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Govt has to take a call on timing of shutdown, MMTC has to be revamped immediately: CMD

There is a long process involved. But the process is on as far as MMTC is concerned.

ET Now|
Updated: Sep 17, 2019, 03.59 PM IST
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Ved Prakash-BCCL-1200
We have already taken action to exit the unviable joint ventures in a phased manner. We have to close down offices which are unviable and also the operations which are not giving us profits, says Ved Prakash, CMD, MMTC. Excerpts from an interview with ETNOW.

What have you heard on the shutdown of STC, PEC & MMTC?
What I hear is that in case of STC and PEC, immediate action will be taken to shut them down. As far as MMTC is concerned, because we have lots of joint ventures, we have to revamp immediately. We have already taken action to exit the unviable joint ventures in a phased manner. We have to close down offices which are unviable and also the operations which are not giving us profits or which are not viable. In today’s competitive global scenario, being a trading company, we have to gear up and revamp our operations to make it more profitable.

When do you see the shutdown actually taking place?
The government has to take a call on that. Today, MMTC has to revamp the operations in a competitive world and we have already initiated the work. We have moved to shut down three small offices which were unviable. We have a total of about 20 offices and so we will have to work in a phased manner.

Could you give us a specific timeline as to when will this be executed?
As I said, we have already taken action on the loss-making joint ventures. But there is a long process involved. We have to appoint valuers, we have to appoint merchant bankers and then we will have to go through that process but the process is on as far as MMTC is concerned.

As we understand, the government as of now owns about 90% stake in MMTC. Is that a plan at play to bring down the debt and may be divest a little bit in MMTC?
As per Sebi guidelines, we have to come down to 25%. So, another 15% has to be divested. I believe DIPAM has initiated actions but for the time being, the process has been put on hold.

Why is that because as you said this is a prerequisite which has to be done?
It has to be done but DIPAM has priorities and the government has priorities and may be the first priority is other PSUs. They are doing it in a phased manner. MMTC’s chance will also come.

Do you have a timeline for the disinvestment?
No, we have not got any timeline from DIPAM.

The chatter is that the government is actively looking at divesting in a phased manner and maybe the stake sale could be larger than 15%? Also, is this going to be via an open market route or is it looking at a stake sale to another entity altogether bordering on privatisation?
For the time being, we heard the percentage of the stake sale is only 15% but the government is not aware of any decision. As far as the second issue of divestment is concerned, we have not heard anything on that. So I think the government is yet to decide on that.

Also what is the amount of real estate that you have on your books right now?
Some properties are leased properties, some are long-term agreements. The valuation as such is difficult for the present.

Would you know as to how many acres or square feet of area and land parcels, you are sitting on?
We have office properties, residential properties, flats at different locations all over India. They are in different locations and under different agreements.

What is the plan then for MMTC in terms of making it more profitable? As of March this year, consolidated debt was more than Rs 900 crore. How do you plan to reduce that?
Today MMTC is a zero-debt company as far as the long-term debt is concerned. The Rs 900 crore which you are mentioning is only a working capital loan which we borrow to carry on our operation but MMTC continues to be a zero debt company so far.

Would it not make sense to sell some of these land parcels perhaps and use it to meet your working capital requirements?
As we revamp our operations, definitely we will decide on the assets which we do not need. Wherever we are closing the offices, we will try to dispose it off or divest depending on requirement.
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