National Bulk Handling Corporation sees new biz opportunity from NCDEX

National Bulk Handling Corporation, which was once owned by Financial Technologies India and servicing MCX, has become an accredited warehouse service provider of National Commodity and Derivatives Exchange (NCDEX).

With an intention to move out of the exchange business after it was declared not ‘fit and proper’ by the regulators, FTIL sold NBHC to IVF (India Value Fund) Trustee Company for ₹242 crore in April last year. Anil Choudhary, Managing Director and CEO, NBHC, told BusinessLine that it was approved as warehouse service provider of NCDEX earlier this month and expects to bounce back with the support of the new promoter and fresh business opportunity.

Of the total warehousing capacity of 25 lakh tonnes, NBHC owns 90,000 tonnes. On an average, it manages agriculture commodities worth ₹6,500 crore.

As part of diversification, NBHC procured commodities worth ₹330 crore for private companies and expects it to touch ₹400 crore by the end of this fiscal. “Our target is to take procurement business to ₹700-800 crore per annum,” said Choudhary.

NBHC has bought 30-40 commodities, including sugar, paddy, soyabean, cotton and coriander for established Indian and multi-national consumer companies.

The company has arranged ₹7,000 crore as warehouse receipt financing from 44 banks for farmers. The industry faces the challenge of reaching this finance to small and medium farmers with goods of 10 tonnes and 20 tonnes, he said.

Working on thin margins it has become difficult for warehouses to service small farmers. Choudhary said warehouses generally target big farmers as they earn just 70 paise on goods worth ₹100 stored and the cost in handling the goods works out to 65 paise.

He expects banks’ warehouse receipt financing to grow up to ₹1 lakh crore from the current ₹30,000 crore, if the government provides some support or special tax sops to warehouse companies servicing small farmers.

With recent climatic changes playing havoc in crop output and fluctuation in commodity prices, managing warehouse business has become even more challenging. “Warehouses in Rajasthan are almost empty this year as farmers are not storing soyabean as the prices are falling by the day due to excess production. Profitability for the entire year would be wiped out if a warehouse remains empty for one month,” he said.

COMMENT NOW