Shares of State Trading Corporation (STC) and Metals & Miners Trading Corporation of India (MMTC) plunged up to 18 per cent on Tuesday on report that the Commerce Ministry has decided to close down the stateowned trading firms along with the Project and Equipment Corporation of India (PEC).
The department of commerce may soon approach the cabinet with the proposal, The Economic Times reported.
It was also agreed upon that the ministry will prepare a comprehensive note for the Cabinet for closure of both STC and PEC within a definite time frame, given their precarious financial position, another report by Press Trust of India said.
At 9:50 AM, STC's stock was trading 17.37 per cent lower at Rs 110.40 as compared to 0.2 per cent decline in the benchmark S&P BSE Sensex. STC registered spurt in volumes by more than two times over two-week average daily volume. A combined 895,000 shares had changed hands on the NSE and BSE by the time this report was filed.
MMTC's shares dipped 16.3 per cent to Rs 20.70 on the BSE. A combined 3.06 million shares of MMTC had changed hands on the NSE and BSE by the time this report was filed.
The STC was set up in 1956 as a trading arm of the government to undertake trade with east European countries.
According to STC's annual report for 2018-19, the company is facing "severe liquidity crisis" as all the lender banks have reported STC's account as NPA due to non-payment of interest on the banking limits availed by the company". Therefore, at present, the company has no banking limits, funded or non-funded, available with it, the PTI report said.
Out of the total dues of about Rs 1,906 crore (as on 31.12.2018) crystallized with the lender banks, an amount of Rs 1,100 crore has already been paid by STC to the lender banks. The balance amount is also proposed to be paid partly through sale of its immovable properties and partly out of the trade receivables to be realised by the company, it said.