SANGITA SHAH
MUMBAI,

Tobacco & FMCG major ITC Ltd will begin trading on the electronic commodity exchanges beginning this Kharif season. The agri business division which accounts for about 15% of the company's revenues will hedge against the price fluctuations of soyabean complex and wheat in the first stage beginning October-November.

S Sivakumar, CEO, International Business Division, ITC told FE that at a later stage they would also foray into mustard, pulses and coffee. Agri business of ITC Ltd has a share of Rs 1,750 crore of the total top line of Rs 12,000 crore.

ITC has already kicked off trading in soyabean futures on the Indore-based National Board of Trade (NBOT). By the end of next month or beginning November ITC will also kick off trading on the National Commodity & Derivatives Exchange (NCDEX). Currently, they are weighing pros and cons of trading on the Multi Commodity Exchange (MCX), as well.

"We are doing our due diligence. Once it is done we will start trading on these exchanges," he said. ITC Ltd, looks at various parameters before kicking off trading on commodity exchanges. These include the transparency and credibility of the exchange management, option of delivery, level of critical mass, and the participation by various members.

"We were waiting for the threshold limit to enter commodity futures market and this season it has happened. We are looking at how broad based the participation is on these exchanges. The market needs to be spread among day trades, processors, commission agents, producers and others who are linked to the commodity business," Mr Sivakumar explained.

ITC Ltd will soon empanel brokers to start trading for these agriculture commodities. Mr Sivakumar also said that participation of farmers will come at a later stage when markets are more grounded. "This is not the time for farmers to enter the commodity futures market," he added.