(FE)
The government is considering the closure or merger of three state-owned trading agencies — State Trading Corporation (STC), MMTC and PEC — as the purpose of their existence has eroded gradually, commerce and industry minister Piyush Goyal said on Tuesday. The news of potential closure spooked investors and shares of STC and MMTC tanked by close to 20% on the BSE on Tuesday, when the Sensex dropped 1.7%. “Slowly the original purpose of these PSUs has come to an end. They are no longer the canalising agencies. It’s not the business of the government to remain in such businesses. It doesn’t make sense to have such a big infrastructure to carry out gold imports, etc. We have started the discussion…all options (closure and merger) are open,” Goyal told reporters on the sidelines of a CII event. As such, these companies haven’t “covered themselves in glory”, he added.
A source told FE that the commerce ministry could recommend the closure of loss-making STC and PEC first. STC may be asked to transfer the titles of its immovable properties, expected to be around Rs 300 crore, to banks and Syndicate Bank — which has initiated the insolvency proceeding against it — may be nudged to withdraw it. The ministry has already asked these two agencies to bolster their cash flow by improving process of recovery from companies that had used their service (such as importing goods, etc) but were yet to pay.
