New Delhi: The Reliance Anil Ambani group is believed to have decided to enter the commodity trading business by setting up a large exchange in the country as part of its plans to capitalise on the vast opportunities in this market.
Besides R-Adag, another corporate giant Kotak group is also mulling over setting up a commodity bourse by acquisition of some regional exchange to get the platform and other technical support, sources close to the development said.
While Kotak group officials were not available for comments, the Reliance group declined to comment on any specific plans for entering into this business.
When asked whether the group might look at entering this business, Reliance Capital’s brokerage and financial products distribution arm Reliance Money’s CEO Sudeep Bandyopadhyay told PTI on the sidelines of a conference here, “We are always open to any opportunity that come our way.”
However, he did not comment on any specific plans regarding this new business. The group is already present in the commodity brokerage business through Reliance Money.
Even as the group officials did not wish to comment, sources said the new business could have some existing bourses as well as a strategic associate as partners to gain technical, business and infrastructure support.
According to experts, this market could be in for a major overhaul with some large corporate houses waiting to start their own bourses.
Another emerging conglomerate Indiabulls group, which is present in businesses like brokerage, financial services, real estate, retail and power has already tied up with state-run trading firm MMTC to start a commodity exchange, for which it is awaiting necessary approvals.
These corporate houses are getting lured to huge growth potential in the Indian commodity market, which is already of the size of close to one trillion dollars and could gain further scale given a continuing bull run across the world in this segment for over five years now, they added.
Kotak Group has a strong presence in financial markets through its banking, brokerage and other businesses. Adag is present across diversified businesses such as telecom, power, financial services, energy, infrastructure and media.
While it was not clear which existing exchange R-Adag was looking at to gain the platform and infrastructure, sources said it may not be the bourses in Rajkot or Ahmedabad as rumoured.
According to experts, new players are being attracted to huge growth potential of commodity trading in India, which is among top five producers or consumers for most commodities.
The commodity market across the world has already seen an unprecedented bull run for about 5-7 years and this bullish trend is expected to continue for another 10 years.
Even as this bull run is being fuelled by actions in places like India and China, the country itself has not capitalised on this trend. Places like Australia, New Zealand and Indonesia have gained large economic traction from the commodity market boom.
The experts believe that entry of established corporate houses could bring in much more credibility to the commodity trading in India, which so far has remained mostly limited to large traders and has very insignificant retail participation.
Besides, domestic and foreign institutional investors are not allowed so far in this market.
The entry of big names like Anil Ambani, Kotak and Indiabulls could help create a better investment scenario in the commodity market, rather than the mostly traders-driven volumes currently.