New Delhi (14.09.2022): The Union Ministry of Commerce and Industry recently announced its decision to de-notify MMTC, STC and PEC.
The move aims toward the closure of Metals and Minerals Trading Corporation of India (MMTC), State Trading Corporation (STC), and Project & Equipment Corporation of India Limited (PEC).
After the de-notification, these companies will no longer remain the canalising agencies for the import and export of goods for the government.
The ministry has made it clear that their utility was examined well and it was believed that there is no need for any canalising agency in the department of commerce.
However, before their closure, the government needs to face many puzzling questions and provide acceptable and viable solutions as well.
Major issues that haunt both employees and stakeholders:
• In case of no business, how will the company meet the expenses?
• What happens to the existing employees as some of them have many years to superannuate
• Both MMTC and STC are listed companies and the procedure laid down will have to be followed for closure which includes the buyback of shares by the government initially.
• STCIL, a subsidiary that shut earlier, has not been closed finally as employees have filed cases in the Karnataka high court. So in case employees of STC and MMTC go down a similar path then it would be difficult for early and smooth closure.
• The employees' benefits like medical etc will have to be addressed to avoid unforeseen litigations.
• Even the shareholders can object during AGM in which the closure proposal has to be approved as per the Companies Act.
• In addition to these critical issues, there is a long way to go for the complete closure of these listed companies.
Many puzzles that persist:
• What happens to the legal recovery cases filed by these companies against various defaulters?
• These companies have a huge land bank and is the government eyeing these assets?
• What happens to the Departmental as well as CBI cases going on in these companies?
It may be recalled that MMTC and STC were created in 1963 and 1956, respectively. PEC Ltd was carved out of the STC in 1971-72.
In 2016-17, MMTC has incurred a loss of about Rs 30 crore. STC too reported a loss of Rs 16.5 crore in the last fiscal after which the commerce ministry commissioned a study to work out a new structure for these state-owned trading firms. Experts believed that these companies lost both their relevance as well as business following liberalisation.
(By Rakesh Ranjan)