MIRA
INFORM REPORT
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Report Date : |
25.05.2007 |
IDENTIFICATION DETAILS
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Name : |
THE STATE TRADING
CORPORATION OF INDIA LIMITED |
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Registered Office : |
Jawahar Vyapar
Bhawan, Tolstoy Marg, |
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Country : |
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Financials (as on) : |
31.03.2006 |
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Date of Incorporation : |
18.05.1956 |
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Com. Reg. No.: |
55-2674 |
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CIN No.: [Company
Identification No.] |
L74899DL1956GOI002674 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
DELT00171D |
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Legal Form : |
It is a public
limited liability company. The
company’s shares are listed on the Stock Exchanges. Subject is a
Government of India owned company. |
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Line of Business : |
It is the
official canalising agency for exports and imports for a number of products. |
RATING & COMMENTS
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MIRA’s Rating : |
A |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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Maximum Credit Limit : |
USD 14000000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well
established Government owned trading house having satisfactory track.
Available information indicates high financial responsibility of the company.
Financial position is satisfactory. Payments are usually correct and as per
commitments. The company can
be considered normal for business dealings at usual trade terms and
conditions. |
LOCATIONS
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Registered
Office / Corporate Office : |
Jawahar Vyapar
Bhawan, Tolstoy Marg, |
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Tel. No.: |
91-11-23313177 /
233221777 / 23701100 |
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Fax No.: |
91-11-23326459 /
6471 / 23701123 / 6459 / 23701191 |
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E-Mail : |
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Website : |
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Branches : |
Located at |
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Overseas
Office: |
P. O. Box 737,
1706, |
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Tel. No.: |
009714-271270 |
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Fax No.: |
009714-2280127 |
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E-Mail : |
DIRECTORS
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Name : |
Mr. Arvind Pandalai |
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Designation : |
Chairman cum Managing Director |
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Name : |
Mr. K.K. Sood |
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Designation : |
Director |
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Name : |
Mr. S.R. Bharati |
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Designation : |
Director |
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Name : |
Mr. Rana Som |
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Designation : |
Director |
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Name : |
Mr. N.K. Mathur |
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Designation : |
Director |
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Name : |
Mr. N.K. Nirmal (From 01.08.2006) |
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Designation : |
Director |
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Name : |
Mr. Vijay Krishan (Upto 31.07.2006) |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Mrs. Asha Swarup |
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Designation : |
Ex-Officio Director |
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Name : |
Mr. Cristy L Fernandez |
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Designation : |
Ex-Officio Director |
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Name : |
Mr. A K Gupta |
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Designation : |
Company Secretary |
SHAREHOLDING PATTERN
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Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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Promoter
(Government of |
27306800 |
91.023 % |
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UTI/Mutual Funds |
700 |
0.002 % |
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Banks/Financial
Institutions |
852609 |
2.842 % |
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FIIs |
- |
-- |
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Private
Corporate Bodies |
350996 |
1.170 % |
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Indian Public |
1481998 |
4.940 % |
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NRIs/OCBs |
6897 |
0.023 % |
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Total |
30000000 |
100.00 % |
BUSINESS DETAILS
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Line of Business : |
It is the
official canalising agency for exports and imports for a number of products. |
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Products : |
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Imports : |
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Products : |
Edible Oils,
Sugar, Wheat, Fatty Acids, Pulses, Hydrocarbons, Gold and Silver, Urea,
Scientific Instruments and Hospital / Police Equipments |
GENERAL INFORMATION
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No. of Employees : |
350 |
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Bankers : |
·
State
Bank of CAG Branch, ·
Vijaya
Bank Main Branch, |
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Facilities : |
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Banking
Relations : |
Satisfactory |
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Auditors : |
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Name : |
Sharma Goel and
Company Chartered
Accountants |
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Associates/Subsidiaries : |
v
All
Government of India Undertaking Companies v
Spices
Trading Corporation Limited v
Tea
Trading Corporation of India Limited |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
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30,000,000 |
Equity Shares |
Rs.10/- each |
Rs. 300.000 millions |
Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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30,000,000 |
Equity Shares |
Rs.10/- each |
Rs. 300.000 millions |
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES
OF FUNDS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
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SHAREHOLDERS
FUNDS |
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1] Share Capital |
300.000 |
300.000 |
300.000 |
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2] Reserves &
Surplus |
3351.409 |
2899.872 |
2660.676 |
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NETWORTH
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3651.409 |
3199.872 |
2960.676 |
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LOAN FUNDS |
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1] Secured Loans |
2027.274 |
1296.217 |
3200.488 |
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2] Unsecured
Loans |
0.000 |
0.409 |
9.784 |
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TOTAL
BORROWING
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2027.274 |
1296.626 |
3210.272 |
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TOTAL
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5678.683 |
4496.498 |
6170.948 |
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APPLICATION OF FUNDS
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FIXED ASSETS [Net Block]
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217.135 |
217.797 |
222.172 |
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Capital work-in-progress
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0.000 |
