"The discussions with the sugar mill owners are at an early stage. Once it is finalised the sugar bourse would be a separate exchange under the aegis of Coffee Futures Exchange India," Shah said.

The coffee bourse is also planning to set up five on-line trading centres in South India. The major centres identified by the bourse are Hassan, Mysore, Chickmagalur (in Karnataka), Kalpetta (in Kerala), and Salem (in Tamil Nadu).

In the first phase of its on-line operations, which are likely to commence within the next eight months, the company is planning to set up additional centres at Virudhnagar in Tamil Nadu and other places in south India. Theboard of directors of Cofei, which met here on Saturday, has also decided to seek sales tax (ST) exemptions on the volumes of coffee traded on the bourse. The company will approach senior officials in the state sales tax department next week, according to Mysore Coffee Curing Works Ltd managing director V Rama Rao.

The company is also negotiating with Reuters and Knight Ridders to provide information on prices and volumes of coffee traded on the coffee futures exchange in Bangalore through paging system.

The proposed facility will enable the coffee players in the state to get additional information. Shah said the company would invite Ramakrishna Hegde, the union commerce minister, to inaugurate the facility which is likely to be operational in May last week. The Cofei will also be conducting a mock trading in May second week inviting more coffee growers and traders.

Sources in Coffee Board said, "S V Ranganath, chairman of Coffee Board, will meet Ramakrishna Hegde next week to discuss different issueson coffee industry."

HLL sceptical

Hindustan Lever Ltd (HLL), one of the companies keen to become a member of Cofei, has expressed its strong reservations against induction of members who are not from the coffee industry. According to an internal note to the Cofei chairman, the company representative said, "while they (non-coffee traders) bring more funds to the exchange and impart liquidity to the futures market, the very same people are likely to erode the credibility of Cofei amongst the coffee industry players." The note further said that the non-coffee members would tend to play the market based on money market considerations and the fortunes in other speculative markets like shares, bullion, and real estate.

It is possible that when a domestic manufacturer, or an exporter wants to buy physical stocks, these non-coffee speculators might be artificially jacking up the market because of depression in some other markets.