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Diversified financial services player Geojit is set to re-venture into commodities derivatives brokerage business from mid-April.
The Board, at its meeting held on March 24, granted approval for the company to enter into an agreement with Geofin Comtrade to acquire its client base for a consideration of ₹8.1 crore. Geofin Comtrade has over 40,000 clients.
The commodity business was discontinued in 2008 when BNP Paribas SA invested in the shares of the Geojit as banking companies were not permitted to undertake commodity broking activity under erstwhile RBI directions. In 2016, SEBI was appointed the regulator for commodity futures trading and in 2017, the clause which prevented Geojit from engaging commodity brokerage was removed. “However, SEBI permitted composite membership scheme that enabled Geojit to engage in commodities derivative broking business directly and not through a subsidiary,” said Satish Menon, the company's Executive Director.
“When we stopped our commodities derivatives brokerage business in 2007-08, we had garnered an income of ₹18 crore and a PBT of ₹6 crore. Our endeavour is to get back the lost business,” he told BusinessLine adding that the company intends to promote all commodities across its 500 offices throughout the country as well as online.
In 2003 it became the first to launch commodity trading in rubber futures in India. In 2004, Geojit Commodities, became the first in the world launched trading in cardamom futures.
It is in this background Geojit amended its ‘Objects’ clause in the Memorandum. It also received membership approval from MCX, NCDEX and NMCE. The agreement once consummated will enable the company to add another promising business line whilst leveraging its existing business infrastructure, he added.
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