0.000 |
0.000 |
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INVESTMENT
|
907.217 |
907.217 |
907.217 |
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DEFERREX TAX ASSETS
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298.428 |
72.317 |
77.191 |
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CURRENT ASSETS, LOANS & ADVANCES
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Inventories
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3301.216 |
2399.396 |
727.146 |
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Sundry Debtors
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16941.891 |
10677.153 |
680.894 |
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Cash & Bank Balances
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654.764 |
39153.484 |
548.361 |
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Loans & Advances
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3285.256 |
1618.498 |
3261.608 |
Total Current Assets
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24183.127 |
53848.531 |
39479.048 |
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Less : CURRENT LIABILITIES & PROVISIONS
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Current Liabilities
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19392.614 |
49767.593 |
2386.599 |
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Provisions
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534.610 |
781.771 |
-- |
Total Current Liabilities
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19927.224
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50549.364
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34613.343
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Net
Current Assets
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4255.903 |
3299.167 |
4865.705 |
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MISCELLANEOUS EXPENSES
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-- |
-- |
98.663 |
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TOTAL
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5678.683 |
4496.498 |
6170.948 |
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PROFIT & LOSS
ACCOUNT
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PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
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Sales Turnover |
71252.405 |
95221.699 |
84804.880 |
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Other Income |
1414.281 |
1209.650 |
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Total Income |
72666.686 |
96431.349 |
84804.880 |
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Profit/(Loss) Before Tax |
566.903 |
370.300 |
258.163 |
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Provision for Taxation |
177.369 |
119.954 |
60.825 |
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Profit/(Loss) After Tax |
389.534 |
250.346 |
197.338 |
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Earnings in Foreign Currency : |
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Export Earnings |
9233.515 |
3310.524 |
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Services Charges |
62.771 |
22.663 |
8258.346 |
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Other Earnings |
0.258 |
0.000 |
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Total Earnings |
9296.544 |
3333.187 |
8258.346 |
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Expenditures : |
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Cost of Goods
Sold |
70626.354 |
94996.378 |
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Overheads |
622.847 |
764.635 |
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Interest |
156.837 |
144.479 |
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Depreciation |
14.685 |
16.008 |
84506.485 |
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Write-Offs |
1.588 |
1.422 |
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Provisions
against Doubtful |
0.000 |
0.000 |
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Receivables
& Investments |
656.401 |
41.962 |
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Total Expenditure |
72078.712 |
95964.884 |
84506.485 |
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SUMMARISED RESULTS
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PARTICULARS |
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31.03.2007 |
|
Type |
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Full
Year |
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Sales
Turnover |
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143122.800 |
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Other
Income |
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712.100 |
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Total
Income |
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143834.900 |
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Total
Expenditure |
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142588.700 |
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Operating
Profit |
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1246.200 |
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Interest |
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|
224.700 |
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Gross
Profit |
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|
1021.500 |
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Depreciation |
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|
17.900 |
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Tax |
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|
276.600 |
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Reported
PAT |
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|
687.000 |
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Dividend
(%) |
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|
00.000 |
KEY RATIOS
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
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Debt Equity Ratio |
0.49 |
0.73 |
0.82 |
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Long Term Debt Equity Ratio |
0.14 |
0.16 |
0.00 |
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Current Ratio |
1.08 |
1.05 |
1.08 |
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TURNOVER RATIOS |
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Fixed Assets |
144.85 |
192.62 |
163.40 |
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Inventory |
25.00 |
50.67 |
80.03 |
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Debtors |
5.16 |
12.54 |
32.15 |
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Interest Cover Ratio |
3.80 |
4.22 |
1.86 |
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Operating Profit Margin (%) |
1.10 |
0.66 |
0.85 |
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Profit Before Interest and Tax Margin (%) |
1.08 |
0.65 |
0.75 |
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Cash Profit Margin (%) |
0.57 |
0.35 |
0.36 |
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Adjusted Net Profit Margin (%) |
0.55 |
0.33 |
0.27 |
|
Return on Capital Employed (%) |
15.12 |
11.63 |
12.44 |
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Return on Net Worth (%) |
11.37 |
10.29 |
7.81 |
STOCK PRICES
|
Face Value |
Rs.10.00/- |
|
High |
Rs.163.25/- |
|
Low |
Rs.160.15/- |
LOCAL AGENCY FURTHER INFORMATION
Fixed Assets:
Ä
Land
Ä
Building
Ä
Road,
Culverts, Sewerage & Water Supply Systems
Ä
Railway
Sliding
Ä
Plant
& Machinery
Ä
Furniture
& Fixtures
Ä
Air Conditioners
& Office Equipment
Ä
Vehicles
Ä
Computers,
Data processor & Communication
History
Subject was
incorporated on 18th May, 1956 at
Subject is a
leading trading house in the public sector and it is the official canalising
agency for exports and imports for a number of products.
In 1994-95, subject
started trading in items like rice, wheat, coffee, Indian made foreign liquor,
sandalwood and oil. During 1995-96,
subject planed to enter into new areas of business like direct import of
fertilisers, non-ferrous metals and kerosene oil. In the domestic trading sector, it expanded
its activities in areas like rice, wheat, coffee, tobacco and rubber.
