Exclusive: FinMin endorses commerce ministry proposal on MMTC closure

MMTC’s quarterly net profit declined 99 percent to Rs 10.67 crore in September 2023 from Rs 1,117.19 crore a year earlier.

The finance ministry has endorsed the closure of MMTC (Metals and Minerals Trading Corporation of India) due to lack of investor interest in the company, a senior government official said.

MMTC, set up in 1963, operates under the ministry of commerce and industry.

“The commerce ministry had sought the finance ministry’s opinion on MMTC. The finance ministry suggested that the PSU should be closed as there is no investor interest,” the official told Moneycontrol.

Once the commerce ministry recommends MMTC’s closure, the final decision will be taken by Alternative Mechanism (AM), which is a panel of finance minister Nirmala Sitharaman, road transport and highways minister Nitin Gadkari and commerce minister Piyush Goyal.

The government has approved the closure of about 21 lossmaking PSUs, but very few have been completed.

“Closure of PSUs is more difficult than disinvestment as it leads to huge job losses,” the official said.

Once the Alternative Mechanism approves the closure of MMTC, it will be coordinated by the finance ministry’s Department of Public Enterprises, which looks at the process of PSU closures.

The government holds a 89.93 percent stake in MMTC, which is short of the minimum 25 percent public shareholding norm. The Cabinet Committee on Economic Affairs approved the sale of a 9.33 percent stake in MMTC in 2012 via an offer for sale, which hasn’t taken place.

The CCEA had in 2020 given in-principle approval for strategic disinvestment in MMTC by sale of a 49.78 percent stake.

However, minister of state for commerce and industry Anupriya Patel informed the Lok Sabha on August 9, 2023, that the government has not taken a decision on the strategic disinvestment of MMTC.

MMTC’s quarterly net profit declined 99 percent to Rs 10.67 crore in September 2023 from Rs 1,117.19 crore a year earlier. Net sales fell 87 percent to Rs 1.81 crore.

The company’s shares have gained about 72 percent in the past one year.

In August 2023, the Securities and Exchange Board of India cancelled the registration of MMTC as a stockbroker for its involvement in an illegal ‘paired contract’ in a case pertaining to the defunct National Spot Exchange.