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Edelweiss commodities, which began operations in 2008, is expanding across the value chain in both its main verticals, bullion and agricultural products.
Contributing a fifth of parent Edelweiss Financial Services' bottom line, the commodity business has set up offices in Dubai, Singapore, Canada and Africa. The company, Edelweiss Integrated Commodity Management Ltd (EICML), is a fully owned subsidiary of Edelweiss, the Rs 27,000-crore (of assets) diversified financial services group.
“We are expanding the value chain, beginning with procurement from farmers to providing funding, warehousing, finance against warehoused stocks and selling it to traders in India and abroad," said D P Jhawar, president and head of the commodities business. “Success will depend on procuring material ourselves to be cost-efficient.”
EICML has started procuring directly from farmers and pays by crediting money into their bank accounts or by crediting Kisan Cards. “Increased bank account coverage due to the Jan Dhan Yojna has helped us -- we don't make cash payment,” said Jhawar.
Edelweiss became the single largest importer of pulses in 2014-15. it imported 360,000 tonnes, about nine per cent of the country's total. On the agri side, it achieved a turnover of Rs 3,000 crore and about a million tonnes of commodities. It plans to replicate the expertise in other commodities like dry fruit and spices.
Apart from imports, the company is expanding in a big way in building warehousing capacity. At present, it has 160 warehouses at 100 locations, with 600,000 tonne capacity. “In the next three to five years, our target is to build three million tonnes of warehousing capacity, largest in the country,” said Jhawar. “To bring transparency, we are investing in technology which will modernise warehouses with customer interface and online operations.”
For the first time in India, the customer will be able to view his stock statement online, as well as view physical stock through web-based applications. The company has invested Rs 15 crore in technology for this and a further Rs 15 crore is planned over the next two years. A 12-person research desk has been set up to support all its agri sub-verticals.
Bullion
Under the bullion vertical, from importing and distribution, it is expanding to refining and mobilising of scrap gold. A refinery it had set up at Ahmedabad began operating this February, with a capacity to refine 72 tonnes of gold and 200 tonnes of silver a year. The plan is to raise the capacity to 200 tonnes of gold and 1,000 tonnes of silver over the next two to three years. In addition to the Rs 85 crore invested so far, it plans to invest a further Rs 40 crore.
Edelweiss is investing in scrap collection through large franchise centres, beside jewellers who collect scrap jewellery.
This will greatly help in recycling the vast gold reserves in our country, said Jhawar. The country currently imports 800-900 tonnes of gold and 7,000 tonnes of silver a year.
“In two years, we expect to get London Bullion Market Association-approved refinery status,” said Jhawar. “We also plan to tie up with banks for a gold monetisation plan.”