The State Trading Corporation of India Limited (STC) is a
premier international trading house owned by the Government of India. The
Corporation set up in 1956, has developed vast expertise in handling bulk
international trade. Though, dealing largely with the East European countries
during the early years of its formation, today it trades with almost all the
countries of the world. The company is the official canalising agency for
exports and imports for a number of products ranging from agricultural
commodities to manufactured products from
The company's major businesses are exports, imports and services to Indian
exporters -- financial assistance, marketing infrastructure, participation in
trade fairs and exhibitions, supply of imported machinery and raw materials and
testing facilities. Spice Trading Corporation of
In 1994-95, STC started trading in items like rice, wheat, coffee, Indian-made
foreign liquor, sandalwood and oil. During 1995-96, STC entered into new areas
of business like direct import of fertilisers, non-ferrous metals and kerosene
oil. In the domestic trading sector, it expanded its activities in areas like
rice, wheat, coffee, cashew, tobacco and rubber.
During 2004-2005, Government of India decided not to pursue the proposed
disinvestments of its equity in STC. Earlier GOI had decided to off-load 65% of
its equity in STC to a strategic buyer thereby bringing down its share to 26%.
During the same period the corporation was successful in getting nominated by
the Govt of Uzbekistan as a nodal agency for imports from and exports to
Business:
Subject is the
official canalising agency for exports and imports for a number of products.
The company’s major
businesses are exports, imports and services to Indian exporters – financial
assistance, marketing infrastructure, participation in trade fairs and
exhibitions, supply of imported machinery and raw materials and testing
facilities.
As a part of
restructuring the subject, the government plans to disinvest its stake
gradually to privatise it (91% of STC’s holdings are held by the government and
the remaining by mutual funds and UTI), and joint ventures in areas like marine
products, leather, bio-technology, mushrooms and oil seeds are being
finalised. Department is looking for a
strategic partner for the same.
The corporation was
successful in making and implementing a deal for import of coal worth Rs. 630
millions and supplying the same to GSEB.
Subject is a
premier international trading house owned by the Government of India.
By virtue of
infrastructure and experience possessed by the subject, it plays an important
role in arranging import of essential items into
Subject is also one
of the 14 agencies nominated by the Government of India for import of gold into
the country. It imports gold in large
quantities for the requirement of jewellers and traders.
The company imports
a number of essential commodities to cover the domestic shortfalls and hold the
price line.
Generic Names of Principal
Product / Service of the Company are :-
·
Trade
in RBD Palmolein, Urea and Wheat
THE WORLD ECONOMY
The global expansion led by United States and China in early 2005 and the broad
recovery gained in the course of the year, extending to Japan and continental
Europe, resulted in World GDP growth exceeding 4% in 2005 for the third
consecutive year in spite of higher prices of energy and other commodities.
While output in the
The value of global merchandise exports rose by 13 per cent in 2005, compared
to 21 per cent in 2004 and exceeded the $10 trillion mark for the first time.
Fuelled by the rise in oil prices, Africa, Middle East, Central and
Rapid demand growth, especially in emerging
Exchange rate fluctuations were significant in 2005. The broad appreciation of
the US dollar, the stability of the euro and the overall downward trend of the
yen were salient developments in foreign exchange markets over most of 2005.
However, the upward trend of the US dollar reversed in early December
2005.
Global financing conditions continued to be supportive of growth,
notwithstanding the progressive removal of monetary accommodation in the
INDIAN ECONOMY 2005-06
For
The country's external sector strengthened considerably with trade volumes
recording a 28.6% growth in 2005-06. Merchandise exports continued to maintain
the momentum of growth for the fourth year in succession and grew by 24.7 per
cent (in US dollar terms). While petroleum, machinery and instruments, readymade
garments, cotton including accessories, drugs, pharmaceuticals & fine
chemicals and gems & jewellery were the top commodities of exports during
the year, the top destinations of exports were UK, Singapore, USA, China and
United Arab Emirates.
Imports grew by 31.5% over 2004-05. Imports of petroleum, oil and
lubricants (POL) increased by 47%, reflecting the impact of sharp increase in
international crude oil prices. Other major commodities of imports were
machinery (except electrical and electronics), electronic goods, gold and
precious / semi-precious stones, pearls. The year witnessed over 50% growth in
imports from
Foreign investment inflows increased to US $ 17 billion in 2005- 06 and foreign
exchange reserves stood at US $ 152 billion as on 31st March 2006 - US $ 10
billion higher than the level a year ago, placing India at the sixth position
in the world in terms of foreign exchange reserves. The Indian stock market
also remained upbeat for the fourth year in succession with the sensex touching
9,398 in 2005 and an all time high mark of 12,600 in May 2006 making
In one of the major developments on domestic front, the Govt. of India decided
to import, after many years, significant quantity of wheat into the country in
view of declining wheat stocks in the Central Pool and hardening prices in the
domestic market.
