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Fortunes of India?s largest foreign trade enterprise are closely linked to the economy.

MMTC is back on investors? radar, with the government planning to disinvest 9.33% of its paid-up equity share in the company. India?s largest foreign trade enterprise, MMTC got listed on stock exchanges way back in 1992 when the government sold a part of its stake in MMTC.

MMTC is a key trader of minerals, metals and precious metals and so its growth is closely linked to economic activity. For example, its revenue and profits both shrank in the financial year 2011-12 because of economic slowdown. The company reported lower net profit in the April-June 2012 quarter, too. However, MMTC remains a zero-debt company.

The country?s top bullion trader is now increasing its presence in jewellery retailing where margins are much higher compared to the bulk trading business.

The state-owned trading agency has emerged as a key importer of coal, with domestic supply unable to keep pace with the fuel demand of industries like power, steel and cement. For example, the company imported coal worth R3,219 crore this year. It expects the rising volume of coal imports to propel its business in the future. MMTC is also a big trader of Lam coke, used in foundries.

India, which is always concerned with food security for its 1.2 billion-plus population is heavily dependent on imported phosphatic fertilisers such as DAP to increase its food productivity. MMTC is well prepared to tap the business potential in this area. For example, fertiliser imports for third parties contributed as much as R5,744 crore to the company?s R66,324 crore turnover in 2011-12.

MMTC is a major exporter of minerals like iron ores, chrome and manganese. But with domestic capacity addition in steel manufacturing picking up, there is growing pressure on the government to encourage domestic value addition and discourage exports of raw materials. So export volumes are expected to become smaller with each passing year.

The bullion business contributed a lion?s share of R51,142 crore to the company?s gross revenue in 2011-12. Of this, gold and silver imports contributed R43,770 crore and R6,578 crore. The balance came from import of rough diamonds and domestic sale of gold bars and medallion.

However, the company is now expanding its presence in the high-premium retail jewellery business. It has joined hands with the leading jewellery retailing chain, Gitanjali. The two have together opened outlets in various cities across the country through a company called MMTC Gitanjali Private Ltd. The company also plans to open outlets in rural areas in partnership with Indian Potash Ltd. Meanwhile, MMTC is planning to increase the number of company-owned outlets.

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First published on: 08-10-2012 at 00:07 IST
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