Indo-US nuclear agreement an opportunity for MMTC: CMD

The nuclear agreement between India and US is an opportunity for state-owned trading firm MMTC, said Ved Prakash, CMD of the company. Speaking to CNBC-TV18, he said MMTC has been in talks with various defence organisations for the same.Over last three years, standalone profits of the company have increased almost 300 percent. However, its loss making steel PSU Neelachal Ispat Nigam has hit MMTC's consolidated numbers, Prakash said. In any deal with the government of India or public sector bank (PSU) companies, there are fixed-margins by way of which they work, he added.Below is the verbatim transcript of Ved Prakash’s interview with CNBC-TV18's Sonia Shenoy and Latha Venkatesh.Sonia: If you could clarify for us whether there is anything positive for a company like MMTC with the signing of this nuclear reactor deal with the US?A: Certainly this is an opportunity for us now and in fact we have been also talking to various defence organisations in the country for their various products, for their imports of special metals. Maybe this will also be a new opportunity for us and we welcome it.Latha: Have you already looked at exporting or importing anything?A: Like Mishra Dhatu Nigam Limited (MIDHANI) or ordnance factories we are already importing their metals and we are also talking to them for export of some of their alloys and some defence items which they have developed. But for MIDHANI and some ordnance factories we are already doing business, for other public sector undertaking (PSUs) we have to just work out.Sonia: Can you just explain what the business model could look like, will you be earning a percent in this particular deal because you have the license to import nuclear fuels etc, but I am not understanding exactly how you will benefit from the deal that India has struck with the US?A: We have yet to get the details of the deal but normally the imports which we are doing on behalf of the government we take fixed margin for our services, logistics, for arranging the deals and arranging the imports to the country. So, it will be some kind of on a fixed margin basis with the government PSUs like the Nuclear Corporation or the Government of India.Latha: What is that volume likely to be, can you give us a ballpark idea how much revenues you may do?A: I won't guess it, maybe it will take little time for us to sit down and work out the real details of that.Sonia: The reason we are asking is because the company has been loss making for the last four years at least. In this fiscal as well the loss has been about Rs 100 crore for MMTC. What do you think the next couple of years will look like. Should we expect another couple of years of losses from the company?A: I would rather say that please look at the net profit of MMTC. Last three years we have increased our net profit by 300 percent. So, of course the turnover has come down but on the topline we are not much worried. The important thing is that with increase of net profit you must have seen that we have also declared 30 percent dividend for the shareholders. So, we believe that once the bottom-line improves we have more capital more funds and more for the shareholders. So, that is the value addition we are doing. This is as per the last financial year which I want to clarify that it is not a loss. It is a net profit which MMTC has earned for the last three years and for future we are definitely quite optimistic.Sonia: I am looking at the consolidated profit and loss (P&L) on Bombay Stock Exchange and there it does show that there is a loss that you have incurred for this year of Rs 104 crore versus a loss of Rs 42 crore last year.A: They are reflecting some other figure but our net profit is in the books of accounts as approved. Our net profit last year was Rs 47.91 crore. This year we have increased to Rs 54.86 crore and year before it was about Rs 19 crore.Sonia: You are talking about the standalone numbers, I am talking about the consolidated numbers for MMTC which has been loss making?A: Consolidated is like this. We have four or five joint ventures. Now these are independent joint ventures. This is a per the recent guidelines of the Ministry of Corporate Affairs that we also have to declare the results of the joint ventures along with MMTC. So, there is nothing to worry. Basically we have five joint ventures. The MMTC PAMP has given us a huge profit whereas the other joint venture you know it is a Neelachal Ispat Nigam Limited (NINL), 1.1 million tonne steel plant. It is with joint venture with joint venture with Government of Orissa, NMDC and BHEL. You know that the steel sector has been bad for the last 2-3 years and it is the basic reason that last year's joint venture has made the loss of how it has come into the consolidated but otherwise it will not be affecting the MMTC's profits.Latha: So, all the losses came from RINL only?A: Not RINL, NINL.Latha: I can see your standalone profit is Rs 54 crore, I agree with you but ultimately your share will reflect your consolidated numbers.A: Yes, because that we have to reflect as per the current guidelines. Earlier we were not doing it. So, now we have to declare the consolidated statement including the joint venture.Latha: I just wanted to ask you about the recent announcement or at least news item that many PSUs are going to be asked to restructure their capital. Is there anything in the works for MMTC?A: No, not as such but disinvestment is on the plan and this year there is a plan to divest 15 percent share and now that government has to take a call we have had one or two meeting with Ministry of Disinvestment. So, when they take a call and see the market improving we are ready for that.Sonia: You are also a market leader in the Indian bullion trade. You guys handle the import of gold. Tell me after the relaxation of import norms do you plan to increase the amount of gold imports and if yes by how much?A: Gold also you must have seen the figures for the last 3-4 months. Two months there was a jewellers strike. Next two months the demand for gold has come down considerably because of the high prices in the global market and second, now since these are the periods when the rural income which is 60 percent of the market it will be a quite time for two months of the rural market because they will be investing on the kharif crops and after two months, from August-September we see that huge demand for gold picks up and MMTC certainly remains prime importer and this year we will be able to tell you that our focus on DTA gold, that is gold supply to the exporters has considerably increased. It has almost increased by 50 percent over last year. So, that is one very good sign for MMTC.