The emerging situation and improvements in Indian economy provided STC an
opportunity to consolidate its long term strategy and to select specific thrust
areas. Accordingly, the Corporation switched over from items yielding high
turnover to items having better profitability. It stepped into backward
integration, expanded bulk trade operations to coal and iron ore and took up
specific value added items like jewellery in addition to counter trade and
offset operations.
REVIEW OF PERFORMANCE
PROFITS
During the year under review, the Corporation earned a profit before tax of Rs
570 Millions representing an increase of 53% over the previous year. As a
result, the earnings per share (EPS) of the Corporation improved to Rs 12.98 as
against Rs 8.34 in the previous year.
The trading profit of Rs 1000 Millions was the highest ever achieved by the
Corporation during the past two decades. The substantial jump in trading profit
was characterized by significant growths in all the three segments of
trade.
TURNOVER
During the year, the Corporation laid greater focus on developing business of
items yielding higher margins. The bullion imports were scaled down from Rs
57170 Millions in the previous year to Rs 22980 Millions in view of very low
trading margin on such imports. The share of non-bullion import in the total
turnover therefore went up from 28% in 2004-05 to 45% of total turnover.
Excluding bullion, the total turnover grew by 27% over the previous year. The
total turnover of the Corporation during 2005-06 amounted to Rs 71250
Millions.
EXPORTS
Exports registered a striking growth of 93% over the previous year. The growth
achieved was far much higher than the national growth of 24% in exports. The
improvement in export performance was the outcome of diversification programme
embarked upon and the new strategies adopted by the Corporation. Areas
demonstrating noteworthy achievements in exports are indicated below :
Steel Operations
With a view to attain long-term sustainability in exports, the Corporation
diversified into overseas steel operations. Under this arrangement, STC has
been supplying steel raw materials to a steel plant in
In keeping with its diversification plans to venture into iron ore exports, the
Corporation signed an MOU with M/s. Mysore Minerals, a Govt. of Karnataka
Undertaking for getting assured supplies of iron ore fines for exports. Supply
arrangements with other parties were also tied-up and, for the first time,
about 0.400 Millions MT of iron ore valued at over Rs 800 Millions was exported
to
Chemicals and Pharmaceuticals
During 2004-05, STC entered into export of chemicals and pharmaceuticals in a
big way. Within a short span of two years, this has become a major line of
business of the Corporation. During 2005-06, exports of these items climbed up
to an all time high of Rs 4000 Millions as against Rs 2360 Millions during
2004-05.
Bullion
For the last few years, the Corporation had been persistently making efforts to
venture into jewellery exports. The efforts eventually bore fruit and the
Corporation was able to make a dent in the export of gems and jewellery by
effecting shipments worth Rs 100 Millions to
IMPORTS
The year saw a major shift in the composition of import turnover. In view of
very low trading margin, bullion imports were systematically scaled down to Rs
22980 Millions during the year as against Rs 57170 Millions in the previous
year. Non-bullion import turnover increased by 19% over the previous year. The
total import turnover during 2005-06 amounted to Rs 54930 Millions. The high
value imports of bullion in the previous years were substituted by larger
imports of hydrocarbons, minerals, metals, vanaspati and petrochemicals, etc.
as detailed below:
Hydro-carbons, Minerals & Metals
Ever since STC started undertaking imports of hydrocarbons, minerals and metals
during 2002-03, imports of these items have been progressively increasing.
During 2005-06, import sales of hydro-carbons, minerals and metals grew by 45%
to reach an all time high of over Rs 17000 Millions.
In view of ever rising domestic demand, import of hydrocarbons, minerals and
metals is well on its way to becoming a major business activity of the
Corporation in the years to come.
Edible Oils/Vanaspati
Despite continued sluggishness in domestic demand of edible oils during
2005-06, the Corporation was able to arrange import sales of over 1.7 lakh MT
of edible oils valued at Rs 3410 Millions. This included over 64,000 MT of
crude sunflower oil imported under TRQ. The Corporation also arranged imports
of about 1.13 lakh MT of vanaspati valued at Rs 3760 Millions under Indo-Nepal
Treaty of Trade.
During the year, the Corporation was successful in obtaining waiver from the
Ministry of Shipping & Transport for import of edible oils on C&F basis
for small lots up to 5000 MT per contract.
Petro-chemicals
The Corporation has been doing consistently well in this area also. During
2005-06, import sales of petro-chemicals amounting to Rs 1330 Millions were
effected. Efforts are being made to expand this business by broadening the
customer base.
Raw Cashew Nuts
For the first time, STC imported and sold Rs 470 Millions worth of raw cashew
nuts and almonds. It is proposed to substantially increase this business during
2006-07.
Others
Other items showing substantial growths in imports sales were pulses and
equipment. While import sales of pulses went up from only Rs 10 Millions in
2004-05 to Rs 660 Millions in 2005-06, that of equipments increased from Rs 60
Millions to Rs 540 Millions.
DOMESTIC SALES
During the year, domestic sales amounted to Rs 5400 Millions, the largest item
being petro-chemicals, which accounted for a turnover of Rs 3150 Millions.
