Three of the leading Gujarat-based commodity exchanges are on an expansion drive.

While the Surendranagar Cotton Exchange, the only regional exchange active in cotton futures, is planning to go online, the National Multi Commodity Exchange (NMCE) in Ahmedabad is awaiting the approval of the Forward Market Commission (FMC) for selling 26 per cent stake to the Bombay Stock Exchange (BSE).

The BSE, a strategic investor, is likely to play an important role in the NMCE's growth.

The online project of the Surendranagar Cotton Exchange has already received two offers, one from the Multi Commodity Exchange (MCX) and the other from the East India Cotton Association. The exchange is busy charting out a strategy as to how it should go online.

The exchange will need a fund of at least Rs 50 to 60 lakh for setting up the technology. It may raise the required fund through banks or strategic tie-ups. The exchange is planning to complete the project in one or two years.

Meanwhile, the Ahmedabad Commodity Exchange is also likely to announce a tie-up next month for its plan to go online. The exchange is in talks with two or three private players, including Reliance Anil Dhirubhai Ambani Group (ADAG).

Speaking to Business Standard, Y B Rana, president, Surendranagar Cotton Exchange, said, "We have decided to go online and are serious about this plan. Cotton is a commodity of national and international interest, and the project will help our growth. It's the right time to go online."

"We have already received two offers for this project, one from the MCX and the other from the East India Cotton Association. However, these initial offers talk about mergers and we do not want to do that. We want to set up our own online exchange and are open to strategic tie-ups, but not mergers," he said.

On the plans to finance the project, he said, "We will require a fund of Rs 50 to 60 lakh for setting up the necessary infrastructure. At present, we do not have such an amount. We may go for bank loans or strategic alliances to raise this fund."

As far as the technology is concerned, we may also go for renting the technological set up. So the funding part will not be a hindrance to our plans."

According to Rana, it may take at least one to two years for the exchange to go online as the plan was still at the conceptual stage. "We need more negotiations and a stronger strategy. So it may take some time. Once the finer details are worked out, we will seek the approval of the Forward Markets Commission (FMC)," he said.

On the other hand, the Ahmedabad Commodity Exchange (ACE) is likely to announce its tie-up for going online next month. It is in talks with two or three private players for this project and a decision is likely to be reached next month.

Pravin Thakkar, president, ACE, said, "We are likely to announce our decision in August this year. Currently, we are in negotiations with two or three private players."

When asked whether the ACE had received an offer from Reliance Anil Dhirubhai Ambani Group, Thakkar said, "Yes, Anil Ambani has shown interest in tying up with the ACE. However, it will not be possible to reveal further details as we are in the final stages of negotiations with all the three parties."