The National Collateral Management Services Ltd (NCMSL), which provides agri-commodity handling and risk management services, is in the final lap to secure more funds from private equity players to fuel its aggressive expansion plans. This is further to the Rs 70 crore funding the company had recently raised from International Finance Corporation (IFC), the private equity arm of World Bank, and Rabo Private Equity, the PE arm of Rabobank.
Mumbai-based NCMSL plans to raise Rs 50 crore ($12 million) more from PE funds and the discussions are in the last lap, a top company official told VCCircle. NCMSL is planning to raise a total of Rs 400 crore (about $90 million) for its expansion with Rs 120 crore in equity, while the remaining in debt. The company has appointed SBI Capital Markets Ltd as advisor to raise debt as well as equity.
The company is also in the final stages of discussions to raise the debt component via ECBs (External Commercial Borrowings) and domestic borrowing.
The company has 402 warehouses in 95 locations across the country. Of this, 70% of them are on lease-basis and remaining 30 per cent work on the franchise model.
It has plans to have its own warehouses in 45-50 locations within a couple of years, as a part of its expansion plan. The company has already announced its plan to expand its operations to 10 more centres in this fiscal, including Bihar and will start cold storages in at least six places, which is expected to be completed by 2012.
NCMSL has been engaged by the Food Corporation of India to procure commodities under the minimum support price (MSP) operations. The company has procured and handled two million tonnes of paddy and wheat on behalf of FCI since 2005-06.
Apart from procurement, NCMSL provides services such as storage, collateral management, commodity finance, testing and consultancy, besides preparing market reports on the entire range of commodities traded in the country.
NCMSL has tie-ups with 18 banks in collateral management of commodities and handle assets worth Rs 2,000 crore for various banks.
With the fast growing retail sector needing further support from the warehouse industry, the independent players will have a big role to play and NCSML is eying that market opportunity.
According to a McKinsey & Company report titled ‘The Great Indian Bazaar: Organised Retail Comes of Age in India’, organised retail in India is expected to increase from 5 per cent of the total market in 2008 to 14-18% of the total retail market and reach $450 billion by 2015.
A Knight Frank India report titled ‘India Organised Retail Market 2010’, published in May this year said that during 2010-12, around 55 million square feet of retail space will be ready in Mumbai, national capital region (NCR), Bengaluru, Kolkata, Chennai, Hyderabad and Pune. Besides, between 2010 and 2012, the organised retail real estate stock will grow from the existing 41 million sq ft to 95 million sq ft.