Will import up to 10 MT coal in FY16: MMTC CMD

Q: The company has reported a loss at the earnings before interest, taxes, depreciation and amortization (EBITDA) level. What is the reason for that and going forward, do you expect MMTC to report losses at the operational level or will it turn around?

A: Certainly not. Our net profit has increased by more than 150 percent over last one year. There has been EBITDA loss mainly because of gold policies. Last year gold import had substantially come down and this year now, since the government has relaxed the import policy and we are confident that the EBITDA which we have made, we will be able to make it more than gold.

Second, the gold business potential is very high for MMTC. This year we are going to import about 10 million tonnes for various power utilities and that should help us doing much better on the EBITDA level.

Q: The profit figure has come under Rs 38 crore and you also have an exceptional item which is a credit of about Rs 63 crore. So, if this credit was not there, you would have reported a loss this time around. What is this Rs 63 crore credit that you have posted?

A: This is the outstanding that we had written-off. We have recovered back that item. We have written it back, so this is how the exceptional item has come because last year, we had created a provisional for that. But, over and above that, I believe we should be doing well.

Q: What was the reason for the tax expense to come down so much and what will be the tax rate of the company going forward?

A: Tax expense because we have also written-off certain item, so we have been the debt as far per the auditors, they had suggested us that we should write-off certain items for which the provision was created long back. So, that also has saved us from the tax component.

Q: You mentioned that you will be importing about 10 metric tonne (MT) of coal in FY16 for various companies. What will be the amount for Coal India and what was the figure last year?

A: Coal India had initially given us the letter of intent (LOI) for five million tonnes. We have already received the order for 1.5 million tonnes and have orders from Andhra Pradesh Power Generation Corporation, we have obtained LOI from government of Haryana and we are talking to Maharashtra State Electricity Board. Also, in Andhra Pradesh, they have additional requirement of four million tonnes. That all put together should give us 10 million tonnes.

Q: In FY15, your total revenues were down close to about 15 percent and you indicated you got hit on account of gold imports. For FY16, import of coal will be a driver. What else will be the growth drivers for the company?

A: Coal will be a driver. Gold will be a major driver because the gold policy on which the government had put restrictions last year has been removed. MMTC has been a major importer of gold and looking forward, we are quite hopeful that we should be able to do good quantities and volume business, volume of about Rs 8,000-10,000 crore. And the volume which has come down, we will do it better than last year.

Q: Your largest trading volumes come in from your fertiliser segment which is actually seeing a near 500 percent rise on a year-on-year basis. But on an EBIT level, the segment is still posting a bit of a loss. Can we expect that to be break-even or a turn around in FY16?

A: Fertiliser, yes, we import urea on government’s behalf. Last year, certain trends, the government of India had delayed the payment of fertiliser and we had to, what really the interest cost, as you say that we have shown loss on that.

The interest cost was very high, we have already taken up with the department of fertiliser and are pursuing that interest loss which we have incurred and also for future, the payment must be prompt if we import on behalf of the government.

They have assured us that payment will be expedited and for future we look equal volume of fertiliser imports because in the country, the demand for fertilisers is going up.