The National Multi-commodity Exchange (NMCE) may seek an extension of the September 30 deadline to shore up its capital to meet regulatory norms, but the exchange is hopeful recent charges of fraud against its founder would not hurt its hunt for investors, according to the bourse?s managing director and chief executive Anil Mishra.
??We can request the forward markets commission (FMC) for an extension, but our board will soon decide on it,?? Mishra told FE.
The statement comes amid FMC allegations that the exchange?s founder, Kailash Gupta, ??abused?? his power at the bourse to financially benefit his family-run companies. It also asked the exchange to file a criminal case against him, subject to the verdict of the Gujarat high court on an appeal made by Gupta in this matter. The court will hear his case on August 17.
In July 2009, the FMC directed national-level exchanges to have a net worth of at least R100 crore and an equity capital of R50 crore each and has since granted periodic extensions to some to comply with the norms. NMCE currently has a net worth of around R60 crore and an equity capital of slightly more than R19 crore.
Mishra said the exchange would focus more on issuing fresh shares to domestic investors than scouting for foreign investors, as was planned earlier, to boost its capital base to meet regulatory norms. The exchange will also consider rights or bonus issues for this purpose as well, he added. ??We are currently in advanced talks with some domestic investors,?? Mishra said, without elaborating.
Asked whether potential investors were shying away due to the charges against Gupta, Mishra said, ??See, the exchange has not failed in any of its obligation. So, as an exchange, its image is pretty much intact. Of course, at an individual level, some questions may be raised against a particular person, but Gupta isn’t involved with the management issues any more. So investors have no reason to panic.?? He said the exchange would take action against Gupta in accordance with the regulator?s recommendations, subject to the court?s verdict.
In October 2010, NMCE issued 2.45 million fresh shares to Bajaj Holdings & Investment Ltd for R25 crore, taking a step closer to meeting the capital requirement guidelines. NMCE?s top two shareholders, Neptune Overseas Ltd and state-run Central Warehousing Corporation, saw their stakes diluted to 30.18% and 29.70%, respectively, with the share sale to Bajaj.
NMCE, one of the five national-level exchanges in the country, currently gets about 80% of its trade value from farm commodities, with the rest coming from the base metals, bullion and energy segments.
Trading volume on India’s commodity exchanges has been increasing over the past few years due to increased hedging on volatile commodity prices and a rise in the number of exchanges and participants, but NMCE has not been able to boost its turnover at a faster pace as some of its other competitors, such as Multi-commodity Exchange and National Commodity And Derivatives Exchange Ltd.
In the first fortnight of July, the value of trade on the NMCE fell more than 32% from a year earlier to R4,665.92 crore, underperforming a 70% rise in the total trade value of all commodity exchanges, according to the FMC data.
India allowed commodity futures trade in 2003 and has 21 commodity exchanges, including the five national-level bourses.