Other major items included minerals and metals (Rs 990 Millions) and coarse
grains / pulses (Rs 730 Millions).
During the period under review, the Corporation entered into domestic supply of
various raw materials such as iron ore, steel, coke, chemicals, etc. The
Corporation also executed the highest ever contract (Rs 8000 Millions) for
supply of 1.9 million MTs of thermal coal to NTPC. The contract involved
handling of 39 ships of 50,000 MT each, movement of over 650 rakes from 5
different ports to 7 NTPC power plants within a span of 120 days. For this
purpose, coal was procured from
During 2005-06, STC entered into oilseeds market and purchased soyabean and
mustard seeds worth Rs 290 Millions. The Corporation also procured, for the
first time, about 10,000 MT of castor seeds valuing Rs 150 Millions for sale in
the domestic market. Besides, STC undertook stock and sale of rice bran on a
modest scale.
FOREIGN EXCHANGE EARNINGS / OUTGO
The total foreign exchange earnings of the Corporation by way of exports,
service charges, etc. during the year amounted to Rs 9296.500 Millions while the
foreign exchange outgo by way of imports and other expenses amounted to Rs
41147.700 Millions.
MOU RATING
It is heartening to note that the overall performance of the Corporation is
likely to be rated as 'Excellent' in terms of MOU : 2005-06 signed with the
Ministry of Commerce, Govt. of India for the third year in succession.
GOLDEN JUBILEE CELEBRATIONS
STC completed 50 years of service to the Nation in May 2006. To mark this
momentous occasion, the Department of Posts released STC Golden Jubilee Special
Postal Cover. A function was organized on 22nd May 2006 at STC's corporate
office building at
Steps were taken for strengthening bond with the employees of the Corporation.
As a first step, emphasis was laid on training of employees. An arrangement was
finalised with NTPC under which a large number of employees of the Corporation
at various levels were exposed to training in attitude building at NTPC Power
Management Institute. The Corporation launched an in-house magazine titled
'Pragati Path' to promote communication amongst the employees.
Greater social interactions among the employees were developed. Functions were
held at STC's Housing Colony involving participation of employees and their
families. A joint lunch for all employees was organised at the corporate
office. A computer training centre was set up at the Housing Colony in
The Corporation also reached out to the print and electronic media. Press
releases were issued from time to time. Press conferences were organised at
OPPORTUNITIES & THREATS
World trade is expected to grow by 7 per cent in 2006 in the backdrop of
expected stronger growths in OECD countries and sustained high growths in the
developing countries. However,
The major core sectors that are projected to record higher growth rates during
2006-07 are coal, electric power, oil & gas, crude oil, steel and aluminum.
The growths in these areas will translate into improved prospects for growth
for a range of industries in the engineering, non-engineering and the services
sectors. The liberal measures taken by the Government of India to encourage
foreign investment in the coal sector and mining would give a boost to the coal
industry and the other user industries in the core sector in particular.
The deepening bilateral trade and economic relations between
However, the refusal of the United States and the European Union at the WTO
Mini-Ministerial Meeting held in Geneva, to budge on the issue of cutting over
generous subsidies to their farmers coupled with more tariff cuts in
manufacturing and market access in the services sector in developing countries,
like India etc. continues to evade possibility of successful conclusion of the
Doha round of negotiations.
On the domestic front, rising prices of basic raw materials, power problems,
transportation, quality and supply constraints pertaining to coal are likely to
affect growth in the core sector.
OUTLOOK
All out efforts are being made to transform the Corporation into the one having
global operation rather than being limited to exports and imports. A beginning
has already been made and close linkages have been developed with a steel plant
in
The Corporation is looking forward to achieving further growth in its business
volume as well as profitability in view of many new diversification plans
already being at various stages of implementation.
STC has been appointed by the Govt. of India as a nodal agency to monitor
implementation of off-set / counter trade obligations arising out of purchase
of aircrafts by Indian / Air
The Corporation has finalized an MOU with the State Trading Organisation of
Mauritius for improving bilateral trade. In terms of the MOU, STC is expected
to service the import requirements of
With a view to extend its minerals operations further, the Corporation proposes
to enter into mining. A plot of land measuring over 525 hectares has already
been reserved by the Central Govt. for mining through STC. Approval of the
State Govt. is being obtained. In the meantime, a project report is being
prepared for undertaking actual operations.
Having made a small beginning in online trading of commodities through NCDEX,
the Corporation plans to enter in this business in a big way in near
future.
Export of gold jewellery in which STC has recently diversified is continuing to
grow and during the first quarter of 2006-07, exports of gold jewellery to the
tune of Rs 185 Millions have already been made. It is proposed to expand this
business by organizing consortia of jewellery manufacturers through
participation in overseas exhibitions and fairs.
The Corporation is also exploring possibilities of importing communication
equipments on behalf of telecom companies and is already on the look out for a
suitable trade partner for entering into long-term tie-up in this regard.
