Govt may give STC Rs 25 bn bank guarantee to help resolve liquidity problem

State Trading Corporation (STC) may soon get relief from the government in terms of bank guarantee of Rs 25 billion to help the company resolve the liquidity problem, sources said.

The commerce ministry has approved the proposal and sent that to the finance ministry for final approval.

"There is also a plan to restructure loans of STC as the company is facing financial hardship," the sources said.

The firm is also in the process of preparing a plan to sell its non-core assets to raise funds.

The move assumes significance as there was a proposal of the commerce ministry for a merger of STC and another state-owned trading firm MMTC.

STC has posted 88.44 per cent fall in standalone net profit to Rs 14.6 million during April-June 2018-19, on account of poor income.

The company, while releasing its unaudited financial result for the quarter ended June 30, 2018, in August, had stated that it has appointed a financial advisor for the restructuring of existing loans and for raising additional loans.

It had also proposed to raise additional working capital funds against its properties.

"Therefore, the Company has approached its lender banks for an appropriate resolution plan with the objective to make the operations of the company viable and sustainable. The lender banks have formed Joint Lender Forum to finalise the reconstruction plan," it had said.