MC Exclusive: Govt likely to suggest closure of MMTC on lack of investor interest

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Lack of investor interest in MMTC Ltd’s offer for sale (OFS) could force the government’s hand in seeking the company’s closure to the alternative mechanism (AM), a panel of Finance Minister Nirmala Sitharaman, Minister of Road Transport and Highways Nitin Gadkari and the minister from the line ministry, which in the case of MMTC is Piyush Goyal, that decides on the matters relating to strategic sale and winding up of PSUs.

“The cabinet had earlier given approval for stake sale via OFS in the case of MMTC. The transanction advisors however have failed to go ahead with OFS. So now there are talks of its closure as there is no investor interest. A final decision will be made on it. That being the case, MMTC is likely to be recommended to the AM for closure saying that in view of the failure of being able to sell its stake via OFS, the earlier decision may be revoked and it may be approved for closure,” a senior government official told Moneycontrol.

The State Trading Corporation of India Limited (STC) is also likely to face closure, he said.

Instead of the cabinet, the AM (alternative mechanism) is empowered now to make a decision on the closure of PSUs.

Also Read: MMTC, STC, PEC likely to face closure; Piyush Goyal to chair meeting on Oct 23

The government currently holds a 89.93 percent stake in MMTC.

On August 9, in a written reply to the Lok Sabha, Minister of State for Commerce and Industry Anupriya Patel said that the government has not taken a decision on the strategic disinvestment of MMTC.

The Securities and Exchange Board of India had cancelled the registration of MMTC Ltd as a stockbroker for its involvement in an illegal ‘paired contract’ in a case pertaining to the defunct National Spot Exchange, the company had informed stock exchanges on August 7.

Also Read: MMTC, STC stocks rally up to 10% after reports of likely shutdown

The state-run trading firm had posted a profit of Rs 1,076.07 crore in 2022-23 against a loss of Rs 241.93 crore in 2021-22.

Established in 1963 as the Minerals and Metals Trading Corporation, MMTC is one of the two highest foreign exchange earners for India with a turnover of over $7 billion. MMTC deals in the trading of minerals and is the single largest exporter of minerals from India.

The company has an international trade network spanning almost all countries in Asia, Europe, Africa, Oceania, and North America. The Miniratna company also has a wholly-owned international subsidiary in Singapore, MTPL.