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MMTC at lower circuit, sinks 19% in 2 days on reports govt may wind it down

From its 52-week low of Rs 26.4 touched on April 28 this year, the stock had leaped 237 per cent to a new 52-week high of Rs 89 on October 17, Tuesday

MMTC

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SI Reporter New Delhi

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Shares of MMTC Ltd were locked in the 10 per cent lower circuit on BSE for a second straight session on Thursday amid reports that the government may wind down the PSU due to a lack of investor interest in its offer-for-sale (OFS). 

The stock was trading at Rs 70.55 in Thursday’s intra-day trade, down 19 per cent in the last two sessions after staging a sharp rally of 55 per cent in the preceding 7 days.   

From its 52-week low of Rs 26.4 touched on April 28 this year, the stock had leaped 237 per cent to a new 52-week high of Rs 89 on October 17, Tuesday, just before the recent losses. 

A Moneycontrol report on Tuesday said that the government could seek the company’s closure to the alternative mechanism (AM) due to a lack of investor participation in the company’s OFS. 

After the approval for stake sale in MMTC, transanction advisors failed to go ahead with the proposed OFS and thus MMTC is likely to be recommended to the AM for closure, the report said, citing an official.  

Other PSUs State Trading Corp (stock is down 10 per cent) and PEC Ltd could also be closed down. The final decision on the three companies will be taken in a meeting chaired by Commerce Minister Piyush Goyal on October 23, reported CNBC-TV18. 

The AM allows for speedy decisions on strategic divestment, minority stake sale and closures of PSU units. It comprises select ministers empowered to decide on the timing, price and number of shares of a PSU to be put out for sale. 

The government currently holds a 99.33 percent stake in MMTC, which is an international trading company, dealing in trading of minerals. 

MMTC is one of India’s largest non-oil importers and the single largest exporter of minerals. 

It is a currently a member of the Multi Commodity Exchange (MCX), registered as a commodity derivative broker from December 2015. 

In August this year, Sebi cancelled MMTC’s broker licence for its involvement in illegal “paired contracts" in a case related to the now defunct National Spot Exchange Ltd (NSEL). 

MMTC traded in “paired contracts", which did not have regulatory approval, Sebi had said.

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First Published: Oct 19 2023 | 2:13 PM IST

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