In a major development on import front, STC has been asked by the Government of
India to import a total quantity of 39 lakh MT of wheat for arrival spread till
January 2007 into the country in view of declining wheat stocks in the Central
Pool and hardening prices in the domestic market. The entire quantities have
since been contracted by STC for import. Shipments have already commenced and
are expected to be completed by January 2007. A quantity of 92,000 MT has
already arrived into the country till end June'06.
SUBSIDIARY
STCL Limited (Formerly, Spices Trading Corporation Limited)
STCL, the wholly owned subsidiary of STC based at
As a result of qualitative changes in marketing strategies and continued thrust
on identifying new product lines, the turnover of STCL reached a record level
of Rs 4710 Millions during 2005-06. The company has also reported 67% rise in
net profit, which has gone up to Rs 59.800 Millions and paid a dividend of 40%
to STC for the financial year 2005-06.
During the year, STCL launched 'Flavourit' brand of organic spices in the
domestic as well as in international markets and the same evoked a very good
response, especially in the
With a view to protecting the interests of farmers, the company played an
active role in selling fertilisers to tobacco growers and supplying quality
agro-chemicals and other inputs for plantations in Karnataka. STCL also offered
finance at a concessional rate to small coffee growers against deposit of their
stocks thereby helping them in avoidance of distress sale of their
produce.
STCL plans to set up chilli and pepper processing plants in Karnataka at a
total investment of Rs 70-80 Millions to help growers get remunerative prices
for their produce through value addition.
Items of exports
Agricultural Commodities :-
·
Wheat
·
Cashew
·
Coffee
·
Rice
·
Tea
·
Tobacco
and Rubber
·
Sugar
·
Extractions
·
Opium
·
HPS
Groundnut
·
Spices
·
Castor
Oil and Seeds
·
Jute
Goods
Manufactured Products:-
·
Chemicals,
Drugs and Medical Disposables
·
Engineering
and Construction Materials
·
Consumer
Products
·
Textiles
and Garments
·
Leatherware
·
Processed
Foods
Areas of operations
include :
Ř
Exports
from
Ř
Imports
into
Ř
Domestic
Trading
Ř
Market
support operation – Rubber, Tobacco, etc.
Ř
Off-shore
Trading
Ř
Counter
Trade
Ř
Joint
Ventures
ECONOMIC ENVIRONMENT
- With Particular Reference to the company
As a result of
liberalised foreign trade policy adopted by the Government, all export/import
items earlier canalised through subject have already been decanalised. Import
of other items earlier handled by the Corporation on Government Account,
namely, edible oils, sugar, wheat, etc. have also since stopped either due to
better domestic availability or due to the changed Government policy.
Presently, there is
no item export or import of which is canalised through the subject. During 2001-02, the entire turnover of the
subject was by way of non-canalised competitive trading and no part of the same
came from canalised or Government Account business. As such, today the subject
functions almost like any other private trading house. In the present
competitive global trading environment, the margins are very low. The subject
is, therefore, making efforts to increase the volume of business in identified
areas so as to attain a reasonable level of profitability.
The vanishing of
Government Account business has not only hampered the turnover and
profitability of the subject but has also rendered a substantial part of the
it's manpower redundant resulting in a high overheads to turnover ratio. A
large part of the overheads being fixed, the only way to improve the overheads
to turnover ratio is to increase the turnover.
The ongoing process
of disinvestment in the subject by the Government proved to be another
performance dampener. Buyers and suppliers are not coming forth to enter into
any long-term business relationship with the subject due to likely change in
the status of the subject after disinvestment and employee morale is low.
MoU with Power
Finance Corporation Limited
The subject plans
to become a major player in the business of coal/coke imports. For this
purpose, an MoU has been signed between the subject and Power Finance
Corporation Limited (PFC). In terms of the MoU, subject will arrange import and
supply of coal/coke to various State Electricity Boards and Independent Power
Producers against payment guarantee by PFC. This is expected to give a boost to
the Corporation's turnover and profitability in the coming years.
DISINVESTMENT
The Government of
India has decided to off load 65% equity in the subject to a strategic buyer
thereby reducing its stake in the company to the level of 26%. The
disinvestment process has already been initiated. The Government constituted an
Inter-Ministerial Group to assist the Department of Disinvestment in the
process of disinvestment. Advisor to assist the Government in the disinvestment
process was appointed in January '02. 'Expression of Interest' was invited from
the prospective bidders who have since undertaken the due diligence exercise.
Legal Advisor and Asset Values have also been appointed. Financial bids are
likely to be invited/evaluated shortly.
State Trading Corporation set for a makeover
THE State Trading Corporation of India Limited (STC) is all set for a make-over
from being a bulk trading agency in commodities to a one-stop shop that offers
specialised trade facilitation, by drawing from experience and contacts built
over five decades.
In an interview to Business Line, the Chairman-cum-Managing
Director of STC, Dr Arvind Pandalai, said, "In the medium- to long-term,
with so much competition and the market opening up, the trading scenario is
going to change. Unless we prepare ourselves through value-addition in trading
operations, nobody is going to come to us."
Accordingly, the Rs 10,0000 Millions
trading giant has devised several plans to position itself through
"backward and forward integration and industrial participation programme
with best international companies so that not only our requirements are met but
the country too gets the best technology at affordable cost," said Dr
Pandalai.
