In signs that all’s not well with State Trading Corporation of India Ltd (STC), the government-owned company has cited its “prevailing financial position” and stopped all payments -- except salary -- to its employees.
The listed company -- set up in May 1956 and handling canalised exports and imports of several items including bulk agro commodities -- also said in a circular that “payments to associates/suppliers not covered under the current business transactions be postponed.”
The department of commerce -- which has the administrative control over STC and is learnt to have a meeting on the matter on June 16 -- declined to comment. However, when contacted, Dhawan B R, Chief General Manager (Funds Management & Banking, Central Accounts, Corporate Tax), STC, told The Hindu that there was no cause for worry. He added: “It (regulation of payments) is only temporary. This is to help meet some urgent commitments of the company. The situation arose because we are yet to receive some payments.”
The STC circular dated June 6, a copy of which is with The Hindu, also said, “Only those payments to suppliers be made which are covered under current business transactions subject to advances having received from back up buyers/associates.” It added that the statutory payments would be made from the available limits/funds. According to the circular, all branches/divisions at STC’s corporate office should comply with these instructions with immediate effect.
For the year-ended March 31, 2017, the company reported a net loss (after tax) of Rs 165.54 crore (standalone) before adjusting for qualifications. After adjusting for qualifications, the net loss was Rs 2077.78 crore. “Considering the overall circumstances surrounding the recoverability of outstanding dues of Rs 1904.24, we are not in a position to ascertain whether the amount is fully recoverable or not,” the company said under 'details of audit qualification' in its Annual Audited Financial Results filed before the BSE. On a consolidated basis, the net loss was Rs 728.31 crore before adjusting for qualifications and Rs 2640.55 crore after adjusting for qualifications.
It is learnt that the commerce department had recently sought to hive off from its portfolio certain non-core areas including administrative control over Public Sector Undertakings such as MMTC, STC and PEC to focus more on ‘core focus areas’ such as trade negotiations and foreign trade policy formulation.
Recently the Enforcement Directorate had “frozen 87,47,285 shares of Ms Balasore Alloys Limited (face value Rs 4,37,36,423) with market value of Rs 62,10,57,206 as on May 3, held by Pramod Mittal, Ms Global Steel Holding Limited and associated companies under PMLA in case of defrauding STC.” This is reportedly linked to an investigation on “money laundering” in the alleged fraud of around Rs 2,100 crore with STC and the CBI case was registered following a complaint from STC.
The Audit Report of the Comptroller and Auditor General of India tabled in Parliament in April had said the STC signed (in April 2005) a tripartite agreement with Global Steel Works International Inc. (GSWII) and GSHL (Umbrella Company of GSWII) for supply of raw material to steel plant of GSWII in Philippines. “Non-adherence to trading guidelines of STC, fixing of exposure limit at an exorbitantly higher side, ignoring the defunct status of the plant, failure to exercise effective control through collateral management agency over the material lying in the plant of GSWII, failure to sell material on cash and carry basis (as approved by Board of Directors) and avoidable conciliation agreement with the party, resulted in blockage of funds amounting to ₹2,101.45 crore including interest of ₹1,129.15 crore and additional trade margin of ₹220.99 crore.” (ENDS)
