NMCE to go public for expansion

Bangalore, July 31 | Updated: Aug 1 2005, 06:21am hrs
National Multi-Commodity Exchange (NMCE) plans to go for an initial public offering (IPO) to raise money for expansion, according to managing director Kailash Gupta. Mr Gupta disclosed to FE that a plan would be worked out within six months. He did not specify the corpus the exchange planned to raise.

We are looking at listing with a premium, Mr Gupta said, adding that funds would be used chiefly to educate trade which is crucial for rapid expansion. Though NMCE has enough cash to fund its operations and minor expansions, it requires bulk funding to fuel rapid growth, he added.

Meanwhile, the exchange, which has already broken-even within two years of starting operations, would report profit by the end of the current fiscal, Mr Gupta said. Transaction charges and interests on deposits constitute the main revenue streams for the exchange. The bourse keeps money earned as cash-margin in liquid deposits that fetch 3-4% returns.

NMCE plans to revive trading of copra, coconut oil, castor seed and mustard seed in near term. Coconut oil and copra have huge market in Kerala while Maharashtra and Gujarat are both major markets for castor seed and mustard seeds.

"We need to educate the trade in these commodities immediately," Mr Gupta added. NMCE also plans to introduce a new contract for black pepper (bold variety) as there is heavy transaction of the MG1 variety.