"Our product range, strong financial base, proprietary
infrastructure and expertise in third-party trading would all be duly and fully
used to convert STC into a world trading company instead of being an
India-centric corporation," Dr Pandalai said.
On backward integration, he said, anybody who exports through us needs
certain inputs, whether it is raw materials, machinery, technology or
assistance in developing products, which might be available domestically or
globally.
"We are going to get all these through our connections and contacts
so that the exporters become permanent partners and together we can grow
manifold," Dr Pandalai said.
In certain cases, he said, this might even be financial requirements and
"if we see capabilities, we can get finances cheaper than anybody else as
we have structured financial operations which we had begun a couple of years
ago."
On forward linkage, he said, "Our clients (both exporters and
importers) may require certain inputs and want us to offload some of their
products somewhere else. We are helping to get these done besides assisting
them in running their plants efficiently."
Dr Pandalai said the corporation is going to certain high-tech areas and
tie up with patent-holders internationally, bring them to
He cited the example of proprietary items for which there was an
exclusive tie-up for production and marketing of ballistic protection
equipment, including bullet-proof armouring of vehicles, under the Centre's
plan to modernise police/paramilitary forces and forensic science laboratories.
He said the company would derive its strength from its earlier
experience in counter-trade deals on defence equipment.
Dr Pandalai also mentioned a recent MoU that STC had signed with the
Foreign Economic Relations Department of the Government of Uzbekistan. Under
this, STC would take some capable textile manufacturers from
The final product could be exported to a third country or brought back
to
The STC Chief said, with disinvestment blues behind the company,
"we are going to fill up the vacuum for professional skills available at
various stages."
The company has begun "dialogues with reputed global organisations
to study the new areas into which the corporation plans to foray and develop a
structure and the inputs required so that the company can get the human skills
by staying one step ahead of competition."
On the current year's prospects for the company, Dr Pandalai said STC
would definitely do better than the MoU physical target it had projected to the
Government, particularly on the export front in areas such as steel, ore,
granite and pharmaceutical products.
On the import front, the company would consolidate its gains in trading
edible oil, parallel marketing of petro-products and a few other traditional
and non-traditional items.
FIVE
DECADES OF THE STATE TRADING CORPORATION
The State Trading Corporation of India Limited (STC) has entered the year of its existence in international trading. It has been a long sail for STC since its incorporation on May 18, 1956 as an autonomous company of the Government of India under the Indian Companies Act, 1956. Today STC has an extra-ordinary track record of five decades of service to the nation.
With a starting capital of Rs. 10
Millions, STC initiated
With the gradual expansion in business, the role and responsibilities of the Corporation have kept pace with the fast growth in trade of specific products such as iron ore, handicrafts and handlooms. To cater to the trade in specific commodities number, a corporation such as the Minerals and Metals Trading Corporation (MMTC), Cashew Corporation of India (CCI), Projects and Equipment Corporation (PEC) and State Chemicals and Pharmaceuticals Trading Corporation (SCPTC) were carved out of STC during the early 1960s and 70s to handle independent business of these items. Even the Handicrafts and Handloom Export Corporation (HHEC) and Tea Trading Corporation of India (TTCI) were subsidiaries of STC at some stage. Some of these corporations have since merged back with STC while others have become independent corporations.
STC has played the role of a catalyst in promoting exports from the small-scale sector by providing a package of services to them such as product development, import of raw material and machinery, quality control, financing, market intelligence, participation in trade fairs, technical know-how, packaging, costing, pricing, transportation, documentation and above all the STC goodwill. STC set up a number of common facility centers for the benefit of exporters. These included shoe upper unit for manufacture of shoe uppers, textile design centre to create new styles and designs of readymade garments in line with the prevailing fashion trends in international markets and design-cum-development center for sports goods industry. STC’s role in promoting exports of leather, leather products, woolen knitwear, processed foods, cosmetics, chemicals, drugs and disposables has been noteworthy.
As an instrument of the Government’s Trade Policy, STC arranged imports of essential commodities of mass consumption such as edible oils, wheat, sugar and pulses. It also handled a large volume of canalized imports of newsprint, natural rubber and life saving drugs to meet domestic shortages. In 1974-75 alone, the Corporation handled as many as 118 canalised items of import, which mostly comprised chemicals. Encouraged by the success achieved in handling bulk items, the Corporation set up an Industrial Raw Material Assistance Centre (IRMAC) which imported non-canalised raw materials in bulk and arranged off-the-shelf deliveries to actual users and registered exporters against valid advance licences, thereby passing them the benefits of bulk buying. The Corporation also imported banned or restricted items like phenol and industrial alcohol to meet their shortages in the country on advice. It imported raw materials and capital goods at most competitive prices, thereby saving foreign exchange.
STC ahs also successfully served its socio-economic objectives by ensuring remunerative prices to growers of certain agricultural products such as rubber, tobacco, shellac, lemon grass oil and sticklac through price support operations undertaken from time to time at the instance of the Government. These operations, whenever undertaken by the Corporation, had a salutary impact on prices.
