Gujarat's defunct equity bourse Ahmedabad Stock Exchange (ASE) is making yet another attempt at revival. The exchange plans to raise around Rs 50-60 crore to meet the net worth criteria set by market regulator and tie-up with the National Stock Exchange (NSE).
The Securities and Exchange Board of India (Sebi) has given regional stock exchanges (RSEs) time till 2014 to revive directly or tie-up with pan-India exchanges. RSEs will have to face shut-down if this deadline is not met.
ASE board will meet on June 5, to decide on raising money and alliance.
Tie-up talks between NSE and ASE have been going on for two years. The plans got delayed as Sebi had set-up a committee under former Reserve Bank of India (RBI) governor Bimal Jalan to study working of stock exchanges and prepare a road map. As per recent norms all stock exchanges in India should have a net worth of Rs 100 crore.
"We plan to sell-off extra land that we hold in Ahmedabad city. We will tie-up with NSE once our net worth is Rs 100 crore. Both these decisions will be finalised in the board meeting," said Hemantsingh Jhala, chairman of ASE.
According to sources from other exchanges, Sebi has alredy asked ASE for their financial and other details and are examining it.
ASE holds a 6,000 sq yd land, located near the Town Hall at prime location of Ashram Road in Ahmedabad, which they plan to sell. This is worth Rs 50-60 crore, said Jhala. ASE holds more than Rs 40 crore in fixed deposits and other instruments and has a equity capital of over Rs 7.4 crore.
Infrastructure Leasing and Financial Services (IL&FS) and leading Gujarati newspaper Sandesh hold a five per cent stake each in ASE. The other 90 per cent is held by 560 small shareholders. The face value of its share is Rs 1 and according to market players, these were sold at a premium of Rs 11 during demutualisation. The intrinsic value of ASE after demutualisation was Rs 60 crore, of which nearly half came from its land holdings.
ASE is the second oldest stock exchange, established in 1894, and has over 300 stock brokers as its members. The exchange has some 2,800 listed companies, which have not been traded actively since 2004. ASE’s tie-up will be somewhat similar to Madras Stock Exchange’s with NSE.
In all there are 16 Sebi-recognised RSEs in India, including Bangalore Stock Exchange, Pune Stock Exchange, Calcutta Stock Exchange (CSE) and Delhi Stock Exchange apart from ASE. Also, effectively defunct are the Inter-connected Stock Exchange and OTC Exchange of India. The Madhya Pradesh Stock Exchange and CSE have tied up with both BSE and NSE. Navi Mumbai-based ISE and DSE too have made unsuccessful attempts in past to start their operation.