The total turnover of STC attained a
Liberalisation of trade policies by the Government since 1991 did pose a challenge to the Corporation’s business in the initial years. But, STC geared itself well to meet the global challenges by embarking upon diversification of its activities.
Over the past five decades, STC has grown from strength to strength. It has since raised its equity capital to Rs. 300 Millions, of which, Rs. 280 Millions has been added by way of capitalization of reserves. In addition, STC has reserves worth Rs. 2760 Millions today. The Corporation has earned profits since its inception and has contributed Rs. 7750 Millions to the public exchequer by way of payment of dividends and taxes.
STC has developed infrastructure and
expertise necessary to structure and implement any type of trade
transaction. Backed by fourteen branch offices, mostly located at major
port towns, the Corporation has its corporate office at
STC has also developed large, real estate in
the form of offices and residential accommodation at major metropolitan
cities including a housing colony for its employees at
In the past three years, the Corporation also made forays into many new areas of trade such as the import of hydrocarbons, minerals, metals, fertilizers on commercial account, petro-chemicals, IT products, and in exports of iron ore, chemicals and drugs. STC has thus emerged as a leading exporter of agro products and importer of precious metals and other bulk items in the country.
As a result of
diversification of business activities, during 2004-05, the STC Group has
achieved an all-time high turnover exceeding Rs. 100000
Millions and earned a net
profit after tax of Rs. 270 Millions. (PIB Features)
STATE
TRADING CORPORATION SET FOR A MAKEOVER
G. Srinivasan
THE State Trading Corporation of India Limited (STC) is all
set for a make-over from being a bulk trading agency in commodities to a
one-stop shop that offers specialised trade facilitation, by drawing from
experience and contacts built over five decades.
In an interview to Business Line, the Chairman-cum-Managing
Director of STC, Dr Arvind Pandalai, said, "In the medium- to long-term,
with so much competition and the market opening up, the trading scenario is
going to change. Unless we prepare ourselves through value-addition in trading
operations, nobody is going to come to us."
Accordingly, the Rs 10,0000 Millions trading giant has
devised several plans to position itself through "backward and forward
integration and industrial participation programme with best international
companies so that not only our requirements are met but the country too gets
the best technology at affordable cost," said Dr Pandalai.
"Our product range, strong financial base, proprietary
infrastructure and expertise in third-party trading would all be duly and fully
used to convert STC into a world trading company instead of being an
India-centric corporation," Dr Pandalai said.
On backward integration, he said, anybody who exports
through us needs certain inputs, whether it is raw materials, machinery,
technology or assistance in developing products, which might be available
domestically or globally.
"We are going to get all these through our connections
and contacts so that the exporters become permanent partners and together we
can grow manifold," Dr Pandalai said.
In certain cases, he said, this might even be financial
requirements and "if we see capabilities, we can get finances cheaper than
anybody else as we have structured financial operations which we had begun a
couple of years ago."
On forward linkage, he said, "Our clients (both
exporters and importers) may require certain inputs and want us to offload some
of their products somewhere else. We are helping to get these done besides
assisting them in running their plants efficiently."
Dr Pandalai said the corporation is going to certain
high-tech areas and tie up with patent-holders internationally, bring them to
He cited the example of proprietary items for which there
was an exclusive tie-up for production and marketing of ballistic protection
equipment, including bullet-proof armouring of vehicles, under the Centre's
plan to modernise police/paramilitary forces and forensic science laboratories.
He said the company would derive its strength from its
earlier experience in counter-trade deals on defence equipment.
Dr Pandalai also mentioned a recent MoU that STC had signed
with the Foreign Economic Relations Department of the Government of Uzbekistan.
Under this, STC would take some capable textile manufacturers from
The final product could be exported to a third country or
brought back to
The STC Chief said, with disinvestment blues behind the
company, "we are going to fill up the vacuum for professional skills
available at various stages."
The company has begun "dialogues with reputed global
organisations to study the new areas into which the corporation plans to foray
and develop a structure and the inputs required so that the company can get the
human skills by staying one step ahead of competition."
On the current year's prospects for the company, Dr Pandalai
said STC would definitely do better than the MoU physical target it had
projected to the Government, particularly on the export front in areas such as
steel, ore, granite and pharmaceutical products.
On the import front, the company would consolidate its gains
in trading edible oil, parallel marketing of petro-products and a few other traditional
and non-traditional items.
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or investigation
registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No available
information exist that suggest that subject or any of its principals have been
formally charged or convicted by a competent governmental authority for any
financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms and
conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.40.53 |
|
|
1 |
Rs.80.41 |
|
Euro |
1 |
Rs.54.52 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
7 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
7 |
|
--LEVERAGE |
1~10 |
7 |
|
--RESERVES |
1~10 |
7 |
|
--CREDIT LINES |
1~10 |
7 |
|
--MARGINS |
-5~5 |
-- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
63 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General unfavourable
factors will not cause fatal effect. Satisfactory capability for payment of
interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|